Inflating the Baseline

A common debate on the news is whether or not government spending should be cut. Large numbers followed by the terms billions and trillions are thrown around for effect and we are all led to believe significant changes will be made to the way our government is financed. 

The truth of the matter is that these cuts that get discussed are actually only proposed reductions in mandated increases. For example, if a government agency has a billion dollar budget this year, by law, this same government agency's budget will increase up to $50 or $100 million by default. Any cuts (or increases) proposed to this agency's funding would be against this increased budget amount.

This happens because the scorer of the cost of government, the Congressional Budget Office, uses a technique called baseline budgeting. Because of a 1974 law, all funding for discretionary programs must inflate itself to keep up with the times so all programs increase year to year by a formulaic percentage. This works great when revenues are steadily increasing. But when the economy retracts, no correction in government spending is made to correlate. Any talk of spending cuts is only against mandated increases.

So going back to that hypothetical agency....if a "cut" of 2% was proposed to its funding, the net result would be a budget that had actually increased in real dollars by $29 million. This goes on across the entire federal government.

A legislative solution has been proposed to change the CBO's technique to a zero-baseline formula, one where any changes to a program's funding must be explicit and outright. One where a cut is actually a cut. Anyone serious about solving our deficit crisis should be in favor of this legislation.

Bridges & Hoes

Last week, the President stood below a 48 year old bridge and told the American people his new stimulus jobs bill would fix all of the structurally deficient bridges that his previous jobs stimulus bill did not get around to fixing. In order to pay for it, the "rich" have to pay their "fair share".

Also last week, a Democratic candidate for Senate spent time lecturing America on how no one gets rich without "the rest of us" paying for their roads and security from "marauding bands" as if these "factory owners" paid nothing into this system themselves. No mention is made, however, to the fact that not one dollar in taxes would be collected without first a business being created and generating income subject to taxation.

A concerted effort is being made to demonize those that maintain and create wealth in this country. The President is repeatedly calling for a fairer system, although no one is clear on exactly what that means. He says he is a "warrior" for those who feel a billionaire should pay a higher income tax rate than his secretary, never mind the fact that he already does.

Some on the Left have a semblance of economic reality, however, and disagree with the plan. Former President Bill Clinton says although he's one of the rich and willing to pay more, the plan won't work. In addition to knowing that taxing everyone making in excess of one million 100% of their income will not fund the deficits we have, maybe President Clinton is more cognizant of the impact of Ms. Warren's views, should they be translated into actual policy.

According to the famed Harvard professor and aspiring Senator, people who generate their wealth on the backs of others should be commended (but really condescended) and are more than entitled to keep their "hunk" of the wealth created. But the rest should be contributed to the common good. Of course, this is exactly how our system currently functions. What is left unsaid is just how big that "hunk" should be.

Perhaps one can apply this idea towards funding President Obama's new stimulus jobs bill. Mr. Clinton, whom has made considerable wealth for himself as a result of a long career in politics, would not have sold near the amount of books, made near the number of paid speaking engagements nor secured the many other lucrative opportunities gained from having been President of the United States.

Using Ms. Warren's logic, perhaps Mr. Clinton's income and foundation endowment as a result of these endeavors could be considered property of the State and Mr. Clinton granted a "living" stipend as a person of public importance. Wouldn't this be a strong down payment on President Obama's new plan? And why stop there? Ms. Warren has been featured prominently in liberal activist Michael Moore's revenue-generating propaganda. Since Mr. Moore has received an inordinately large income as a result of misguided souls overpaying to listen to his filth in movie theaters, perhaps Mr. Moore owes the country beyond his current tax bill.

Recently President Obama joked that the first jobs stimulus funded projects were not quite as shovel-ready as he originally advertised. Nothing has changed this time around. It appears they are only ready for hoes.

[scandal] Gate

The drama produced by the coverage and sweeping scope of the resulting aftermath of the break-in at the Washington D.C. Watergate Hotel compelled the Nation for years throughout the mid 1970s. The pop-culture obsession with the unfolding political thriller spawned a generation of eager investigative journalists and an entrepreneurial spirit ready to develop a more efficient means of providing more.

Over the last 35 or so years, scandal after scandal has been suffixed with the term Gate. Throwing this simple word after anything will quickly evoke images of fraud and wrongdoing. It will typically also increase ratings and newspaper sales.....or page views.

In recent months, a number of scandals with far-reaching implications have been slowly bubbling up in news reports. The order of importance can be debated but from illegally facilitating the transfer of automatic weapons to foreign drug cartels intending homicide....pressuring and manipulating Congressional testimony in favor of preferential federal regulatory review for companies led by large political donors....and streamlining federal oversight of taxpayer "loans" to bankrupt companies with these exclusive relationships, the current Administration occupying our Executive branch is challenging to become the #1 proprietor of scandal, perhaps surpassing Congressional social media practices.

Curiously, none of these Executive transgressions has yet to be ascribed the dubious honor of making the Gate list in public discourse. I would like to propose a new term to add to this collection. One that encompasses all of these emerging head-shakers....and the disgraces sure to have a whistle blown soon. This term can become the new Gate that permeates the public consciousness and perception of a fraudulent mistake.

ObamaGate pretty well sums it up, I think.

Aliens in charge?

Recently the Speaker of the House suggested although he maintained a cordial relationship with the President, it was as if the two came from different worlds. A guy who won the Nobel prize for re-explaining economies of scale suggested an alien invasion was just the economic stimulus the country needed to turn our woes around.

Not all is lost in this growing inter-galactic conflict panic, however. An optimistic outlook has been offered theorizing a natural and organic purge of these potential alien invaders: American Exceptionalism.

Maybe there is something to all of this.

The Golden Corral Tax: an all-you-can-spend government plan

President Obama, keeping his promise from his speech to Congress, has unveiled his plan to reduce the record federal deficits his administration has radically enlarged. With a public debt of almost $15 TRILLION and current annual deficits in the federal budget of around $1.3 TRILLION, the President has recognized the absolute need to tackle the fiscal problems that will not escape us.

President Obama’s plan is a remarkably simple approach to solving our nation’s complex financial imbalances: tax people that are already heavily taxed more. 

The President’s “new” plan calls for higher taxes on “millionaires and billionaires so they can pay their fair share.” The reality of the plan is that taxes on anyone making over $200,000 will increase. This hits far more than “millionaires and billionaires.” Many small-businesses file their taxes as individuals and will also be hit by this, including the owner of my own company.

More importantly, there is no proposal in the President’s plan for how the government will enforce this new tax as there is currently no tax bracket for incomes in excess of one million dollars. The plan does not outline any proposal for creating this new bracket, either.

A logical look at our revenue and spending gives a clear indication of our main problem. It is not that the American people are under-taxed; it is that government spending is far too high. After adjusting for inflation, the Federal government averaged $1.872 TRILLION in annual revenue during President Clinton’s years in office. During that same span, the government spent $1.929 TRILLION annually. President Bush’s term saw $2.159 TRILLION in revenue (an increase after the “Bush” tax cuts no less….) and spent $2.407 TRILLION annually. In the three years of President Obama, the government has averaged $1.906 TRILLION in revenue, but spent $3.193 TRILLION on average.

Even if everyone making in excess of one million dollars was taxed 100%, the one-year revenue would be $727 BILLION. This is nowhere near enough to fund the government at current levels. Not to mention, who would continue to work when they were taxed out of everything? Then there is the fact that 50% of the working-age population pays absolutely no federal taxes. So when there is talk of “fair-share”, who really needs to be paying more? And what is “fair”? What percentage should the government allow us to keep of our own paycheck?

A new euphemism has emerged as a result of the President’s plan: the “Buffett Tax”. A few weeks ago, mega-billionaire Warren Buffett wrote an op-ed article in the New York Times attempting to demonstrate how he was massively under-taxed. President Obama has taken that idea and started sprinting with it. Never mind the fact that Mr. Buffett’s company has close to a BILLION dollars of unpaid back taxes.

The truth in this sad situation is that Mr. Buffett has made billions of dollars speculating on which companies will receive government aid. Mr. Buffett knows that his wealth comes from special knowledge acquired through special connections about what government spending will go where. Real deficit reduction will require less government spending, lessening Mr. Buffet’s company’s ability to "win" with the certainty it has in the past. If Mr. Buffett were serious about solving our deficit issues, he would pay the taxes already owed before talking about more. And Mr. Buffett can always provide a gift to the Treasury without mandating higher taxes on everyone else.

President Obama asked for bi-partisan cooperation. Why then would he propose a plan that he himself has acknowledged would be awful for the economy? Even his own party would not pass these tax increases when it held both the House and Senate. If these tax increases cannot pass a Democratic Congress, how will it gain support from Republicans as well? 

Perhaps President Obama is not really concerned with our problems. Perhaps President Obama is more concerned with campaign speeches that get his radical base motivated for the 2012 election. But as much as tax reform is a popular issue for many voters, raising taxes does not equal tax reform. There is a lot of talking about "raising revenue". The best way to do this is to get more people paying taxes, not increase taxes on the few that actually do pay. And if we really want to get job-creation going, taxing those that hire is probably not the best idea. Personally, I have never been hired by someone who was not "rich," as defined by the President.

The American Jobs Act : Stimulus war games

Over the course of the last 6 weeks, our President has been telling everyone who would listen about his upcoming "jobs" plan that would finally revitalize our sagging economy. Throughout his campaign-style monster-bus tour through the Midwest, President Obama told the American people that following his 10 day vacation in Martha's Vineyard, he would be presenting Congress a series of steps that would get employers hiring again, not just to stimulate. Not lost on some was the similarity to his 2010 pre-Vineyard vacation message as well as the irony of telling the country he would promote job growth after taking a vacation.

Well after several weeks playing several rounds of golf followed by some last-minute schedule posturing with Republicans and the NFL, we finally got to hear what the President would be proposing. More infrastructure spending and public teacher funding relief. More payroll tax cuts. Another extension of unemployed benefits. These were all large components of the Stimulus of 2009, which has already horribly failed to achieve its objective of sub-8% unemployment. President Obama promised a bold new initiative and I guess what he gave us is the $4000 tax credit to employers that hire a worker who had been unemployed longer than 6 months.

Coming on the heels of the contentious debt ceiling debate, the President was fully aware the country was in no mood for more government spending. So in his speech, the President called on the controversial Congressional "super-committee" to add the $450 billion the "jobs" plan would cost to their already overwhelming and politically impossible task of cutting $1.2 trillion from the nation's future deficits. (Nevermind that our nation will incur more debt than that this year alone...)

Even as the President called on Congress 17 times in his speech to "pass this bill" immediately, it took the administration five more days after the Joint Session address to produce a proposal in legislative language that could actually be reviewed by Congress. As is always the case, the devil is most definitely in the details. And there are plenty of details in the 155 page proposal.

One detail to emerge is an obscure provision in the unemployed-hire tax credit initiative that would allow those that are not hired to then sue the employer they interviewed with for discrimination on the basis of being unemployed. So the law says that if you don't get hired, you can then go sue the company that didn't hire you because they were looking negatively at your unemployment status. Obviously this makes no sense, but more importantly, what company would even interview someone unemployed if there was the prospect of a lawsuit if the candidate wasn't the right one? Perhaps this was a favor granted to the legal profession to increase their overall billable hours but beyond that will do nothing to promote job growth.

Another detail to emerge is the President's proposal to offset these "temporary" spending increases so that they become deficit-neutral. Shockingly, the plan is a tax increase, namely on the "rich" and those greedy oil companies. Once again, "rich" is defined as making over $200K. Looking at the existing tax tables and not taking into account any deductions, the tax burden on $200K is over $50,000. Does anyone really think someone making $200 and paying $50 in taxes is not paying their fair share?? Oh, and the tax increases would be permanent.

If the President were serious about changing the economic climate in this country, he would propose comprehensive tax reform that closes these loopholes everyone agrees distorts the free market and, in exchange, lower overall rates and condense the brackets.The corporate tax rate should be lowered from the internationally-uncompetitive rate of 35% to somewhere under 20% and companies should not get tax benefits because of beneficial relationships and costly lobbyists. What new company could compete paying 35% when their competition is paying zero?

If the President were serious about growing the economy, long-term structural changes would be proposed, not more isolated government spending. Business-strangling regulations would be removed. Certainty needs to be established and the uncertainty about upcoming costs associated with ObamaCare compliance and future tax increases do not provide this. Dependence on more costly foreign energy sources does not breed confidence either when we are not tapping our own resources at home.

No, the President is not serious about job-creation. This "new" plan is more of the same: a wish-list of handouts to political allies and one last back-door attempt to slide in tax hikes before the next election. The President's team has to know this plan will not be passed in Congress. So what exactly is their goal in all of this because it is certainly not to create jobs for the unemployed?

9/11 - the real legacy

After completing my first lab session in a freshman-level Intro to Civil Engineering course at the University of Texas on a beautifully clear and crisp Tuesday morning two weeks into my collegiate career, a quick glance at my new and unfamiliar university email inbox showed a new message from my sister with the simple message of 'WTC'. Feeling the fatigue that only an 8am lab explaining the ever-exciting concept of Moment of Inertia can provide, I decided to check the message later and head back to the dorm.

Leaving the CE building, I felt an eerie sense of anxious despair in the crowds of students heading in the various directions. I wasn't quite sure what it was but as I continued walking, I passed a small crew of construction guys reworking a section of sidewalk. They had a radio going and as I walked by, I heard what sounded liked stressed voices and the term 'World Trade Center'.

  By now my mind was racing with possibilities. I've always been mildly obsessed with world events and having just had the USS Cole bombing go down on my birthday the previous year, I was already expecting something awful. Continuing to walk through a plaza in the shadow of the iconic Longhorn Tower, I happened to see my dorm roommate walking toward me. Throughout my entire time on the sprawling campus at UT, this was the only time I ever ran into him on campus. And we were both engineering students. He explained the dire situation to me immediately and my first response was "was it bin Laden??" He looked at me with wide eyes and said he had just heard that name on the news. "Who is bin Laden??" he asked me....

Being one of those seminal moments in history, no doubt everyone has a remarkably detailed account of how they endured the events of September 11, 2001. It was traumatic in every sense of the word. But it was also invigorating. Upon hearing the stories of heroism from the first responders and those that led others to safety from within the doomed buildings, Americans recalled our sense of exceptionalism. We remembered why we became the greatest nation ever created, and thus why we had become an enemy of extremists whose ideals were in direct contrast with that of our own.

For a brief time this country was unified. President Bush was our great leader that we could rally behind. I remember hearing so many people who voted for Al Gore and were upset at the way the election of 2000 had gone, admit they were happy George Bush was president at a time like that.

Unfortunately this did not last long. As the reactionary dominoes continued to fall over the next 18 months, we suddenly found ourselves in two wars in lands 99.9% of Americans had never seen. This reality unleashed a lesser acknowledged third war into which our country was thrust. This third war was much closer to home. It was internal.

As a result of the misguided, poorly planned Iraq adventure, new fuel was given to a political movement that had been left dormant for some time:  the radical anti-war, socialist/internationalist Left. Credible voice was now given to their cause, which had been for sometime discredited. Self-described moderates who believed invading Iraq was wrong were now being coerced into a much larger and much more complex coalition. A coalition consisting of radical environmentalists, corrupt union leaders, socialist foreign nationals and, most importantly, the mainstream media. They all gathered around the same premise: US foreign imperialism for oil and oppression of lessers had to be stopped.

All of a sudden, every major media outlet from the NBC news to the New York Time was bashing the President, all of his advisors and Republicans in general. Conservatives were called war hawks and torturers (these were the nice terms). All of a sudden, the US was cast as an imperial monster that could not be allowed to continue. American Exceptionalism began to fade from the national lexicon.

So thus began the fight. After coming up short in 2004, the 2006 midterm elections came around and the media conducted an all-out blitz. The economy had recovered well from the bubble recession and people were mostly happy with the condition of the country. The proponents of Leftist agendas had nothing to run on except hyped-up ethics charges on some Republican congressmen and an overall disapproval of the Iraq war. Also thrown in there was some global warming scare tactics to make people believe the Republicans wanted to burn the Earth, even though science has now debunked the man-made climate change scam.

When the election was held, unemployment was around 4.6%. Oil was around $50/barrel. Consumer confidence was near all-time highs. Fast forward through the legislative record of the democratically-held 110th Congress which was put in power as a result of the 2006 election and we begin to see the effects of the Left's agenda. I won't delve too deeply into the details (I'll save that for a later post) but laws enacted and uncertainty created by an increasingly 'liberal' legislature swiftly sent the economy into a downswing. And as people began to lose their jobs, their over-extended lifestyles were no longer sustainable. Hence the foreclosure crisis, leading then to the derivatives crisis with the mortgage-backed securities and default swaps.

Thanks to a complicit media and an all too easy target in a lame duck President who was very unpopular, the country was led to believe Republican "lack of regulation" led to the mess so we elected to go in a new direction and hope for the best.

Two years of Democratic control of the House, Senate and Presidency were quick to yield more ineffective big government solutions that further contributed to our decline. Record deficit spending on the series of economic stimulus, bailouts and new programs were thrust upon us in addition to Obamacare.

The authoritarian manner in which all of this occurred was a leading cause of the eventual awakening of opposition to this leftist swing in government the latter half of the decade. The Tea Party organically sprouted up in response to all of this government overreach. Their message was simple: government had gotten too big and was no longer sustainable at the rate of increase currently projected. More importantly, the government was to be of and for the people, not an authoritative behemoth.

Despite another massive campaign throughout the 2010 election cycle to smear this grassroots movement as a corporate-funded group of white racists, many Tea Party candidates won upset victories, giving the Republicans one of the biggest midterm election victories in US history. And now with the 2012 Presidential election in the balance, the Left is pulling out all stops in their efforts to marginalize what is logically the only movement in politics right now aimed at solving our real problems.

So here we are, ten years after we had the most tragic attack on our country's great, exceptional history. Ten years after we lost 3000 Americans. The real legacy of 9/11 is that it propelled our country not only into the global war on terror, but also an internal war for control of the direction of our country.

I have gone from a college freshman wondering if the Tower was next to get hit to a new father, responsible for the safety and development of a beautiful one month old boy. It is that responsibility combined with an unabiding love and pride for my country that has prompted me to throw my perspective out there. Too much is at stake to sit idly by while the country my son will grow up in is transformed into another failed socialist experiment. Ten years later, I hope we can begin to regain the sense of what made America great in the first place.

just another blog

And so it more person who believes their opinions are worthy of garnering someone else's valuable time. One more outlet for "slanted" perspective, not subject to mainstream censor. This blog is just another blog.

What this blog will do, however, is attempt to shed some light on some of the complex (or not so complex) issues that surround all of us. Often what gets lost in the myriad of "news-fix" sources competing for seconds of lessening attention spans is a concise yet thorough, sensible yet insightful explanation of these issues. This blog will attempt to do just that.
The n8 Light will shine bright upon the darkness.