Fast-forward slowly to spring 2011. Need a crisis (for a host of reasons).

Complain of the lack of the current Congress taking care of business on the budget for the balance of 2011. Ignore the fact that the year is half gone and your own party had control of the entire legislative process — veto proof — until recently. Declare loudly, and with great conviction that “this is no way to run a government!” Gotta agree with that. Hasn’t been since last October and before.

Then, just to make sure the perception of a crisis continues, suggest a dollar amount of reduction for the rest of this year’s non-budget without specifying where to cut and criticize the specifics that the other party suggests. That ensures a continued deadlock, and therefore, a continued perception of crisis.

And have “someone” in the Senate decry the process of funding the government by one week extensions. After all, it’s no way to run a government. Hasn’t been since last October.

What a crock! Both political parties have been on a spending binge for decades. The “people” (remember us?) have said “no more.” Now the hard work must begin and only due to the backbone given the Republican party by the “Tea Partiers” is there a somewhat serious push to deal with our huge national debt and current deficit spending. The Democrats don’t want to talk in real terms and even a huge portion of the Republicans are not totally serious, except to the extent being motivated by the thought of being buried under tons of tea when the next ship comes into the electoral harbor.

Here is the real crisis:  Democrats want to run an additional $9 trillion in deficits over the next decade while the Republicans want to REDUCE the debt by $6 trillion — they’re $15 trillion apart! That’s $15,000,000,000,000.

There certainly will be pain in many quarters if the deficit spending is to be curtailed, and the debt begin to be reduced — as it must. Let’s talk about an area of possible change that evokes a lot of emotion: medicare.  What if medicare were to change requiring recipients to have to pay more of their cost? Since that and social security comprise the biggest areas of expenditure, those are areas of potential savings.

The question then becomes whether to reduce the benefits under those “sacred cows” or continue them as is and virtually assure that our grandchildren are thrown under the tax bus. Which is worse?

That catch-22 is the most graphic and understandable, but the question will have to be repeated many times over within the maze that is our government spending melange. Two very difficult things seem to me to be essential of consideration.

First, federal, state and local governments must re-examine priorities and severely cut in every area that is not an essential governmental function. Let’s face it, there are not very many essential governmental functions.

Second, the sacred cows must also be examined. This includes (gulp) national defense, social security, medicare, and all forms of welfare.

Simple principles. Focus, and get to work.

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Let’s compare it to something we can visualize. First, what is the debt figure?

Click on the thumbnail and get a good look at what $14 trillion looks like written out.  A “14″ with TWELVE places after that! And 15 cents. Check the clock for updates.

OK, $14 trillion. Now let’s think of something really, really huge and complicated that we might want to spend some money on. The object is to try to think of a monstrously expensive project.

How about rebuilding Japan after the quake/tsunami? We have all seen the horrifying pictures and videos. Towns gone. Nuclear plants in danger. The whole island shifted 13 feet closer to our Pacific coast. Wreckage of lives and property as far as the eye can see, and beyond.

What could be more expensive than that — in our mind’s eye today — to have to write a check for? Well, as expensive as the current estimate is, it pales in comparison:

LONDON — Quake-hit Japan faces a recovery and reconstruction bill of at least $180 billion, or 3 percent of its annual economic output, or more than 50 percent higher than the total cost of 1995′s earthquake in Kobe.

Reuters, via Damage estimate for Japan quake is at $180B – Business – World business – msnbc.com.

So, compare the cost of rebuilding after this horrible disaster, to our debt disaster:

14,000,000,000,000 compared to 181,000,000,000  which is 1.29% of our debt. That is, for LESS THAN 2 PERCENT OF OUR DEBT BALANCE, we can rebuild Japan. THAT is how big that number — the amount of our national debt — is.

Do you hear anyone in Washington talking seriously about reducing it?

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• Japan boosts holdings of US debt in January (seattletimes.nwsource.com)

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Read “them” as both state and federal legislators, but let’s talk about Congress now. There is much talk presently about reductions in federal spending, and much talk about not being able to get cuts through both houses and past the President’s veto. Read the article excerpted below (and browse the other budget analyses on the Heritage Foundation site) and then call your Congressional reps and senators.

This article talks about the spending and resulting deficits on an annual basis. Keep in mind that each annual deficit adds to the national debt — now projected at $14 trillion. People often confuse or become confused by references to the annual deficit versus the debt. Further confusing is the fact that most spending (or revenue) projections are made as to what will happen, cumulatively, over 10 years. This article discusses what is possible in one year.

Table 1 (not copied in this excerpt) sets forth $343 billion in available spending cuts for the new Congress to consider when it takes up the federal budget for FY 2012. Many of the cuts fall into six areas:Empowering state and local governments. Congress should focus the federal government on performing a few duties well and allow the state and local governments, which are closer to the people, to creatively address local needs in areas such as transportation, justice, job training, and economic development.Consolidating duplicative programs. Past Congresses have repeatedly piled duplicative programs on top of preexisting programs, increasing administrative costs and creating a bureaucratic maze that confuses people seeking assistance.Privatization. Many current government functions could be performed more efficiently by the private sector.Targeting programs more precisely. Corporate welfare programs benefit those who do not need assistance in the American free enterprise system. Other programs often fail to enforce their own eligibility requirements.Eliminating outdated and ineffective programs. Congress often allows the federal government to run the same programs for decades, despite many studies showing their ineffectiveness.Eliminating waste, fraud, and abuse. Taxpayers will never trust the federal government to reform major entitlements if they believe that the savings will go toward “bridges to nowhere,” vacant government buildings, and Grateful Dead archives.[5]

via How to Cut the Federal Budget | The Heritage Foundation.

That is over 1/3 of $Trillion annually that can be cut. That can make a serious dent in recent fiscal follies. Over the past two years, Congress has added $2.7 trillion to the national debt (id.). Against a $14 trillion debt, that translates to a twenty-four percent increase in the national debt in only two years.

Go to the referenced article, read through Table 1 presented there, and see if there are any cuts with which you disagree. I am confident you won’t find many.

This article is a couple of months old now, and the new Congress (at least a large portion of the Republican majority in the House) is hard at work on finding ways to cut the budget. I am even somewhat optimistic that they all know that cuts are needed, but are without the personal and political courage to make the drastic decisions that appear to be needed.

Encourage them, pray for them, and then vote out the ones who don’t participate!

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(edited to add a resource below detailing the changes)

Firstly, about this “tax cut” bill.  It’s not a tax cut.  The fiscally responsible folks in Congress stopped a tax hike.  The irresponsible ones, those who have no idea of what makes the U.S. economy tick and care little about individual rights, were trying to hike your taxes.  But secondly, the pandering rhetoric about the estate tax is more pathetic than pandering.  The gall of the (almost) former Speaker talking about the concession NOT to gouge successful people with a draconian estate tax as if that was a “benefit” is the height of economic class-warfare!

In order for the President to get those terms accepted, the Republicans insisted that $23 billion in benefits go to 6,600 wealthiest families in America * * * *

via House passes bipartisan tax cut deal, first of Obama administration – CSMonitor.com.

Since when is it a “benefit” to get to keep the property — the estate — that you worked hard for?  OK, sure, like the NY Congressman Weiner said, you’re dead but you darn sure should get to leave it to whomever you wish. Here is that report:

On Fox News this afternoon, New York Rep. Anthony Weiner dismissed host Megyn Kelly’s moral concerns over the estate tax. She tried to argue that it was an unfair burden to have to pay extra taxes on inheritances when that money was already taxed as income during the person’s life. “You aren’t paying anything in that case because you’ll be dead,” Weiner responded.

via Weiner on estate tax: not unfair because “in that case because you’ll be dead” | The American Independent.

There’s arrogance, and then there’s callous arrogance.  Besides, when last I looked it up, the estate tax produced something like 1/2 of 1% of the total federal revenues.  The estate tax is not about revenue, it’s about redistribution of wealth and punishing success; and, at its core, it’s about jealousy.

There is no tax cut — in either income or estate taxes — an INCREASE was headed off.  I say the estate tax increase was headed off because the amount of the increase is far less than what the liberals wanted. Here’s a little history:

The House in 2009 approved an estate tax rate of 45% with a $3.5 million exemption. If Congress does not act by Dec. 31, the estate tax rate will zoom to 55% with a $1 million exemption, while marginal tax rates will return to their higher late-1990s levels.

House may amend estate tax provision: Hoyer – Investment News.  The 35% rate with a $5 million exemption is a considerable improvement.

Here is an excellent source describing the provisions of the bill:

The House of Representatives on Thursday by a vote of 277–148 passed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, HR 4853, which would postpone the sunset of the 2001 and 2003 tax cuts, reduce the estate tax, extend a large number of expired provisions, and extend unemployment benefits. The bill now goes to President Barack Obama for his signature, which is expected soon.

The House passed the Senate’s version of the bill without amendment. Prior to the vote on the bill, the House rejected, by a vote of 194–233, a motion that would have stricken the estate tax provisions in the bill and replaced them with an estate tax provision providing for a 45% rate and a $3.5 million exemption.

The bill has provisions covering the estate tax, expiring tax cuts, expired tax provisions and an alternative minimum tax (AMT) patch.

The bill postpones the scheduled sunset of the lower tax rates introduced in 2001 by the Economic Growth and Tax Relief Reconciliation Act (EGTRRA, PL 107-16); those rates will now continue through 2012. The bill also continues the lower capital gains tax rate introduced by the Jobs and Growth Tax Relief Reconciliation Act of 2003 (PL 108-27) through 2012.

via Tax Cut Extension Enacted, Journal of Accountancy, American Institute of CPAs.  Much greater detail in the full article.

(To the tune of Bob Hope‘s “Thanks for the Memories” and apologies to him.)  By the way, you can subscribe to this blog in the box to your right.

What are the consequences of federal policies, and what is the message of the 2010 election?

There is plenty of oil and gasoline on hand, and pump prices usually fall this time of year. So what’s causing the run-up? Most analysts point to the Federal Reserve’s $600 billion economic stimulus effort.

via Not-so-happy holidays ahead at the pump as gas prices jump – USATODAY.com.

Welcome to the tip of the iceberg. The Fed, which in theory is independent of Congress, just laid a whopping tax on you in the form of inflation.  This perceived need for a “money flood” stems from a long series of ongoing mistakes.  At the root of the monetary problem we put two nails in our national coffin long ago:  (1) getting off of the gold standard, and (2) opening trade with China.

Between Congress’ bad fiscal and regulatory policy (and I’m not speaking just of the last two years) and unions driving jobs overseas to a now-open and ever-willing China (and others), America is broke and our foreign-state bankers are about ready to cut off our credit.  We’ve borrowed about all we can and printing money is the last ditch effort to prop up our economy.  To a degree, that used to work when the dollar was perceived as having an intrinsic value.  It doesn’t, it’s just paper.  Any intrinsic value ever attributed to it was due to the strength of America — and now we have a president who is apologetic for who we are as a nation!

The effect of the Fed’s printing more money that is nothing but paper now, is to to devalue the dollar against all of the world’s major currencies.  Since we buy most of at least our discretionary goods from overseas, the prices go up. Add to that the fact that there are many emerging countries beginning to consume a LOT more in goods, you then have higher demand for the same goods we are buying and that also drives up the price.  See the inflationary pressures?

Now put that in the context of  the now not-so-secret push for a “new world order” with people like George Soros pushing for a “gradual decline” in the value of the dollar.  As an aside, he is also a huge proponent of legalizing marijuana.  But back to the point.  Take a look at this YouTube clip, especially at about the 3:20 mark to 3:35:  “… an orderly decline to the dollar is desirable ….”  Really?  Only if you have the goal of dragging the economy of the U.S. down to the lowest common denominator.

This is part of the thinking that is apologetic for what America is, and which denies American exceptionalism. This thinking decries success and — unless you’re George Soros — repudiates the notion that you should be able to build wealth if you are creative and successful.

In that YouTube clip above, Soros openly discusses the “new world order” notion and his goal is clear:  redistribution of wealth on a global scale, justified because he (and I suggest Obama and the hard-core left part of Congress) believes that we — Americans — are “too rich” and too powerful globally and the world must become a level playing field.

Balderdash, I say!  That notion is heresy to every hard-working American who has pulled himself up by the bootstraps.  It ignores the positive contribution that America has made — and continues to make — in every corner of the world.  It ignores the many ways that as a people we seek to give people a hand-up rather than a hand-out.  People at home and globally have benefited from the largesse of the American people.

Thomas Jefferson (in a quotation attributed to him, but not necessarily well-documented) is said to have stated

The democracy will cease to exist when you take away from those who are willing to work and give to those who would not.

Accurately attributed or not, the concept is obvious. Yet we have national policies that continue to drive us directly to that result by taking away from the producers, by making it more difficult for them to produce, by marginalizing entrepreneurship and success — and Soros would accomplish that on a global scale if he has his way.  George Soros is a very scary guy!

We are reaching — or perhaps have already reached — the point where the takers outnumber the makers.  I found a great discussion about that concept

In that year of 1967, for instance, the United States had a population of 198 million, a GDP of $825 billion, a federal budget of $157 billion and federal “social welfare” expenses of $26 billion. This placed “social welfare” spending at $131.30 per capita, 3.1 percent of GDP and 16.6 percent of federal outlays.

In 2010, the United States has a population of 308 million, a GDP of $13.3 trillion, a federal budget of $3.6 trillion and federal “social welfare” expenses of $2.1 trillion. This places “social welfare” spending at $6,818.18 per capita, 16.1 percent of GDP and 59 percent of federal outlays.

Bradley Harrington, via The Coming Civil War: Producers Vs. Parasites – The Philadelphia Bulletin.

I commend to you the reading of not only the article but the comments thereunder.

Read that again:  Social welfare spending in 1967 was 3.1% of GDP, and in 2010 is 16.1%. Now maybe some of that increase was needed in order to doing a better job of caring for those truly in need. OK, but 5-1/4 times increase attributable to that?  If you live in the real world and look around you, you know that’s not the case.

A fundamental problem is that the feds keep trying to “fix things” by social engineering through taxes and regulation when all they really need to do is in the few categories that only a federal government can do (a military, interstate highways, air safety, etc) and get out of the way of the makers of goods and services.  Harrington, writing in the article quoted above was quoting an oh-so-true statement from Ayn Rand:

“The task of defining ideas and goals is not the province of politicians and is not accomplished at election time: elections are merely consequences. The task belongs to the intellectuals. The need is more urgent than ever.”

- Ayn Rand, “The Wreckage of the Consensus,” 1967 -

via The Coming Civil War: Producers Vs. Parasites – The Philadelphia Bulletin.

Politicians need to get out of the way of the producers not only of the goods and services, but of the ideas and goals.  It seems to me that this was the message of the 2010 elections.

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Regardless of how you view the Nov. 2, 2010 election results, we still have the future to worry about; and one of the most worrisome features of Congress is the concept of “earmarks” a/k/a “pork barrel projects.”  I suggest that earmarks constitute the most divisive, dishonest and dangerous of procedures threatening the republic. Why do I say that?

First, what are “earmarks?”  They are the local project riders added to legislation to authorize and fund pork barrel projects.  You vote for my earmark and I’ll vote for yours and both constituencies will be happy — and we’ll get re-elected.  Often the projects are not only unneeded but downright wasteful, e.g. the Alaska road-to-nowhere. It’s bad enough that if my project costs $1 million, then yours costs $1 million resulting in a $2 million hicky.

That’s bad enough — wasteful spending — but I’ll never be convinced other than that often the dialogue is “if you’ve vote for this legislation that you really don’t like, I’ll vote for a huge earmark for you.”  What is the difference between that and buying a vote at the polls — which is quite illegal?  The give and take of the legislative process — which is necessary — is bad enough in seeking compromise to pass legislation, but swapping earmarks for votes compromises principles.  That is intolerable.

There is reason to hope that earmarks may be targeted by some in Congress, witness:

With their sweeping electoral victory in hand, Republicans are committed to ending earmarks – the local-project riders to legislation – and focusing on the big national issues, a top Senate Republican said Wednesday.

“We can’t have 500 congressmen and senators who think it’s their job to bring home the bacon – and that’s what’s going to change,” South Carolina Sen. Jim DeMint told CBS’ “The Early Show. “One of the first thing we’ll do in the House and Senate is ban earmarks as Republicans – that’ll get our eyes back on fixing our tax code, fixing social security and Medicare, getting America back to work.”

DeMint called earmarks “that parochial interest I think gets that the focus of interest off national interests onto paving local parking lots.” He said in an editorial Tuesday that the dozens of GOP congressional newcomers “can’t be bribed if they’re not for sale.”

via DeMint: We’ll Ban Earmarks Right Away – The Early Show – CBS News.

Not only do earmarks have the potential to compromise a legislator’s principles, but they violate the separation of powers demanded by the Constitution. The separation of powers — the principle that powers of government are shared among the three, co-equal branches of government — requires that certain powers have checks and balances to control the functions of government and the spending and administration of funds (those would be OUR tax dollars, for you in Loma Linda) is one of those important areas.

Seal of the Office of Management and Budget

Earmarks circumvent the executive branch part of that control according to this Wikipedia article:

The federal Office of Management and Budget defines earmarks as funds provided by Congress for projects or programs where the congressional direction (in bill or report language) circumvents Executive Branch merit-based or competitive allocation processes, or specifies the location or recipient, or otherwise curtails the ability of the Executive Branch to manage critical aspects of the funds allocation process.

via Earmark (politics) – Wikipedia, the free encyclopedia.

If you doubt that earmarks are a problem, check out the earmarks database at the Office of Management and Budget. The OMB estimate of 2010 earmarks is a file 2.6MB in size in a compressed zip file (containing an Excel spreadsheet).  There are 53,409 line items in that file.  One analysis of the FY2010 earmarks states

Earmark totals appear to have decreased from fiscal year (FY) 2009 to FY2010, but an apples‐to‐apples comparison tells a different story. In FY10, appropriations bills contained 9,499 congressional earmarks worth $15.9 billion. This compares with 11,286 congressional earmarks worth $19.9 billion in FY09.

However, to do a true year‐to‐year comparison requires taking away certain Army Corps of Engineers earmarks that were included in FY09 but not in FY10.1 In addition, the FY09 total includes earmarks from a supplemental spending bill passed after the regular spending bills that year.2 After adjusting for both of these factors, FY10’s $15.9 billion in earmarks represents a slight increase from $15.6 billion in FY09.

TCS FY2010 EARMARK ANALYSIS: APPLES-TO-APPLES INCREASE IN EARMARK …

What to do now?  We citizen/taxpayers need to be just as vocal about earmarks as we were in this election about the size and scope of government.  No, in the scope of our current federal budgets and deficits $15 billion is not significant money, but the probability of bastardizing the legislative process is simply too great.  “We” (and I mean that in a non-partisan way) have “their” (and I mean both sides of the aisle) attention:  carpe diem.

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The audacity of hope and change:  take a policy like Obama-care that 70% of the country rails against, cram it down the throats of Congress and the populace, have FORMER Speaker Polosi state “we have to pass it first and then see what’s in it,” and NOW the President wants bipartisanship!  That’s audacious at best.  As we used to say on the bridge of the aircraft carrier, “all ahead flank, right full rudder ….”

WASHINGTON (Reuters) – President Barack Obama on Saturday chided the two top Republicans in Congress, challenging his rivals to make a fresh start and build a bipartisan effort to boost growth after next week’s election.

Speaking three days before a midterm congressional election in which his Democrats are expected to suffer heavy losses, Obama said lawmakers had a “duty” to seek common ground.

“That’s why I found the recent comments by the top two Republicans in Congress so troubling,” Obama said in his weekly radio address, in which he urged Democrats and Republicans to work together on issues like extending middle-class tax cuts.

via Obama says troubled by comments of top Republicans | Reuters.com.

Sen. Everett Dirksen, in the 1950′s on the floor of the U.S. Senate during budget debates, is said to have quipped “a billion here and a billion there and pretty soon it adds up to real money.” It is now well-accepted that he did not actually make that statement so often attributed to him, but he was well capable of saying such, and likely should have. So what would he think about the current spending spree? Who is at fault? It’s Congress (led by the nose by Pres. Obama) and while the following article (which appears to have the facts) faults more the currently Democrat-led Congress, neither party can claim to have been fiscally responsible in recent decades.

A little-known fact is that federal spending rose by only 2.8% during fiscal 2007 under the final budget passed by a Republican Congress. I know, zero percent would have been preferable, and it was way too little and too late for a bunch that had let spending grow way too quickly during the previous five years.

Then came the Democrats. Spending during the fiscal year that ended in September 2008, the first full budget year under the control of Nancy Pelosi and Harry Reid, increased by 9.1% to almost $3 trillion. That percentage increase was greater than any Republican Congress under George W. Bush.

They were just warming up. Fiscal 2009 brought the beginning of the $787 billion (before interest) “economic stimulus plan.” All but those in serious denial acknowledge that it has failed to revive the economy, which economist David Rosenberg described on August 25 as already being in a depression. Despite representations to the contrary, the stimulus plan had 9,000 earmarks, including that $2 billion Illinois energy debacle. More generally, entitlement and other spending went into overdrive. Fiscal 2009 ended with a reported deficit of $1.416 trillion.

via Pajamas Media » It’s the Spending, Stupid.  (The above links are mine)

Where does it end? When? What does it take for us (you) to get mad enough to make your voice heard? If the general idea of spending doesn’t get your dander up, focus on the following comment from the above article:

This is great. Read the whole piece. It’s an adaptation from an article written in the 80′s but still quite relevant.  Perhaps even more so, embellished by Jon Stewart.

545 PEOPLE — By Charlie Reese

Politicians are the only people in the world who create problems and then campaign against them. Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits? Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes?

via 545 vs. 300,000,000 – Story Ideas – The Daily Show Forum.

TORONTO (Reuters) – Pressured by an aging population and the need to rein in budget deficits, Canada’s provinces are taking tough measures to curb healthcare costs, a trend that could erode the principles of the popular state-funded system.

via Soaring costs force Canada to reassess health model – Yahoo! News.