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Archive for November, 2010

When I was six, I had what I thought was a very smart idea: a stop sign just for bad buys. That way everyone who was not a bad guy could ignore it, but while the bad guys are stopped it would be easier for the police to catch them.

My excuse for that idea is that I was six.

My father, having a PhD in psychology and therefore knowing nothing about how people think, got very annoyed with my idea for being so silly, and said that by drawing that stop sign on a sheet of paper I was wasting paper.

Eventually I grew up and realized why my idea would not work. The problem is, I am still waiting for progressives and conservatives to grow up and realize why my idea would not work.

Oh, they would never dream of putting up a stop sign for bad guys, true. But progressives do really believe in gun laws, and conservatives do really believe in morality laws.

It always amazes me, every time I read any online gun debate. The progressive point of view is that some guy will be pondering a crime, and as he is preparing will discover that his gun is forbidden. Then he will say “gee, I was going to rob a bank, but I cannot use my gun to do that. I guess I will stay home instead.”

I am also amazed with the drug debate. The conservative point of view is that some guy will be pondering purchasing some drugs, will see an advertisement on television saying “just say no,” and say “Gee, I didn’t know that this stuff was bad. I guess I won’t do this anymore.”

They both believe that at some level that criminals obey the law. The law is sacred. People stop at a stop sign, not because it may be good for traffic control or because they don’t want a ticket, but because it is a stop sign and that is what you are supposed to do at stop signs.

Perhaps they can be satisfied in their quest for ever more laws by passing a law that says it is illegal to break the law, an idea a six year old can really appreciate.

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Every so often, something reminds you that good fortune has brought you in touch with a remarkable family. Friendship seems to work that way: it brings families as well as individuals together.

When my mother came to the United States from the Netherlands after World War II, she lived in Minneapolis to see if my dad would make up his mind and propose to her. Meantime, she took a summer job waiting tables at Yellowstone National Park. There she met a co-worker named Jane, a smart woman my mom’s age. They became friends.

About the time my mom and dad married in 1953, Jane married Franz Gayl in Minneapolis. The Gayls had two children: a daughter, Ilse, and a son, Franz, Jr. Today the Washington Post published an article about Franz, Jr. that begins:

Franz Gayl made a name for himself a few years ago as a Marine Corps whistleblower, a civilian scientist who helped push the Pentagon to shift its Iraqi weapons strategy. Senators called him a hero for disclosures that helped get heavily armored vehicles known as MRAPs to the battlefield.

To reward Franz for his efforts, the Marine Corps stripped his security clearance and tried to place him on administrative leave. As another article put it, what was left of his career is over.

A few years ago I visited Jane and Franz’s stepfather Arthur Pejsa in Minneapolis. Franz had recently assumed the troublemaker’s arduous role at the Pentagon. Arthur warned that Franz placed his career at risk if he didn’t keep quiet. According to the Washington Post report, Arthur was right. You try to get the government to do the right thing, and your career is over.

I told Arthur at the time that some things are more important than your career. We needed people who would speak truthfully about the war in Iraq. At the time Franz started to speak up, the Pentagon would not even provide extra armor for its Humvees, let alone buy the more expensive MRAPs.

You may remember the soldier who challenged Secretary of Defense Donald Rumsfeld when he met with troops in Iraq. The soldier asked Rumsfeld why his men had to go scavenging in local junkyards to find extra metal to protect their vehicles. Rumsfeld’s answer amounted to, “Suck it up. You don’t always get what you want.” Indeed. Many men and women died in Iraq because their government didn’t provide them with the proper equipment.

One person persistently prodded and pushed for better armor — appealed to the Marines’ sense of honor not to leave their soldiers unprotected. What did he get? Fired. Our government should have piled honors on him because he tried hard to make people do the right thing. He tried to lead and speak openly in an organization that prizes only good followers, and leaders who follow the rules. So the Marines dismissed him.

You have to wonder how we can win wars or defend ourselves when we treat our best people that way. I hope Franz finds a way to contribute as a scientist — talented people can usually cope with obstacles. Whatever he accomplishes, though, our armed forces won’t receive the benefit. Once people show you the door, they don’t welcome you back. To clear up uncertainty about that, the Pentagon should post a sign on its front door: FREE THINKERS AND UPSTARTS NOT WELCOME. GO AWAY.

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It Should be Easy to Balance the Federal Budget

In spite of the recommendations for tackling the federal budget deficit and national debt of Obama’s Debt Commission, which included a combination of tax hikes and spending cuts, a new poll released by  Rasmussen Reports finds that 51 percent of likely voters polled believe it is possible to balance the federal budget without raising taxes.  This is not surprising since approaching where to cut federal spending is like a glutton deciding where to start eating at an all you can eat buffet.  In other words, there are so many things that should be cut from the federal budget the hardest decision is where to begin.

There are so many things the federal government finances that are unconstitutional it would take a treatise to list them all.  So, instead I will just “nibble” at the edges, which in itself will save a bunch of dough.

First of all, how about abolishing a few bastions of corporate welfare?  I speak of the departments of agriculture and commerce.  In 1910, over 30 percent of Americans farmed.  Today, less than 3 percent of us till the soil, yet the Department of Agriculture’s budget has ballooned to be one of the largest in the Executive Branch at $95 billion per annum.  According to the Heritage Foundation, farm subsidies distributed by the department are meant to lessen the poverty of family farmers, but in reality the majority of payments go to big commercial farms with average yearly incomes of $200,000 and net worths of close to $2 million.   Keep in mind that these subsidies not only are a waste because they go to big agribusiness, but they are responsible for high food prices. Clearly, farm policy in America does not promote the general welfare.  Abolish the Department of Agriculture and save almost $100 billion annually.

Another corporate welfare enclave is the Department of Commerce.  At $6.5 billion a year this wouldn’t save that much but should be an easy target to unite the constitutionalist right with the socialist left.  The goal of the department is to essentially promote American business abroad.  Not just those on the right or left but all Americans should know that that is the job of corporate marketing departments.  The department is just another gross example of corporate welfare run amok.

And while we are talking gross examples of corporate welfare, there is no better example than the federal agency known as the Overseas Private Investment Corporation (OPIC).  The agency’s mission is to provide political risk insurance, loans, and loan guarantees for U.S. private capital in less developed countries.  In other words, the agency helps facilitate the transplanting of American jobs to foreign countries by giving financial aid to American business and by insuring those businesses against potential losses due to political upheavals and the like in their country of operation.    Granted the abolition of OPIC would only save tens of millions, but why should American workers pay for the exportation of their jobs overseas?  Doesn’t this also cut into valuable tax revenues? End the injustice, take the risk of doing business in a distant land off the taxpayer and place it back where it belongs on the business, abolish OPIC.

Next on the chopping block should be the boondoggles better known as the Departments of Education and Energy.  Brought into existence under Jimmy Carter in the late 70s, the Department of Education was nothing more than a gift from the president to the teacher’s union for supporting his presidential run in 1976.  Education has not improved in America since its founding, thus at a price tag of $70 billion a year abolition of the department is a no-brainer.

Likewise, the other Carter era department – Energy, should also be axed.  Its goal when it was founded in the late 1970s was to reduce American dependence on foreign oil.  It has failed miserably in that endeavor.  In the early 1970s, America imported 24 percent of Her oil.  Today She imports over 65 percent of Her oil.  By pulling the plug on Energy another $23 billion annually would be saved.

Again, because of my desire to keep this article at a reasonable length, I cannot get into all of the cuts I would propose of the unconstitutional and wasteful things the federal government spends money on.  But, I would be remiss if I didn’t include a discussion of the largest portions of the federal budget – namely Social Security/Medicare and defense.

The U.S. Government Accounting Office (GAO) in 2008 announced that because of the retiring Baby Boomer Generation unfunded future obligations for Medicare and Social Security total almost $41 trillion.  Many experts agree that to fund the programs into the future will require raising FICA tax rates enormously.  More than likely, those rates will bankrupt American companies and force many to relocate overseas.  The resulting unemployment will lower the standard of living for all Americans.  Something radical needs to be done.

In 1935, when Social Security started if you reached age 21 you could expect to live to age 65.  The retirement age for Social Security was initially set at 65.  In the last 75 years life expectancy has risen by 12 years to 77 years of age, yet the retirement age for Social Security remains at 65 years of age!  How insane is that?  In the short term to sustain those currently on the system and to save trillions the retirement age for both Social Security and Medicare should be raised to 75 years of age.  In the meantime, we should work toward transitioning to a time when socialized retirement does not exist.  Social Security has been continuously broken and reformed because it is a flawed concept.  Medicare has probably done more to raise the cost of healthcare for all Americans than any other “entitlement” program.  More than the well-being of seniors is at stake here.  The very financial solvency of the country is at stake and this affects all of us.

Lastly, the defense portion of the budget must undergo huge cuts.  Washington spends over $1 trillion annually on defense related expenditures.  We have our troops in over 150 countries.  Why is it that we have invested so much money and personnel in our security and yet still not feel safe?  It seems like the government’s national threat level is perpetually stuck at Yellow or Elevated.

Besides that, who are we competing against militarily?  We spend about six times more on defense than the next highest spending country – China.  Do we really need to spend a trillion dollars a year to defeat Al Qaeda?

The United States is in a similar position to what faced the Soviet Union in the late 1980s.  With a bankrupt economy, Soviet leaders continued to spend lavishly on its military industrial complex.  The result was the breakup of the empire.  The lesson was and is that bloated defense budgets can break the bank.  We can no longer afford to finance a worldwide empire that doesn’t even make us safe.  It is beyond the time to bring the troops home and cut the war budget by at least half.  To not do so puts our national security in greater risk than if we continue to spend trillions.

There is so much in the federal budget that can be cut that it should be relatively easy to balance the books.  At the end of the day the U.S. government must cut back drastically or face financial insolvency.   A majority of Americans realize that the solution is in cuts and not tax increases.  The problem is Americans have gotten use to feeding at the federal trough.  Big business will oppose abolishing federal departments that give them subsidies and eliminate competition.  The teachers’ unions will fight tooth and nail to preserve a department that perpetuates their failed monopoly over our education system.  The AARP will scream bloody murder about any changes to Social Security and Medicare.  And of course, defense contractors and military brass will mount a campaign of fear and hatred to protect their gravy train.  In the end, what it will come down to is the courage of our elected leaders.  Given their historic track record, it won’t be easy.

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Your Vote Didn’t Count last Tuesday

Did you really think it was worth your time to vote last Tuesday?  Oh, Republican partisans will of course say an unequivocal “yes” as their party “shellacked” the Democrats and in the process picked up several Senate seats, governors’ mansions, and control of the House of Representatives.  But in actuality within 24 hours of the Republicans coup d’état all those Tea Party voters and others who crave small government had their votes negated and their victory smashed.

How?  To begin with, South Carolina Senator and Tea Party Kingmaker Jim DeMint admitted on John King’s State of the Nation on CNN that Republicans will support raising the debt ceiling currently at $14.3 trillion, but only if massive cuts are included with the vote.  Ah, Senator, there is plenty to cut in the budget that will make raising the debt ceiling unnecessary.  How about ending our quest for World Empire by ending foreign occupations, closing down bases, and bringing our troops home?  How about abolishing the Energy, Commerce, and Education Departments for starters?  How about rescinding the balance of Obama’s “stimulus” program and ending corporate welfare as we know it?  Just these moves alone would save over a trillion dollars.  If there was ever a time for Republicans to be gutsy it is now.  They are riding a wave of voter anger unprecedented in our history.  They have a mandate from those same voters to cut, eliminate, and abolish anything and everything in the way of a balanced budget.  But within 24 hours of their mandate DeMint is already cutting deals on federal spending.

Jim DeMint aside, the biggest negation of the voters’ wishes on Tuesday came on Wednesday.  The Federal Open Market Committee (FOMC) of the Federal Reserve Bank announced that it would begin a new buying spree of between $600 and $900 billion of U.S. Treasury bonds over the next 10 months. This so-called quantitative easing is necessary according to the FOMC because, “…the pace of recovery in output and employment continues to be slow”.  Thus the Fed must step in, purchase Treasury Bonds from banks so the banks in turn can loan that liquidity to businesses to get the economy moving again.

You see Congress and the president are not the only big spenders in Washington.  The Federal Reserve also exercises the power to essentially spend our money through monetizing government debt.  Thus, on the very day voters across the country were saying no more reckless spending and voting spendthrifts out of Congress the unelected Fed decided to usurp the People’s power by deciding to spend hundreds of billions of dollars to purchase Treasury bills from member banks.

Based on past experience, here is how the Fed’s spending spree will work.  The Fed will create between $600 and $900 billion of liquidity (dollars) out of thin air.  It will then use that liquidity to buy up massive amounts of Treasury bonds from the big banks.  The banks are supposed to use the proceeds from the sales to make new loans and to get the economy moving again.  Keep in mind that what the Fed is about to do, it has already done in the not so distant past. Beginning in March of 2009 the Fed injected about $2 trillion into banks to buy up toxic assets.  Precisely at that time, the S&P 500 stock index bottomed out after falling by 57 percent from its historic high.  Since the Fed began that round of “quantitative easing” in March of 2009 the S&P has rebounded a remarkable 80 percent.  With the economy still stuck in a deep sewer there is no reasonable explanation for the sudden, renewed health of the stock market except that Wall Street invested their Fed funds in themselves instead of in Main Street.

And that is what banks are going to do this time as well.  It is bad enough that an unelected central bank has the power to print our money like crazy with no Congressional restrictions placed on it, but to give it to the big banks without any stipulations like they have to make loans or face penalties is just plain criminal.

Look, our political and financial systems are corrupt and rigged.  They make a Mafia bookmaker look honest.  Think of it like a happy love triangle between Congress, the Fed, and Wall Street.  To protect itself politically Congress has contracted out management of our money supply to the Federal Reserve.  In return, the Fed prints money out of thin air to support Congress’ deficit spending which ensures its high reelection rate.  The Fed supports big banks by loaning them our money at very low rates.  It bails them out when they don’t have enough reserves to meet obligations.  It allows fractional reserve banking whereby banks are guaranteed solvency by the Fed even though they loan out up to 90 percent of deposits on their books.  The final link in the cycle is the contributions given by Wall Street banks to members of Congress.  We’ve heard DeMint, McConnell, Cantor, Boehner and other Republicans decry the deficit spending of Democrats but when have we ever heard them decry the Federal Reserve?  Never.  There is a good reason for this:  the Fed is their meal ticket to reelection through the financing of deficit spending and campaign kickbacks from Wall Street.

This whole rigged system has been destroying our standard of living for decades.  By adding more dollars to a low producing economy the value of our currency will continue to deteriorate and prices will spike.  Previous “stimulus” spending of Congress and quantitative easing by the Fed has already caused commodity prices to rise hugely in the last year:  Agricultural Raw Materials up 24%, Industrial Inputs Index up 25%, Metals Price Index up 26%, Coffee up 45%, Barley up 32%, Oranges up 35%, Beef up 23%, Pork up 68%, Salmon up 30%, Sugar up 24%, Wool up 20%, Cotton up 40%, and Rubber: 62%.  You get the idea.  Imagine price increases after this next round of easing.  But don’t worry, because the Fed’s member banks will know when to pull out of the stock market before it busts.

At the end of the day, if you voted for smaller, less expensive government last Tuesday your vote was negated by the unelected economic central planners at the Federal Reserve.  It took the FOMC just 48 hours in closed door meetings to undo what candidates across the country spent billions of dollars on in the last year to achieve on Election Day.  What a pity since you thought your vote was really worth your time.

Article first published as Your Vote Didn’t Count Last Tuesday on Blogcritics.

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As Usual, Campaign Full of Hype, but Short on Details

Given all the hype about this year’s midterm elections, you’d think that the results are actually going to make a difference in the lives of Americans.  Oh, we’ve all heard the hyperbole.  Both sides are talking about how this is an election for “the soul of America”.  Democrats are warning Americans that we can’t go back to the failed policies of the Bush Administration by electing Republicans to Congress.  Republicans, bolstered by the Tea Partiers, are screaming bloody murder about the president’s socialist policies and his reckless spending.  It seems like both sides have wasted a huge amount of time and money with these worthless arguments when they should have been talking details about some issues that will really affect Americans.

For starters, let’s talk about the War on Drugs?  Since its inception, government at all levels has spent an enormous amount of money on drug eradication, policing, prosecutions, and imprisonment.  Within the last year we passed the milestone of having one in every one-hundred Americans behind bars.  Many are incarcerated for non-violent drug offenses.  But, besides the cost of this failed war it has also caused a huge problem on our southern border – incredible violence.  Actually there is a civil war going on in Mexico that is spilling over into Arizona, New Mexico, and Texas.  It’s all fueled by the enormous profits reaped from illegal drugs.  The “rebels” in Mexico have turned huge profits into murderous rampages of police, judges, and mayors in Mexico and Americans in Arizona and Texas.  With all the carnage caused by the War on Drugs there has been hardly any debate amongst the candidates about what should be done.  I am hard pressed to come up with a candidate who has called for an end to the madness by decriminalizing drugs and treating the situation like the pubic heath problem that it is.  It is a disgrace that an issue so important to the safety of Americans, our border integrity and fiscal sanity has been totally ignored.

As much as Tea Partiers like to denounce federal spending they have not made eliminating wasteful federal departments a part of their platform.  Take the Department of Energy for instance.  Its goal when it was founded in the late 1970s was to reduce American dependence on foreign oil.  It has failed miserably in that endeavor.  In the early 1970s, America imported 24 percent of Her oil.  Today She imports over 65 percent of Her oil.  With a $23 billion annual budget, should we continue to subsidize this failure?  Unfortunately, no candidates addressed this question during the campaign.

Naturally, politicians want to win elections, so any discussion about making hard choices with regard to Social Security and Medicare was off the table during the campaign.  Unfortunately, with millions of baby boomers hitting retirement these two “entitlement” programs more than anything else will break the federal budget. The U.S. Government Accounting Office (GAO) in 2008 announced that unfunded obligations for Medicare and Social Security totaled almost $41 trillion.  Yet, very little discussion was had during the campaign about raising the retirement age or privatizing the system.  How can an issue with such huge implications for the future of the country get so little attention?

Last, but certainly not least, little attention has been given in this campaign to the institution most responsible for the financial crisis, the institution which controls the supply of our currency yet operates in absolute secrecy, and the institution which has and is about to again give billions of dollars in backdoor bailout funds to shyster banks.  I am of course referring to the Federal Reserve Bank.  Ben Bernanke and his Federal Open Market Committee are arguably the most powerful economic policymakers in the world and as recently as a couple of weeks ago Fed policymakers were expressing their belief that inflation was “too low”.  In other words, the prices you pay for goods and services are not high enough to spur economic recovery.  Now, this rhetoric would be tolerable if it was simply professorial theorizing, but these same policymakers actually have the power to print more dollars and make prices go up even further.  What’s so amazing is that Tea Party candidates have made reckless government spending their mantra issue, yet almost none have lambasted the Fed for its role in monetizing the debt.

Chances are good that the midterm elections of 2010 will result in a political shift of power in the Congress.  So, what?  Even in their “Pledge to America” published in September the Republicans committed to cut spending by only $100 billion.  This is loose change compared to the enormous debt we are facing down the road.  Since they love war there is no chance they will end the violence caused by the War on Drugs.  Because they lack courage, Social Security and Medicare will doom us to financial ruin.  And the Federal Reserve will remain safe under Republican rule in Congress since it is the mechanism which makes all the reckless spending possible.  After Republicans screw up the next two years, maybe then Americans will be ready to vote for third parties.  Hopefully, it won’t be too late.

Kenn Jacobine teaches internationally and maintains a summer residence in North Carolina

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