Archive for July, 2011

Obama Raises More Questions than Answers

It seems like every time I listen to a politician talk I always come away with more questions than answers.  Take President Obama’s nationally televised speech this week on the debt ceiling crisis.  The President spoke to the nation for about 15 minutes but I still don’t have a clue as to what he is proposing to do about our debt crisis.  In fact, all I know is that he wants a “balanced” approach to meeting our fiscal woes.  Clearly, his pollsters have indicated to him that independent voters crave “balanced” approaches to problems – but I digress.  What follows are several questions I had after listening to the President.

First and foremost, Obama spent a good amount of time lamenting the deficiencies of the tax code.  He talked about credits, subsidies, and loopholes that allow the very rich to avoid paying their “fair” share in taxes.  Now, there is no doubt that the income tax code is in need of a total revamping, but the question is why did Obama wait for a crisis to take an inflexible stand on raising taxes?  He has been president for two and one-half years and he was a senator for three years before that.  Why didn’t he propose changes to the tax code in all that time that would have closed loopholes and eliminated special breaks for politically connected hot shots?  Could it be this is all just political rhetoric to arouse his base going into an election year?

Speaking of the rich paying their “fair” share of taxes, naturally the President harped on this class warfare theme repeatedly.  Fair is a very subjective word.  Chances are good that what the President considers fair I don’t.  By “fair” does Obama believe the rich should pay the same percent of income in taxes as everybody else?  Or does he believe they should pay an amount equivalent to the amount of government services they use?  In either case they don’t.  I did a little research and found that the rich actually pay most of the federal income taxes in America.  For instance, the richest 10 percent of taxpayers pay 70 percent of all taxes.  Could it be I misunderstood the President?  Perhaps he meant that the rich already pay more than their “fair” share of taxes and deserve a tax cut?

But I suppose the position of Obama’s that I can’t understand the most is his insistence that without raising the debt limit the U.S. Government would be in default.  According to the Bipartisan Policy Center there would be enough revenue per month to pay the interest on the debt, social security, Medicare and Medicaid and unemployment benefits.  If we ended the wars we could use the $31.7 billion earmarked for the military industrial complex (defense venders) for military pay, veteran’s benefits, IRS refunds, and welfare.  Under this scenario, our debt obligations are met thus avoiding default, vital services are provided to the American people, and only the massive bureaucracy which has become Washington will shut down.  I think this sounds like a great deal.

At the end of the day, politicians are puzzling and the current occupant of the White House is no exception.  They talk and talk and talk and produce more questions than answers.  It is amazing that with all the talk in Washington over the debt ceiling no one has mentioned how presidents and Congresses for decades have been ignoring what is already the law of the land.  Section 7 of Public Law 95-435 passed by the 95th Congress and signed into law by President Carter requires a federal balanced budget.  Perhaps if this question were asked of Washington a long time ago we wouldn’t be in the financial mess we find ourselves in today.

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

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We Can’t Afford to Raise the Debt Ceiling

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.”

Senator Barack Obama

Senate Floor Speech on Public Debt

March 16, 2006

Senator Obama ended his speech with a profound yet often neglected fact, “Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities.”  He went on to vote against raising the debt ceiling in 2006.

What a shame Barack Obama has such a short memory.  If only he would have paid heed to his own words once he became president in 2008 we wouldn’t be about $3 trillion more in debt and in the worst fiscal crisis the world has ever seen.  But, of course, the President and his supporters claim that he had no choice but to spend us even farther into oblivion.  After all, he inherited an awful economy from his predecessor.  The story goes that his spendthrift policies are what saved us from an economic meltdown.  How they know that exactly is not clear?

What is known is that Obama’s policies have not solved our economic woes.  In fact things have become far worse under his leadership.  The two statistics that the ordinary American cares most about are unemployment and price inflation.  Both have headed in the wrong direction since Obama assumed the reins of power.  The government’s unemployment figure stood at 7.8 percent the month Obama became president.  Today, 9.2 percent of our workforce is without work.  In spite of his “stimulus” spending the unemployment rate has increased 18 percent!

Naturally, with all the new spending and monetized debt over the last two and one-half years, it is reasonable to expect that goods priced in dollars would see an increase.  As I have predicted many times on this post, they have.  If we just use the government’s CPI numbers it is easy to see that prices under Obama’s program have taken off. When Obama took office the government’s CPI number stood at 0.0 percent.  The number released for June 2011 stood at 3.6 percent.  Additionally, gas prices have doubled under Obama and food prices are soaring.

If one were to calculate unemployment and price inflation like they were prior to 1980, we are clearly in a depression.  Bread lines have simply been replaced by food stamps.

The point is that Obama’s polices have been a dismal failure.  The current issue before Congress is whether to raise the current debt ceiling.  It is interesting to note that Obama and his ilk will only talk about what alleged calamities will befall us if the debt ceiling is not raised.  Seniors, soldiers, and the disabled will be relegated to the streets begging for change to support their families they tell us.  No mention is ever made of what calamities will befall us if the debt ceiling is raised and the reckless spending is allowed to continue.  Right now, 43 cents of every dollar Washington spends is borrowed.  Over the next decade, interest payments on that debt assuming interest rates rise gradually will total $5.5 trillion.  That is revenue that cannot be used to invest in America – roads, schools, jobs…  If the current debt ceiling is raised for further deficit spending a greater percentage of each future dollar will not be available for American investment or as Senator Obama put it so aptly in 2006, “Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities.”

The President and Congress have tried to spend our way out of economic crisis.  Predictably, it has failed and even made things worse.  Raising the debt ceiling further will only exacerbate the crisis.  To avoid a “leadership failure” Obama should do whatever it takes to cut trillions in spending.  It is the only way to get “our Government’s reckless fiscal policies” under control and ensure a viable economic future for all Americans.

Article first published as We Can’t Afford to Raise the Debt Ceiling on Blogcritics.

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In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks. ~ Spencer Bachus, U. S. House of Representatives

The death-knell of the republic had run as soon as the active power became lodged in the hands of those who sought, not to do justice to all citizens, rich and poor alike, but to stand for one special class and for its interests as opposed to the interests of others. ~ Theodore Roosevelt

Today we want to consider the idea of state capture. What does this concept mean, and why should we care about it? State capture occurs when one class or group or interest asserts enough control over the state, that the state acts on behalf of that group rather than for the polity as a whole. Given the mortal threat state capture poses to a democratic republic, we want to recognize it when it occurs, understand its consequences, and know how to respond to it.

When the founders of our republic praised the checks and balances in our Constitution, they pointed not only to the branches of government, but also to constitutional balances that would prevent one faction, among competing interests, from obtaining too much influence. Historically, democratic republics quickly fail if one powerful interest manages to gain control of some significant portion of the state’s organs of power. These organs include the treasury, the army or the military more generally, the judiciary, the executive, or even basic administrative functions. Once the external faction has control, it is hard to dislodge.

Democratic checks on state power quickly disappear after state capture occurs. In fact, state capture indicates that the equipoise essential to pluralist democracy has already disappeared. If checks and balances among groups outside as well as inside the state remain effective, state capture cannot occur. When one group captures the state, or a portion of it, democratic controls and processes that compel a state to act in the interest of all groups – or at least to balance the interests of all groups – suffer a serious setback.

Why should we even think about state capture in the United States? Don’t we have a Constitution where that kind of thing cannot happen? Think again. State capture occurred in the United States in 2008, when large financial firms used taxpayers’ assets to ward off bankruptcy. The firms committed fraud, lost trillions as a result of their activities, and drew on public resources to protect themselves from ruin.

During the collapse of 2008, we heard phrases like moral hazard, too big to fail, and Washington looks out for Wall Street but not for Main Street. If you hear these phrases often enough, they begin to obscure what actually happened. State capture actually happened. A financial panic unfolded, and financial firms responsible for the panic took what they needed from us to protect themselves. The firms that practiced fraud could not have rescued themselves had they not asserted sufficient control over the United States Treasury and the assets in it.

Now we come to the last question: how should democratic citizens respond to state capture? If they respond with confused apathy, the new status quo experiences no challenge. If they respond with conventional regulations and appeals for stricter oversight, they are unlikely ever to redress the balance of power that went awry when the state suffered its initial defeat. To redress the balance of power – to assure restoration of democratic checks on the state and the entities that captured it – citizens must replace the government that allowed itself to be captured in the first place.

That is not easy. No group relinquishes power voluntarily. No group, having captured a key arm of the state’s apparatus, will give up its advantages without resistance. Similarly the state, even if it knows it suffered a defeat, rationalizes the errors that led to its ignominy. It is compromised and cannot self-correct. To return to democratic control, the state must have new leadership. To give the state new leadership, citizens must replace both leaders and the institutions they lead. History does not hold a promising outlook for citizens who try to do less.

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Obama is Wrong about Medical Marijuana as Well

Presidents are supposed to be compassionate.  President Obama is showing his true colors as his Department of Justice (DOJ) sent out a memo last week on medical marijuana use.  The memo directed the head of the Drug Enforcement Administration and U.S. Attorneys’ offices nationwide to crack down on medical marijuana shops by making the investigation and prosecution thereof a top priority.  Even though the (DOJ) denies it, this newest memo reverses the Administration’s previous policy on medical marijuana use.  Under the so-called “Ogden memo of 2009, Obama gave habitual pain sufferers and the terminally ill “hope”  by making enforcement of the Controlled Substances Act (CSA) with regards to medical marijuana use a low priority.  His election cycle about face is not compassionate as it will bring great harm to many who rely on cannabis for relief.

It has been determined that medical pot is effective in treating the symptoms of cancer, AIDS, multiple sclerosis, glaucoma, and epilepsy.  As far back as 1975, the New England Journal of Medicine published a study that showed oral ingestion of marijuana is effective in relieving nausea and vomiting caused by chemotherapy.  Other benefits include the lessening of depression caused by cancer and an increase in appetite which allows cancer patients to live better more comfortable lives.

But the Administration is bent on denying this needed drug to patients.  In last week’s DOJ memo, the reason given for increased enforcement of the CSA was that, “Congress has determined that marijuana is a dangerous drug and that the illegal distribution and sale of marijuana is a serious crime that provides a significant source of revenue to large scale criminal enterprises, gangs, and cartels.”  Well, in the first place, marijuana’s danger is surely negated by the medical benefits of the substance.  In the second place, the reason criminal gangs and cartels are making so much money on pot is precisely because Congress has made it illegal!  Is there no sanity in Washington?

In the final analysis this is not the federal government’s issue to legislate.  Article 1 Section 8 of the Constitution does not give Congress the authority to regulate what we ingest into our bodies.  The 10th Amendment reserves that power to the states.  Referring back to the memo, it states that individuals, who cultivate, sell or distribute marijuana “…are subject to federal enforcement action, including potential prosecution. State laws or local ordinances are not a defense to civil or criminal enforcement of federal law with respect to such conduct, including enforcement of the CSA.”  Nonsense, just because Congress doesn’t consult the Constitution before enacting legislation doesn’t mean what it says goes.  It is proper and necessary for the states to interpret the Constitution and in this case take a stand against the federal government for violating their sovereignty over substance policy by nullifying the CSA.

Of course the President could nullify the CSA as well in much the same way he has stated that he will rightly nullify the Defense of Marriage Act.  He simply could refuse to enforce the law.  But, he answered that question in the memo released by his DOJ last week.  Apparently, political points are more important to the President than relief for the suffering and the supremacy of the Constitution.

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

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