Tax Reform – The Old Guy Phd

Obama-A Socialist America?

G’Day!

I agree with Dr. Charles Krauthammer, who indicated on National TV after this week’s State of the Union address, that President Obama’s intention is to transform America into a European-style Socialist State. Many of my articles over the last two years have suggested that Obama is a “Neo-socialist” – a person who believes in government control over all aspects of the economy, including wealth redistribution, regulations, “Executive Orders,” and central planning. (Neo-socialism is different from traditional ‘Socialism,” which is based on government “Ownership” of businesses and industries.) Neo-socialists want political and economic central control over the country but not the responsibility of ownership or consequences. Unfortunately, both socialism and neo-socialism are equally destructive to economic growth and individual liberties and has historically failed or is failing in nations that have pursued it. Is this the future you want for America?

Based on the President’s “Inaugural Speech” and the “State of the Union Address”, it appears evident that Obama and the Democrats have no real intention of reducing government spending, reforming entitlements, or even seriously addressing our federal deficit and debt crises. However, they are intent on more spending, more taxes, more regulations, more debt, and less freedom for the American people. Resuming the pattern of his first term, Obama also seems to be more interested in fixing “Blame” on everyone but himself (especially Republicans) for everything wrong, when he should be exercising bipartisan leadership to resolve our problems – especially the ones he has created or aggravated. In my opinion Obama’s idea of a “Grand Bargain” is to raise taxes by every means possible, including class warfare, to fund “Bigger Government,” “Entitlements,” “Green Energy,” “Climate Control,” “Wealth Redistribution” and any other project his neo-socialist ideology deems desirable. I believe America’s best days could be ahead but “Obammunism” is not the way to solve problems and is not good for jobs, the economy, the Middle Class, or the future of our great country. We need a President who is willing to represent ALL the people fairly, exercise impartial leadership, and take responsibility for the consequences of his actions and policies.

So how has Obama really performed so far? During his first Presidential Campaign, he promised “Change” to transform our government. Unfortunately, he has been remarkably successful in moving America in the direction of European-style socialism and a culture of dependency. In only four years the size of government has increased from 20% of GDP to 25% of GDP. Our annual Federal Spending has increased from $2.9 trillion to $3.8 trillion (an increase of over 30%) and is expected to continue for Obama’s second term. Our annual Federal Deficit has increased from $0.5 trillion to over $1 trillion (an increase of 50%). Our National Debt has increased from $10 trillion to over $16 trillion (a 60% increase and now more than 100% of GDP). In the first two years Democrats passed massive new legislation for government-controlled healthcare, sweeping regulations over the financial industry, and the use of “Executive Orders” by the EPA, the Department of Energy, and the unconstitutional appointments to the NLRB to regulate personal and business use of private property and erode personal freedoms. The Democrat controlled Senate has not passed a budget in nearly four years. Welfare dependency has increased significantly and forced wealth redistribution through higher taxes on the “Rich” was recently enacted (and Obama wants more). The economic results have been the worst recovery in decades and a decline in GDP in the 4th Quarter of 2012. Clearly, Obama has delivered on his promise to “Change” our country. Are these the “Changes” for which you voted? Do you believe continuing these policies will solve our problems and advance the future for our children?

In my opinion it is not too late to correct this adverse trend toward national decline and save our nation. America can resolve its fiscal and debt crisis and restore our country to a solid foundation of responsible government and future prosperity. However, this can only occur if we return to the principles that have made America the greatest and most exceptional country in the world. These principles are: Constitutionally protected individual liberties, free markets, sound fiscal and monetary policies, economic growth, and Constitutionally limited government. The “Obammunists” are rapidly leading us away from our founding principles and toward a future of economic stagnation, shared poverty, limited personal freedom, and dependence on government for much of our survival. Under Obama, America is quickly declining into a centrally controlled overregulated neo-socialist state with increasingly limited opportunities for aspiring individuals and companies to succeed.

So what should we do? We have a republic with democratically elected representatives. It is up to us to determine and vote for the representatives that place the future of America before politics and who will stand up for the best interests of the people and the nation. The first and most vital action we can take is to become informed about the issues and vote out the “Obammunists” in the 2014 election. This one single accomplishment will at least stop the decay and give us the opportunity to correct the damage being done by Obama and the Democrats. Currently, we should demand our President and Congress concentrate on resolving our fiscal/debt crisis, get our economy back on track, and create productive private sector jobs. As I outlined in many of my 45 previous articles, this can be done and we need to do it. The American People should not be the servants of the government. Government should be the servant of the people.

The Old Guy PhD

It’s the Entitlements, Stupid!

G’Day!

With apologies to President Clinton for modifying his famous phrase, this time “It’s the Entitlements, Stupid!” Virtually everyone with a functioning brain knows that our exploding National Debt and $1 trillion annual Federal Deficits are unsustainable. Without a solution to this government-imposed national crisis, the American economy will continue to stagnate, unemployment will be high, job opportunities low, and the country may ultimately decline into bankruptcy. Also, anyone with a functioning brain knows that the solution to this problem must involve compromise and agreement among the three (3) fundamental contributors to the problem; “Entitlements,” “Discretionary Spending,” and “Tax Revenues.” By listening to the Media, President Obama, and the Democrats, you would conclude that the sole cause of our country’s fiscal and debt crisis is insufficient “Taxes on Rich.” Nothing could be further from the truth. This is like trying to stand on a 3-legged stool with two of the legs removed.

Let’s analyze President Obama’s only publicly proposed solution, “Tax the Rich.” Our annual federal deficit is currently $1.3 trillion. Obama’s proposal with possible outcomes is presented below:

Obama “Tax the Rich” Proposal	Possible Annual Revenue (billions)	% Deficit Solved
Raise top 2 rates on Incomes above $200-250,000 from 33 to 35% & 36 to 39.6%	$44.2	3.7%
Raise Dividend tax from 15% to Ordinary Income Rate	$20.6	1.7%
Raise Capital Gains tax fro 15% to 20%	$3.6	0.3%
Reinstate the Pease limit on Itemized Deduction	$12.3	1.0%
Reinstate the Personal Exemption Phase-out (PEP)	$4.2	0.4%
Subtotal Tax increase for Upper-income	$84.9	7.1%
Restore Estate & Gift Tax to 2009 levels	$11.9	1.0%
Total Government Tax Revenue	$96.8	8.1%

The above result is a static analysis and assumes no income or behavioral change by taxpayers (highly unlikely). In total, Obama’s “Tax the Rich” solution would potentially generate $96.8 billion per year and solve a mere 8.1% of our annual fiscal deficit problem. Since neither Obama nor the Democrat leaders have publicly suggested any change in either “Discretionary Spending” or “Entitlements,” this would leave a continuing federal deficit of approximately $1 trillion per year or 92% of the fiscal problem unresolved. (Interestingly, a $1 trillion annual deficit is the amount in Obama’s currently proposed budget for the next four (4) years.) This is blind insanity and “Ostrich Management.”

“Entitlement” reform for Medicare, Medicaid, and Social Security combined with growth oriented “Tax Reform” and “Discretionary Spending” cuts are the only ways we can avoid the trap that Greece and other European socialist countries have created for themselves. By insisting ONLY on “Taxing the Rich” with no consideration for “Discretionary Spending” cuts or “Entitlement” reform, Obama appears to be more interested in political ideology than in solving our nation’s economic problems. Without correction, we will create a European slow growth dependent society for America and potentially financial collapse. We must demand a better and more comprehensive performance from our government. I believe the Republicans are correct in demanding that any agreement on additional tax revenues must be accompanied by significant cuts in federal spending.

Let’s review some fundamental facts about our unsustainable National Debt and continuing Fiscal Deficits. The table below summarizes the major items in our national economy and Obama’s 2012 enacted budget.

Item	2012 Budget Amount (Billions)
Total Current National Debt	$16,200
Estimated Gross Domestic Product (GDP)	$15,797
Total Federal Government Receipts (Tax, etc.)	$2,469
Total Federal Government Outlays	$3,796
Annual Federal Surplus (Deficit)	($1,327)
Total Mandatory “Entitlement” Outlays	$2,252
Health (Medicaid, etc.)	$361
Medicare	$484
Social Security	$818
Income Security (Food Stamps, Unemployment, Housing, etc.)	$580
Net Interest on Debt	$225
Total “Discretionary” Outlays	$1338
National Defense	$702
Education	$79

Federal outlays in 2012 are expected to be $3.8 trillion (24% of GDP) with a $1.3 trillion deficit after government revenues of $2.5 trillion. Mandatory “Entitlements” total $2.3 trillion, (60% of federal outlays and approximately 15% of GDP), AND are growing at an alarming and unsustainable rate. Discretionary federal outlays (including National Defense) are $1.3 trillion. Simple math indicates that to balance the budget without “Entitlement” reform, the entire Federal Government “Discretionary Spending” (including National Defense) must be eliminated or tax revenues increased across-the-board by approximately 50% to eliminate the deficit. Neither of these alternatives individually or in combination is feasible or desirable. Currently the largest federal “Entitlement” outlays are: Health (Medicaid) & Medicare $845 billion, Social Security $818 billion, Income Security $580 billion, and Interest on Debt $225 billion. (Please note that “Interest on Debt” is unusually small based on an artificially low interest rate (approximately 1-1.5%) resulting from global economic problems and monetary support by the FRS. When interest rates return to normal levels the $225 billion could easily double or more in a very short period of time. Remember, interest rates were in the double digits in the late 1970s and early 1980s. Just look at the recent government borrowing rates in the troubled countries in Europe.)

While the mandatory “Entitlement” programs have good intent and are desirable, they are not sustainable and are inconsistent with economic growth policies. “Entitlements” are where the big federal outlays reside and must be part of a major solution to our fiscal and debt crisis. “Entitlement” reform is the most significant fiscal spending problem we face. Fortunately, we have excellent proposals from Conservatives and bipartisan groups available on how to fix “Entitlements” (see Bowles-Simpson, “The Moment of Truth,” Domenici-Rivlin, “Restoring America’s Future,” and The Heritage Foundation, “Saving the American Dream”). It would be helpful if Obama and the Democrats would acknowledge these or offer proposals of their own. It won’t be easy but as I said in the title, “It’s the Entitlements, Stupid!”

Let’s get to work and save our country!

The Old Guy PhD

Debate Round Two – Romney Wins with Truth & the Economy

G’Day!

First, hooray for Ryan in the Vice Presidential Debate! He withstood a frontal attack by the Democrats’ chosen “Pit Bull”, Joe Biden and Won! Biden inappropriately and disrespectfully interrupted, laughed, and expressed contempt while Ryan was discussing the serious issues facing America. Biden’s rude and comic behavior illustrated his and Obama’s disdain for the problems facing our country. Also, it is important to note that Biden misrepresented (or lied?) on major issues approximately five times in the course of the debate. (Remember, Vice President Biden is only a heartbeat from the Presidency – is he your choice as a backup?)

Congratulations to Romney for beating Obama again (& biased liberal moderator, Candy Crowley) in the second Presidential Debate with honesty, strength, new ideas, and an unbiased picture of the declining American economy. Equally important, Romney has new ideas and reiterated his 5-Part Plan to correct the Obama economic malaise – Energy Independence, Free Trade, a Balanced Budget, Improved Education, and Tax Reform to support Small Businesses. For his part, Obama merely offered a rehash of his failed policies of the last 3 ½ years, a belief that taxing the “rich” will solve the debt crisis and create wealth and prosperity, and repeated his “bumper sticker” slogans blaming everyone but himself. Obama says that the Republicans want to return us to the failed policies of past. Does he mean free market capitalism, personal freedom, and limited government? Or does he mean the failed policies of socialism, communism, and wealth redistribution, which have historically failed and are currently failing in Europe?

Romney also continues to win women voters with his focus on fairness, jobs, the economy, and bringing down the cost and improving choices in healthcare. Obama appears to believe that the important women’s healthcare issues are taxpayer funded abortions and birth control. If misinformation (deliberate lies?) and character assassination plus unsustainable deficits and potential national economic disaster are appealing to American voters, Obama will win in a landslide. Obama, Biden, and the Democrats have degenerated into employing the desperation tactics used by losers with no rational alternatives – they blame others for the problems; attack, ridicule, and misrepresent their opponents positions; attempt to change the subject; and accuse their opponents of lying! How low can they go? Fortunately, I have faith in the intelligence of the majority of Americans to think for themselves and see through the misinformation and character assassination techniques being used by Obama, the Democrats, and supported by the Liberal Media.

This election is a clear choice between individual freedoms, high growth free market capitalism, fiscally responsible limited government, and saving “The American Dream” vs. government-restricted personal and property rights, a slow growth government controlled economy, irresponsible and unsustainable growth in government, entitlements, and our National Debt, and destroying “The American Dream”. I sincerely believe that, if Obama and Biden are reelected, we are at best facing European style socialism and dependency, increasing taxes for ALL who pay them, and continued economic decline. At worse, we could face exploding National Debt and ultimately national financial collapse. Be aware and vote accordingly!

Think and remember that the freedoms, opportunities, and economic growth we have enjoyed for over 200 years were the result of hundreds of thousands of loyal and dedicated Americans who unselfishly fought and died in many wars to create and protect them. These brave men and women unselfishly served to protect our freedoms and to promote freedom and democracy not only at home but also throughout the world. Obama is deliberately or accidentally undermining and eroding these hard-won individual freedoms and our capitalist economy in order to bring centrally controlled wealth redistributed “fairness” through “Neo-socialism”. Under neo-socialism the government does not own businesses, it forces them through regulations and rules to conform to the wishes of appointed (not elected) central administrators. (Think of the Environmental Protection Agency (EPA), the Department of Energy (DOE), Obamacare “Death Panels”, the Dodd-Frank “Consumer Financial Protection Bureau” and “Financial Stability Oversight Council”, etc.).

As I have said before, the growth of Western Civilization and especially the United States was fuelled by the expansion of individual liberties, property rights, and a free market capitalist society. Our nation was established on the fundamental principle that government is the servant of the people, not that people are servants of government. It’s time to take back our country and return to the individual liberties, free markets, economic growth, and limited government we have long enjoyed. Vote in November!

The Old Guy PhD

The Presidential Debates – Romney Wins Round One!

G’Day!

Finally the American people were able to see both the real Romney and the real Obama on the same stage, at the same time, unfiltered by spokespersons or the biased Liberal Media. The debate was informative and enlightening and a huge victory for Presidential Candidate Romney.

Romney was enthusiastic and passionate, decisive, well prepared, well organized, and armed with better specifics of both his own proposals and those of Obama. Romney was more confident and professional in his delivery, firm but friendly in responding to the questions of the moderator, Jim Lehrer, and those of Obama, and quick to stand up for his principles and to correct the misinformation presented by the President. Romney stood solidly in favor the basic tenets established by our Founding Fathers in The Declaration of Independence, The Constitution, and The Bill of Rights. The most significant of which is a government limited to protecting national security, individual freedoms, private property rights, free markets, and providing fair and impartial justice. In his debate remarks Romney laid out a five part path to future growth and prosperity: Energy Independence, Free Trade, a Balanced Budget, Improved Education, and Tax Reform. I’m in – are you?

On the other hand, Obama was not well prepared, poorly organized (even rambling at times), and appeared uncomfortable in the setting and especially with Romney’s challenges and corrections of his misinformation. He was lackluster, hesitant, and vague in his presentation, repeatedly relying on the familiar “bumper sticker” slogans used during his campaign – “fair shot, fair share, same rules”, “failed policies of the past”, “saved us from the biggest recession since the Great Depression”, etc. How many times do we have to listen to this misinformation? During the debate President Obama looked bored, did not seem to want to be there, and became increasingly uneasy. Obama has not been seriously challenged since the primary against Hillary Clinton and even then the Liberal Press “had his back” as they have persisted in doing since his election. When everyone around you, including most of the Press, fawns over your very presence and you win the Nobel Peace Prize for actually doing nothing other than being elected, it is difficult, especially without a “teleprompter” or agents to spin the issues on your behalf, to be publicly challenged by an opponent who is equally or better educated, has far more experience, and has high religious and moral standards. It makes you wonder just how capable Obama is in serious negotiations with other world leaders? Obama did make it clear again that he believes Big Government, higher taxes, more regulations, less personal freedoms, and more spending are the answer to our economic, fiscal, and debt problems. Do you?

As stated in my last article, “The November Election-A National Intelligence Test for America!”, this election IS the clearest choice between two different visions for America: sound fiscal policy vs. unsustainable fiscal policy, less government vs. more government, more individual and business freedom vs. less individual and business freedom, lower taxes vs. higher taxes, free market capitalism vs. centrally controlled neo-socialism, stronger national defense vs. weaker national defense, private doctor-based healthcare vs. central government mandated healthcare, strong foreign policy vs. weak and apologetic foreign policy, and, perhaps most importantly, more support for The Constitution vs. less support for The Constitution. These are the real issues from the debate and which we will be voting for or against in November. Do not make the mistake of letting Obama’s campaign rhetoric and a prejudiced Liberal Media systematically brainwash and deceive you into failing to think for yourself and to vote for what is right for our county.

As I have stated in previous articles, our nation was established on the fundamental principle that government is the servant of the people, not vice versa. It’s time to take back our country. Vote in November!

The Old Guy PhD

Obammunism – What is “Fair”?

G’Day!

Everyone believes in “Fairness” but what is it? Is “Fairness” equal opportunity to succeed based on your own efforts and decisions, free of government intervention? Or, is “Fairness” government dictated equal sharing of the success of others independent of personal effort and decisions? Consider this, who determines “Fair Share”? Under Capitalism, “Fair Share” is objectively determined by the choices of free people in a free market. Under “Obammunism”, political bureaucrats subjectively and arbitrarily determine “Fair Share” and impose it on the people. Regarding tax alone, what is to protect you from the “Bureaucratic Elite” changing the wealth threshold from $1 million, to $250,000, to $100,000, to $75,000 or lower? If you support Obama’s policies, nothing can protect you from the Government arbitrarily changing “Fair Share” to adversely penalize more and more successful people. If you work hard and succeed in improving yourself and your family, what is to prevent the government from penalizing you for becoming “Rich”? Under Obama, “Fair Share” cannot be satisfied until everyone is economically equal. This is not “The American Dream”.

To our Founding Fathers “Fairness” is our personal “Entitlement” to national security, individual freedom, and free market capitalism with limited fiscally-sound government based on equality of opportunities and private property rights. To President Obama and the Democrats it is “Obammunism”, which is based on the government’s “Entitlement” to regulate and control the American people and businesses to accomplish subjectively determined income and wealth equality. “Obammunism” is achieved through higher taxes, bigger government, forced income and wealth redistribution, expanded welfare dependency, and unfunded entitlements to an unnecessary and undeserved portion of the population. It further requires excessive environmental restrictions on the use of private property, regulations and controls over selected industries, and use of taxpayer funds in the arbitrary selection of industrial “winners & losers”. So far Obama’s big government approach to economic equality has resulted in slow economic growth, a net loss of approximately 4 million jobs, and an energy policy that has killed jobs and leaves American security more dependent on imports of foreign oil. “Obammunism” has also resulted in a 60% increase in our National Debt (from ~$10 trillion to ~$16 trillion) and a huge fiscally unsustainable federal deficit that has exceeded $1.3 trillion in every year of Obama’s Presidency. Erskine Bowles of the Bowles-Simpson Debt Reduction Commission stated earlier this month on the subject of our National Debt, “It is like a cancer. Over time it will destroy the country from within.” Alan Simpson simply referred to it as, “Madness”.

The founders of our great country also believed in equality, the equality of opportunity implemented through personal freedoms, private property rights, and free markets. They believed in minimal government and established a Constitution and subsequent Bill of Rights to guarantee and protect the individual liberties of all citizens from the oppressive policies of the foreign governments from which our ancestors fled in search of a better life. Is it moral or ethical or “Fair” for the government in a land of equal opportunity to engage in wealth redistribution from those who worked hard, made good decisions, and earned their success to those who did not? While nearly everyone believes and supports a reasonable social safety net for the truly needy, the trends since the Great Depression have increasingly been to increase welfare and entitlements far beyond reasonableness and absolutely beyond sustainability.

So what do I believe is “Fair”? What “Entitlements” should we expect from our government? First and foremost, I believe that we are entitled to a President who actually believes and supports the oath of office he declared at his inauguration, which is: “I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States.”

I believe that we are entitled to a limited government that is business friendly and supports and protects our individual freedoms, free markets, private property rights, sound fiscal & monetary policy, economic growth, and the security and defense of our great nation.

I believe that we are entitled to a limited federal government that regulates and enforces only those activities that cannot be controlled by citizens through either individual freedom of choice under free market capitalism or by State and local governments.

I believe that, except for essential government services, we are entitled to keep what we earn and that wealth redistribution for the goal of economic equality, excessive welfare, and unsustainable entitlements is “Unfair”, unethical, and destructive to economic growth. I further believe that tax reform is essential. (See “Fiscal & Debt Crises – Tax Reform Essential!”)

I believe that, as the Founding Fathers intended, we are entitled to a government that protects our right to use our private property as we wish as long as it does not endanger or encroach on the value of our neighbor’s property AND that we should have the right to use our private property free of unnecessary environmental control and regulation by administrators.

Finally, I believe we are entitled to a President that supports and protects the rights of ALL American citizens and does not promote policies intended to enhance reelection prospects by dividing the country by income, gender, ethnicity, religion, political party, sexual orientation, or race.

Under Obama, our exceptional nation is on the precipice of a fiscal catastrophe and terminal decline in the world. It is not yet too late to correct the Obama’s neo-socialist trend for more taxes, more spending, bigger government, slower economic growth, and eventual collapse under a mountain of unsustainable debt. Throughout history, no nation has been able to sustain excessive spending by taxing, borrowing or “printing money” as a way out of fiscal insanity. All have failed. It is time for America to wake up and realize where this “Amateur” President is taking our country. Study the issues and vote accordingly in November.

The Old Guy PhD

Big Government IS STILL Our Problem – & It’s Growing!

G’Day!

A year ago on February 11, 2011 my first posted article was “Big Government IS Our Problem!” I firmly believe Big Government is STILL our problem and it is not only growing, it is accelerating! What our country needs is LESS GOVERNMENT not more. If we could get government off our backs, unnecessary discretionary spending could be eliminated, individual and business opportunities could be pursued, jobs created, and income increased, allowing our economy to expand more rapidly. Government needs to be reduced not enlarged.

Last year I believed President Obama and the Democrats would eventually consider the best interests of our country first and would finally realize that their policies were dividing and potentially bankrupting the nation and stifling economic growth. I hopefully thought the President and Congress would recognize this and relatively quickly pursue the excellent recommendations in the bipartisan Bowles-Simpson Debt Reduction Commission’s Report, which was officially presented to President Obama in early 2011. How wrong I was! Obama immediately shelved the report; the Democrats declared it dead on arrival and again failed to pass the required Federal Budget. It has now been over 3 years that the Democrats have prevented passing a budget and Obama’s huge overspending budget proposals have been overwhelmingly defeated by both Republicans and Democrats. Only the Republicans, especially Paul Ryan, have tried to adopt any of the Bowles-Simpson recommendations. Reluctantly, I have come to the conclusion that the “Obammunists” are only interested in pushing their socialist agenda for central control over our lives, our environment, and our private property. Their actions, or lack of, are driving our country into an increasingly dependent and unsustainable welfare state. More importantly, their policies are in serious danger of destroying the American creative opportunistic spirit and national prosperity in which the majority of US citizens believe and enjoy.

In my opinion it is not too late to correct this adverse trend toward mediocrity and save our nation. America can resolve its fiscal and debt crisis and restore our country to a united foundation for responsible government and future prosperity. However, this can only occur if we return to the principles that have made America the greatest and most exceptional country in the world. These principles are: Constitutionally protected individual liberties, free markets, sound fiscal and monetary policies, economic growth, and Constitutionally limited government. The “Obammunists” are rapidly leading us away from all these principles and toward a future of economic stagnation, shared poverty, limited personal freedom, and dependence on government for much of our survival. Under Obama, America is declining quickly into a centrally controlled overregulated socialist state with increasingly limited opportunities for aspiring individuals and companies to succeed.

So what should we do? The first and most vital action individuals can take is to become informed about the issues and vote out the “Obammunists” in the November election. This one single accomplishment will at least stop the rot and give us the opportunity to correct the damage done by Obama and the Democrats. Next we should demand our new President and Congress concentrate on resolving our fiscal/debt crisis, get our economy back on track, and create productive private sector jobs. As I outlined a year ago, at least six actions should be undertaken: 1) Stop/Minimize non-essential regulations, 2) Have a business-friendly government, 3) Reduce tax rates, especially on business, through tax reform, 4) Enact an energy policy that encourages rather than discourages development of domestic sources of traditional energy, 5) Fix the fiscal and debt crises by cutting government spending, revising entitlements, and increasing tax revenues through tax reform, 6) Pass the three pending Free Trade bills and expand them to include other trading partners. Of these six actions only #6, the Free Trade bills, has been passed. (see “Yes, We CAN Grow the Economy and Create Jobs!”)

More specifically, I suggest our new government in 2013 accomplish the following ten (10) priority items:

1) Unless already accomplished in 2012 by the outgoing President and Congress, immediately extend all the 2012 tax rates for 2 years or until the Tax Reform in Item 6) below is enacted.

2) Immediately declare a moratorium on any non-essential new laws and regulations.

3) Immediately rescind Obamacare (unless The Supreme Court has already done this for us).

4) Immediately rescind the Dodd-Frank Act and its approximately 400 new required regulations (most of which are still to be written). In this regard the most important pieces that need to be rescinded are “The Bureau of Consumer Financial Protection”, “The Financial Stability Oversight Council”, and “The Durbin Amendment”.

5) Initiate and approve a medium term Balanced Federal Budget that downsizes government, reforms taxes by simplifying the code, reducing tax rates, broadening the tax base, and eliminating politically motivated subsidies. This budget should reform entitlements to sustainable levels, assure the defense and security of America, and reduce and “Cap” the Federal Government Spending at 18-20% of GDP. (see “Bowles & Simpson Have it Right!”)

6) Initiate and enact the necessary tax and entitlement reform necessary to accomplish suggestion 4) above. (see “Fiscal & Debt Crises – Tax Reform Essential!”)

7) Demand that any and all new laws or regulations enacted have a “Sunset Clause” that automatically terminates the new law within no more than 10 years.

8) Demand that Congress review and terminate annually for the next five years at least 10% of all currently existing laws and regulations that are non-essential, unnecessary, or out of date.

9) Demand a review of all Executive Departments and Agencies of our Government with the goal of downsizing or eliminating over time those that are non-essential, unnecessary, or just bloated. I suggest the prime candidates for consideration are the Departments/Agencies/Bureaus of: Environmental Protection, Energy, and the National Labor Relations Board.

10) Longer term, Congress should initiate and pass a Federal “Balanced Budget Amendment” to the Constitution. Forty-nine states currently have some version of a balanced budget requirement. Only Vermont does not. (see “Is a Balanced Budget Amendment Necessary?”)

Our country can be saved if the American People recall and return our government to the original spirit and intent of our founders. The United States is exceptional among all nations because of our Constitutional support of individual liberties, private property rights, a free market capitalist society, and limited government. Government should be the servant of the people. The American People should not be the servants of the government. It’s time to take back our country! Study the issues and vote in November!

The Old Guy PhD

Election 2012 – America’s Choice Has Never Been More Clear!

G’Day!

Happy New Year! I hope your holiday season was enjoyable and successful and best wishes for a healthy and prosperous 2012!

This year we will face an election that will probably decide our nation’s course for many years to come. 2012 may be the most important election in our lives. Never have the choices been clearer than they are today: small government vs. big government – free market capitalism vs. centrally planned socialism – individual liberty vs. bureaucratic control of freedoms. At stake is the future of our economy, the relationship between our government and ourselves, federal fiscal and debt solvency, taxation levels, America’s role in the world, and the legacy we are endowing to our children. The key issue is which choice offers the best opportunity for economic & job growth, wealth creation, and a higher standard of living for the American people. It is critical that we each take the time and make the effort to understand the potential consequences for our culture, our opportunities, and our country from these two widely different visions of the role of government and vote accordingly.

Choice 1: Overall, the Republican Party generally supports small government, free market capitalism, and individual liberty. More specifically, they further believe in the Constitution as written by the Founding Fathers, individual & business freedoms, sound fiscal and monetary policies, tax reform for business and individuals, a government limited to protecting the legal rights of individuals, property, and the security of our nation, and equality of opportunities for all citizens. They believe that a reasonable but not unlimited social safety net is desirable for those truly in need. Republicans believe that prosperity and job growth is derived from entrepreneurial business activity free from excessive government interference and is promoted by minimizing regulations and maximizing freedoms and opportunities. Individual success is honored and rewarded. Free markets determine winners and losers and wealth is distributed based on objective “achievement”.

Choice 2: Overall, the Democrat Party supports big government, centrally planned European-style socialism, and bureaucratic control of freedoms. They support a “living” Constitution to be interpreted and modified by the judicial system as desired, regulated individual & business freedoms, unsustainable government spending and entitlements, higher taxes, and forced wealth transfer from the successful to the less successful. Democrats and especially the current President believe in regulated and even hostile control over businesses and the use of Administrative Executive Power as desired to accomplish this. They believe that economic and job growth is derived from government planning, controls, and subsidies to bureaucratically selected companies and industries. Individual success is envied and resented and should be corrected through wealth redistribution. The government determines winners and losers based on fiat and wealth is distributed based on an arbitrary determination of “fairness”.

For months we have heard impressive speeches from our President promising more “Hope and Change” supported by more government regulations, unsustainable entitlements, and higher taxes on the “Rich”. No doubt we will hear many more. But no volume of skillful oratory by the President or his eventual Republican contender can disguise the fact that the two fundamental choices above are the issues in the forthcoming election.

Do you believe that big government, centrally planned European-style socialism, and bureaucratic control of freedoms with increasing control over your lives and businesses are best for you? Do you believe that government administrators can make better decisions for us than we can make for ourselves? Do you believe that these bureaucratic decisions are the best approach to economic growth, job creation, and a higher standard of living? If you believe this, vote for Democrats.

On the other hand, do you believe in small government, free market capitalism, and individual liberty with the freedom to make our own decisions about our lives and businesses? Do you believe that we can make better decisions for ourselves than the government? Do you believe that individual decisions under free markets are the best approach to economic growth, wealth creation, and a higher standard of living? If you believe this, vote for Republicans.

President Obama’s position on the above choices is precisely clear and soon we will have a Republican Presidential Candidate to compare. Please take the time to study the choices, the potential outcomes from each on your lives, consider what is at stake for our nation and our children, and vote accordingly. The choice will be yours in November.

The Old Guy PhD

Yes, We CAN Grow the Economy and Create Jobs – Redux

G’Day!

On June 10 I posted the below article on the above subject. To date the Obama Administration and Congress have failed to act on any of the issues and suggested solutions presented. The article is still essentially accurate after three (3) months of non-action and is repeated below for those who missed it. We must get our government working for the people and not for themselves. I hope you join with me in advocating responsible government that supports individual freedom, free markets, sound fiscal and monetary policy, economic growth, and limited government! Let’s get to work!

Obama and the Democrats have tried and failed with virtually every centrally controlled socialist alternative to stimulate the economy and create jobs. The only jobs they have really created are in government. The so-called recovery is the weakest in decades and may be about to “double dip”. Big collectivist government solutions have failed miserably (see “Big Government IS Our Problem!”). Obama and the Democrats only answer to this failure has been to blame it all on Bush. They claim that without their $4 trillion dollar taxpayer & debt funded stimulus, nationalization of businesses, increased healthcare regulations and spending, increased financial regulations, and extreme monetary easing by the Federal Reserve, it could be worse. The only thing that worked has been TARP and that was enacted under President Bush! It is time for government to stop regulating, remove the uncertainties facing business, get out of the way, and let the free market and capitalism work. You do not create jobs by taking wealth from those that generate it, siphon off government administration and oversight, and redistribute less of it back into the economy.

Economic growth and job creation is about free markets, minimum regulations, incentives, and opportunities in the private sector. Government doesn’t create jobs; the private sector creates jobs. Government also doesn’t create opportunities but it can discourage or prevent them (think energy policy) and it can and does distort the market through politically motivated subsidies or tax deductions for selected industries. If taxation and regulations are minimized to the level necessary to support the essential role of government as defined in our Constitution, business will take advantage of whatever opportunities are available in the marketplace and the economy will grow. Unfortunately, the Obama administration and the Democrats in Congress do not understand this. They apparently believe that a few “elites” (themselves) in government are smarter than the millions of consumers and business managers throughout the global economy. They have imposed on American business a climate of increasing regulatory restrictions, increasing healthcare costs, high business taxes, and increasing uncertainty as to what they will do next. In this centrally controlled environment, it is no surprise that American businesses are not currently hiring or investing in our country. The regulations and costs just in Obamacare and the Dodd-Frank Financial Regulations Act are particularly harmful and businesses are wisely waiting to see what the government will force on them next.

So what needs to be done to create jobs and get our economy back on track? At least six actions could and should to be taken: 1) Stop/Minimize non-essential regulations, 2) Have a business-friendly government, 3) Reduce tax rates, especially on business, through tax reform, 4) Enact an energy policy that encourages rather than discourages development of domestic sources of traditional energy, 5) Fix the fiscal and debt crises by cutting government spending, revising entitlements, and increasing tax revenues through tax reform, 6) Pass the three pending Free Trade bills and expand them to include other trading partners.

First, a moratorium on new regulations should be declared and all regulations associated with Obamacare and Dodd-Frank (especially the Consumer Protection Agency) halted until after the next election in 2012. The uncertainty overhang from these two bills alone is stifling hiring and investment by business. Ultimately, all regulations, both existing and new, should have a “sunset clause” that requires our government to formally reaffirm their need at pre-set intervals, perhaps every ten years. This would insure that outdated or unnecessary laws do not become permanent.

Second, President Obama needs to realize that his collectivist socialist policies don’t work and become truly business-friendly. It is no secret that the current administration is pro-union, pro-environmentalist, and anti-business as evidenced by numerous actions by himself and the Administration’s Departments and Agencies. The pro-union/anti-Constitution actions by the NLRB against Boeing in South Carolina (see “Attack on American Business by Obama “packed” NLRB!”) and the many actions of environmentalists against any form of energy development (drilling in the Gulf of Mexico, Shell Oil off the coast of Alaska (see “Obama Administration Attacks American Business Again!”) are not conducive to economic growth and job creation. This week the issue of an energy pipeline from Canada to Texas has also come under attack by environmentalists. These and other obviously pro-union and environmentally biased activities against businesses (and some States) should be halted and free markets given an opportunity to function.

Third, tax reform is essential to both economic growth and reduction in the deficit (see “Fiscal & Debt Crises – Tax Reform essential!”). As the referenced article indicates, there are several excellent proposals available and Republican presidential candidate, Tim Pawlenty, just added another this week. All are pro-growth and pro-job creation and all will work by providing incentives for private sector investment IN THIS COUNTRY, not abroad. Naturally, the Democrats, who believe in centralist government solutions and not in free markets, are generally opposed to all of them. Perhaps the easiest, most immediate, and most beneficial tax reform is to reduce (or eliminate) corporate tax rates to a level equal to or less than the major nations with whom we compete and simultaneously eliminate the politically motivated subsidies and deductions that distort the market. Currently US corporate taxes at 35% are highest in the developed world and actually represent double taxation on income, first at corporate level and again at personal level, when distributed as dividends. Additionally, the high US corporate tax rates discourage US based international companies from repatriating foreign profits back into the US because, if returned, they are taxed at the higher US tax rate. Our current tax policy encourages investment abroad and discourages repatriation of profits back into America. This is a job killer, not a job creator. Is our government crazy?

Fourth, enact a domestic energy policy that encourages rather than attacks development of domestic sources for traditional energy. This will create thousands of good jobs in our economy and reduce our dependence on foreign energy supply. For far too long we have allowed the environmentalists to dictate policy and stagnate domestic energy growth. Every rational person knows America will be dependent on fossil fuels for decades. Yes, development of alternative energy forms and technology is important but there is no chance “green energy” is going to be a replacement for traditional energy sources, including nuclear power, any time soon. It is madness to exclude active development of domestic fossil fuel sources and nuclear power from our alternatives just to satisfy a few environmentalists with unproven science and questionable computer projections. If “green energy” was a viable economic solution, we would not need a policy or subsidies to support it. Also, independent of the longer-term cost benefits from domestic production, the extremely high and increasing risk of supply from the foreign sources is a very dangerous national security concern. The Middle East is in turmoil and no one knows how it will turn out. Without domestic alternatives, American could find itself with an energy disaster, which could seriously endanger our economy. We must actively develop domestic energy to create jobs in America, sustain our economy, and reduce our global supply risk.

Fifth, resolve our short and long term deficit and debt crises. We must get government spending and the dual debt and deficit crises under control (see “Bowles & Simpson Have it Right!”, “Obama Ignores Bowles-Simpson Debt Reduction Commission – Again!”, “Is Obama Really Serious about Debt Reduction?”). Our Government is too big, too oppressive, and exercises too much control over the American people and business. The current policies are sucking money from business and taxpayers, adding more public sector union layers of government control, stifling business growth, and reducing America’s ability to grow and prosper. As stated above, in a free market economy with protection for the freedom of individuals and businesses, the private sector creates jobs. Since his election, Obama has expanded the size and scope of government control far beyond the level any freedom-minded citizen would have imagined possible. Simultaneously, Obama has also increased our federal deficit by $4 trillion and increased our national Debt by approximately 40% to $14.3 trillion. Relative to GDP the size of government has increased from approximately 20% of GDP to over 25.5% of GDP, a 5% increase in the size of government relative to our economy in less than three years. Without correction, our deficit next year is expected to be another $1.6 trillion and in ten years our national debt will grow to a staggering $22 trillion! Does anyone think this makes sense? My article last week, “Is Our Government Broken? – Redux!”, provides more information on this critical issue.

Sixth, pass the Free Trade Agreements for South Korea, Columbia, and Panama. These proposals go back to the Bush Administration and should be easy to pass. I believe nearly everyone including the President and many Democrats support them. As usual, politics is holding them up. Free trade works and provides value through additional products and services at lower costs to all American consumers. Only unions are opposed to free trade because, in the short term, it may reduce union jobs in non-competitive industries. Over 200 years ago, Adam Smith established the unchallenged principle that the wealth of a nation was based on the goods and services available to its citizens. Free trade allows this to work for the benefit of all consumers. It’s time for the unions to realize this and support what’s good for the nation over what’s good for the union.

Yes, we CAN solve our problems, if we have the political will to do so. This country was founded and prospered on the principles of individual freedom, free markets, sound fiscal and monetary policy, and limited government. Let’s get back to our foundations and demand that our elected representatives in government get to work.

The Old Guy PhD

Debt Reduction: Bowles & Simpson Have it Right – Redux!

G’Day!

On April 1, I posted the article, “Bowles & Simpson Have it Right!”, suggesting that the Bowles-Simpson Debt Reduction Commission’s proposal was a good solution to our country’s deficit and debt crises. Subsequent articles have repeatedly referred to this proposal as a reasonable bipartisan way to address our federal fiscal problems, especially long-term debt, (see “Obama Ignores Bowles-Simpson Debt Reduction Commission – AGAIN!”, “Is Obama Really Serious about Debt Reduction?”, “Fiscal and Debt Crises – Tax Reform Essential!”). Approximately eight months after publishing the Commission’s preliminary report and 5 months after formal submission to President Obama, the “Gang of Six” in the Senate finally appears to be considering it. Perhaps there is some intelligent life in Washington after all. I hope so.

To resolve our unsustainable deficit and debt crises, we need significant comprehensive changes to improve revenues through comprehensive tax reform, to reduce discretionary spending including defense, and reduction/reform in entitlement programs for Medicare, Medicaid, and Social Security. All of these reforms: taxation, government spending, and entitlements, are essential to a comprehensive solution for our country’s problems and ALL must be addressed if we are to succeed.

Bowles-Simpson, which is still an appropriate bipartisan starting point, addresses all of these issues and was approved by 61% of the commission members. I hope it now gets the attention it deserves. The “Gang of Six” and Bowles-Simpson have identified nearly $4 Trillion in deficit reductions over ten years with an immediate reduction of $500 Billion. Both plans rely on government spending cuts and tax reform to lower tax rates, broaden the tax base, and increase tax revenues. These are all good initial actions and I would also suggest the addition of the House “Cut, Cap, and Balance Act, which specifically “Caps” government spending relative to GDP and includes a “Balanced Budget Amendment” provision to insure that our government performs its future fiscal requirements in a responsible way. Currently, polls indicate that over two-thirds of the American people want a “Balanced Budget Amendment” and do not want a further increase in our National Debt. Now is an appropriate time to deal with these issues to insure not only our own future but also more importantly, the future of our children.

If Congress and the President had seriously considered Bowles-Simpson earlier in the year, the debt crisis could already be resolved. We must bring responsibility to the country back into our government and significantly reduce its size.

The Old Guy PhD

Note: The original Bowles-Simpson article with “links” is repeated below for those who missed it.

Bowles & Simpson Have it Right!

In my previous posts, “Big Government IS Our Problem” and “Is Our Government Broken”, I laid out the current and projected fiscal and debt problems facing our nation and argued that significant contraction in government spending is immediately essential. Also essential is tax reform. Our taxes MUST be simplified, the tax base broadened, and tax rates reduced (especially business taxes), if we are to be able to compete in a global economy.

The Debt Reduction Commission’s “Co-Chair’s Proposal” released in December 2010 by the Co-Chairs, Democrat Erskine Bowles and Republican Alan Simpson and submitted to the President in February 2011, is an excellent and understandable overview of the recommendations, which, with minor modification, were approved by 11 of the 18 bipartisan members (61% approval) in December 2010. Unfortunately, the final vote fell short of the 14 votes necessary for the “Supermajority” needed to directly submit the recommendations to Congress. While the Co-Chair’s Draft Proposal differs slightly from the final report submitted to the President, it is worth reviewing for its importance, focus, clarity, and brevity. They have done an excellent job and their proposal deserves the immediate attention of the President and Congress. While no one will be fully happy with all of the commission’s proposals, rational behavior combined with cooperation and compromise by our elected government is necessary if we are to remain a solvent and great nation. The time for government to act is NOW!

The bipartisan Debt Reduction Commission worked from April – December 2010 to develop and present overall comprehensive recommendations to solve our country’s short and long term fiscal and debt crises. They have done their work well. The report addresses all the necessary areas required to resolve the issues including setting out ten (10) objectives, “Guiding Principles and Values”, beginning with “#1-We have a patriotic duty to come together on a plan that will make America better off tomorrow than it is today”; and “#2-The Problem is REAL – the Solution is Painful – There’s no Easy Way Out – Everything Must Be On the Table – and Washington Must Lead”. The other 8 can be read by clicking the link in paragraph above. After establishing the Guiding Principles, the following comprehensive “Five Part Plan” is recommended:

1.Enact tough discretionary spending caps and provide $200 billion in illustrative domestic and defense savings in 2015.

Pass tax reform that dramatically reduces rates, simplifies the code, broadens the base, and reduces the deficit.
Address the “Doc Fix” not through deficit spending but through savings from payment reforms, cost-sharing, and malpractice reform, and long-term measures to control health care cost growth.
Achieve mandatory savings from farm subsidies, military and civil service retirement.
Ensure Social Security solvency for the next 75 years while reducing poverty among seniors.

Implementation of the comprehensive Five Part Plan is projected to achieve nearly $4 trillion in deficit reduction through 2020, in addition to other specific improvements in debt and budget reductions summarized below:

Achieves nearly $4 trillion in deficit reduction through 2020: 50+ specific ways to cut outdated programs and strengthen competitiveness by making Washington cut and invest, not borrow and spend.
Reduces the deficit to 2.2% of GDP by 2015, exceeding President’s goal of primary balance (about 3% of GDP).
Reduces tax rates, abolishes the AMT, and cuts backdoor spending in the tax code.
Caps revenue at or below 21% of GDP and gets spending down to 22% and eventually to 21%.
Stabilizes debt by 2014 and reduces debt to 60% of GDP by 2024 and 40% by 2037.
Ensures lasting Social Security solvency, prevents projected 22% cuts in 2037, reduces elderly poverty, and distributes burden fairly.

The proposal outlines how to achieve the above results through specific recommended actions to improve revenues through “Comprehensive Tax Reform” alternatives, to reduce spending through “Discretionary Budget Options” including Defense cuts, reductions for entitlement programs through “Mandatory Budget Options” for healthcare and “Reforming Social Security”. All of these reforms: taxation, government spending, entitlements for healthcare and social security, are essential to a comprehensive solution for our country’s problems and all must be addressed if we are to succeed.

The Co-Chair’s Proposal is controversial but responsible, realistic, and deserves the serious consideration of the President and Congress, who are currently engaged in irrelevant political bickering over trivial spending cuts instead of the substantive fiscal and debt problems we face. Congress and the President should get together, agree on or revise as appropriate the “Guiding Principles and Values” above, and start to work for the American people and our country. Political posturing for re-election is NOT a valid course of action.

Currently, neither the Congress nor the President is addressing our fiscal and debt crises with any sense of urgency. The President and the Democrats are not only totally ignoring the problem but are fighting to avoid even minimal reductions from the inflated budget spending of the last 2-3 years. Federal Budget inflation nearly tripled our federal deficit from $0.459 trillion in 2008 to $1.3 trillion in 2010 and is expected to increase again to $1.7 trillion this fiscal year. Obama’s recent budget proposal for 2012 continues spending at $3.7 trillion and the deficit at $1.6 trillion. Additionally, Obama’s new budget projects a further cumulative deficit of $7.2 trillion for the next ten years – bringing our debt to approximately $22 trillion! This is not leadership; it is madness! Only the Republicans are even attempting to address the issue and, to date, their proposals are woefully inadequate. To be fair, the House Republicans through Representative Paul Ryan are promising to present a comprehensive budget in April that does address the looming long-term catastrophe we face. I hope they deliver.

Given the magnitude of our fiscal and debt problems, the current congressional squabbling is an inappropriate distraction from solving the overall crises facing our nation! Without an agreement on debt limits and/or spending cuts by April 8, our government may shut down. As noted in “Is Our Government Broken”, except for national security and some essential services, shutting down might actually be a good thing. Our government is too big, too irresponsible, and too self-centered. Can’t our Congress or Administration do math?

Where is President Obama’s leadership in all of this? Actually, at the time of this writing he’s currently travelling again and making speeches at a Democratic Party Fundraiser – big surprise. As usual, when leadership and responsibility for our country are required, Obama is absent. Last week with a national debt deadline imminent, Congress took a week off rather than stay in session to attempt to resolve the current national debt limit issue. Brilliant! Our elected representatives need to make financial solvency and economic growth a priority and get to work NOW!

We are on unsustainable fiscal and debt crises that, if not corrected quickly, will lead to potential financial and economic disaster for our country. Our government is oppressive and out of control, its growth must be stopped, and its intrusion in our lives and businesses reversed. We MUST maintain the entrepreneurial spirit necessary for economic growth and global competitiveness. We need to bring back the constitutional freedoms and personal liberties that led us to become the greatest nation on earth. Our government should immediately take up the Bowles-Simpson Co-Chairs’ Proposal.

The Old Guy PhD

Government Imposed Uncertainties Hurt Economic Growth!

G’Day!

In nearly every analysis or survey of why business and financial institutions are not currently hiring or investing in America, the primary reason given is “uncertainties”. While dealing with economic uncertainties is a normal part of business decisions, the Obama Administration and Democrats in Congress have created additional administrative and legislative uncertainties that are unnecessary and detrimental to growth. Removal, or at minimum temporary suspension, of these government obstacles to investment, growth, and job creation would allow business and financial institutions to get America moving again.

Summarized below are the current government-sponsored complications that are discouraging job creation, capital investment, and the economic growth that we would expect from business during a normal expansion. I apologize in advance for its length but the issues are important and merit nominal analysis. Please review the information below and ask yourself, “If I were a business manager or a banker, would I risk my own money to expand, startup a new business, or make loans in this restrictive and uncertain regulatory environment?”

Fiscal Deficit & Debt Crisis: These two related issues are by far our greatest overall national risk! Fortunately we have a very comprehensive, rational, and bipartisan solution available, which was initially sponsored by President Obama. It is the Bowles-Simpson Debt Reduction Commission Report, “The Moment of Truth”. Unfortunately, President Obama and Congress have ignored this proposal since its completion. I have extensively discussed and still support this positive and bipartisan solution, (see “Bowles & Simpson Have it Right!” “Obama Ignores Bowles-Simpson Debt Reduction Commission – Again?” and “Is Obama Really Serious about Debt Reduction?”). The commission’s report, which was approved by a majority of 61% of the bipartisan members, has languished in obscurity since it was completed and presented to President Obama early this year. The recommendations from the commission cover all the necessary aspects of an implementable comprehensive solution to the our fiscal and debt crises including significant tax reform, reductions in discretionary and defense spending, and entitlement reforms including Social Security. For reasons that are a mystery to me, neither Congress nor the President appears to be considering this report in their current discussions. The President and the Democrats are not only totally ignoring a rational solution but have been fighting for months to avoid even minimal reductions from the inflated federal budget spending of the last 2-3 years. How can anyone expect financial institutions or business firms to act positively with these uncertainties hanging over them?

Taxes: As repeatedly discussed in previous articles, both corporate and individual income tax reform is essential for economic growth and investment in our country (see “Fiscal & Debt Crises – Tax Reform Essential!”). We need to raise additional federal revenues by lowering tax rates (especially corporate tax rates), eliminating loopholes, subsidies, and unnecessary “tax expenditures”, broadening the tax base to include more taxpayers, and simplifying the tax code. Currently at 35%, corporate tax rates in America are among the highest in the developed world (corporate taxes in China are 25%, Russia 20%, Germany 15%, and Ireland 12.5%) and foreign profits are penalized if returned to the US. This is ridiculous and encourages job creation and investment overseas, not in the US!

Regarding broadening the tax base, over 51% of US families currently pay no income taxes but receive the benefits paid by taxes from the rest of us, especially the much maligned “wealthy” (who already pay 76% of total income tax revenues). The current Obama proposal is to add more taxes on the “Rich” by rescinding the “Bush Tax Cuts” sooner than they are scheduled to expire. Simple math demonstrates that the “Rich” don’t have enough income to pay for the current and projected Obama deficits. This is nothing but political demagoguery and class warfare in preparation for the next election and is neither rational nor a serious solution to our long-term government overspending problems. If we are to solve our deficit and debt crises, broadening the tax base can and must be accomplished.

In “Fiscal & Debt Crises – Tax Reform Essential!” noted above, I have outlined three overall reform alternatives: 1) Retain but simplify our current “Progressive tax system, 2) Adopt a “Flat Tax” (one tax rate for all), and/or 3) Adopt a “Fair Tax” (a consumption or “VAT” tax). I personally prefer implementation of the “Fair Tax” either alone or in conjunction with one of the other two alternatives. However, any one or a rational combination of these alternatives will accomplish the necessary tax reform goals and stimulate economic growth. All have detailed proposals available to our government, which are currently being ignored. The current extension of the “Bush Tax Cuts” expires at the end of 2012. Would you hire new employees or invest in your business, if you didn’t know what your taxes would be in eighteen months?

Obamacare: Virtually all independent analysis indicates that implementation of the 2000+ pages of Obamacare will ADD not reduce healthcare costs and will probably result in a single payer government-controlled healthcare system with restricted options and limited services. Small businesses, the job growth engine of our economy, are particularly at risk. At last count, approximately 1450 organizations, including many unions, have been given Obama Administration waivers against required implementation of Obamacare because of the higher costs it demands. Equally importantly, no one really knows all the implications, costs, or unintended consequences of the legislation because the Obama Administration is still writing the rules. In two separate articles, I suggested market-based solutions to our healthcare issues, “How to Solve Healthcare Part I” and “How to Solve Healthcare Part II”. I lived and worked in England for the better part of ten years and can assure you government-run healthcare is costly (through taxation), inefficient, slow, and limited in providing medical services. Think long and hard before you support such a system in the US. Again, if you were a business manager and were faced with the higher costs, more administration, and uncertainties associated about healthcare rules that are still being written by the administration, would you add to your payroll costs by hiring new employees?

Dodd-Frank Financial Regulation: Like Obamacare, this legislation is lengthy, complicated and potentially expensive for the financial services industry and ultimately consumers. No one really knows all the implications or additional regulations of the legislation because they are still being written by the administration and will create many unintended consequences for consumers and the industry. The Act is perhaps the most significant change in financial regulation since FDR. It represents major changes to all financial regulatory agencies and affects most of the nation’s financial industry. Major new agencies have been created: Financial Stability Oversight Council, the Office of Financial Research, and the Bureau of Consumer Financial Protection. Perhaps the most controversial provision is the creation of the potentially big and expensive “Bureau of Consumer Financial Protection” within the Federal Reserve System (FRS). Very importantly, even though the new Bureau is placed within the FRS, it operates INDEPENDENTLY. The FRS is PROHIBITED from interfering with matters before the Director, directing any employee of the Bureau, modifying the functions and responsibilities of the Bureau or impeding an order of the Bureau. With virtually unlimited power and authority to act independently, without oversight, the agency can do whatever it deems appropriate supposedly to protect consumers! WOW! Have we become a potential police state regarding “consumer protection”! What ever happened to “Caveat Emptor” (let the buyer beware) and personal responsibility? Is the government going to protect us from everything and if so, how? How many new public-sector union employees will this take? What will it cost? Ultimately, businesses and consumers will end up paying for this new unlimited-power bureau with sweeping authority to do “whatever it deems appropriate to protect consumers”. This is a scary development and creates endless uncertainties as the bureau writes its new regulations. More government madness and not good for job creation (except in the government)!

Additionally, the “Durbin Amendment” gives the power to regulate debit card interchange fees (prices) to the FRS. Effectively this eliminates free markets for debit cards and allows price fixing by the FRS, which was acted on by the FRS this week!

This is not a good trend for freedoms or free markets and bodes poorly for the other uncertain regulations to follow. If you were a banker faced with these uncertainties and risks, what would you do?

Energy & Environmental Policy: An intelligent national energy policy is vital to support economic growth and minimize the very real and present dangers of disruptions in our essential imports of foreign supplies. This policy must include and recognize America’s economic necessities, national security concerns, and the time required and costs necessary for conversion from any current source to any new technologies without creating growth constrains. It must include ALL possible sources of domestic energy generation including fossil fuels (oil, natural gas, coal), nuclear, as well as green energy sources (wind, solar, biotech).

Obama has no apparent energy policy other than promoting the green energy sources to ostensibly support his “global warming” environmental agenda. This action is happening at a time when more and more evidence is challenging and refuting not only “global warming” theory but also CO2 as a causative agent, and at a time when energy demands and prices for fossil fuels are increasing with NO serious alternatives in sight for decades! Further, the dependency and risks from imports of fossil fuels to the US are staggering and the economic and national security consequences of a stoppage of these imports would be catastrophic for our nation. Obama’s administration is actively working against virtually every effort to explore and develop domestic sources of fossil fuels. Offshore drilling in the continental shelf and interior of the US is being severely restricted even though thousands (perhaps hundreds of thousands) of good jobs could be created by actively pursuing known domestic reserves. Specifically, exploration and development of fossil fuel sources are being stifled by a lack of permits from the Administration and delays forced on development by environmentalists such as the EPA’s recent stoppage of Shell Oil’s permit to drill and develop a 27 billion barrel reserve in the Arctic Ocean off the coast of Alaska. (see “Obama Administration Attacks American Business Again!”)

The EPA is also trying to circumvent Congress’ refusal to pass “Cap and Trade” legislation by “backdooring” the regulations as new rules issued directly from the agency. Also, the EPA has proposed two new “clean coal” regulations regarding the use of coal in power plants that may result in “hundreds of thousands of coal industry jobs lost” and an estimated increase in the cost of coal produced electrical power by 11-23%. It is further estimated by a trade group that, in addition to the above jobs lost, the new regulations will cost the coal industry approximately $180 billion. For information, coal-fired power plants account for approximately half America’s energy supply.

I am not opposed to environmental protection or pursuit of green energy sources but, like many, am not convinced that global warming is actually occurring, and if so, is caused by humans or CO2. A rational and balanced national energy policy is needed. Restricting our domestic economy growth at a time of increasing global competition and increasing our dependency on foreign imports from a very volatile area of the world for the sake of a still unproven theory does not seem to me to be wise. It only creates more costs and uncertainties for our country and harms job growth, especially in the energy sector.

Pro-Union, Anti-Business Activism: The pro-union anti-business biases of the current administration are well documented and are detrimental to job creation, capital investment, and economic growth in America. Obama’s endless campaign speeches to unions, the stream of union activists to the White House, and repeated class warfare attacks on the “wealthy” are sufficient evidence of these biases.

Perhaps the most flagrant current example is the National Labor Relations Board’s (NLRB) anti-business, anti-free market, and pro-union (not pro-labor) socialist attack on the Boeing Corporation and “Right-to-Work” States (see “Attack on American Business by Obama “packed” NLRB!” and “Obama “packed” NLRB Continues Attack on Boeing & Free Markets!”). Under Obama, the NLRB has become a pro-union activist body and is now deliberately attacking job creation and investment in America by attempting to stop Boeing, America’s #1 exporter, from final implementation of the firm’s new “Dreamliner” factory in Charleston, South Carolina. South Carolina is one of 22 “Right-to-Work” States, which don’t require (or prevent) hiring union workers. To date, Boeing has already invested approximately $1 billion and hired approximately 1000 workers in South Carolina. Boeing directly employs over 160,000 workers, and is indirectly responsible for approximately another 1.2 million jobs. Apparently to the NLRB, the only “good” American jobs are union jobs.

For years during and subsequent to the Bush Presidency, union activists and Democrats in Congress have prevented the passage of Free Trade Agreements with South Korea, Columbia, and Panama, which are favorable to American business, American exports, American consumers, and will create American jobs. The unions have delayed passage because imported goods coming into the country at lower prices will displace some workers. Really! This is the global free market at work, expands economic growth, creates wealth and jobs, and benefits all consumers who are provided with more product choices at cheaper prices. Finally, this week the Senate is holding hearings on these bills and hopefully, after years of delays and economic losses, will be passed and signed by the President. Just another uncertainty caused by government interference in the marketplace that has hurt job growth and consumers.

With these pro-union anti-business biases at the very top of our political leadership and government, is it any wonder that business is hesitant to hire and banks to loan?

Conclusion: Government needs to get out of the way! (see “Big Government IS Our Problem”) The above issues and the uncertainties they have imposed on our economy are indications of where Obama’s and the Democrat’s policies are leading us. Socialism and central planning don’t work – just ask the former Soviet Union or India. Free markets and individual freedoms do work! Obama is increasingly turning our nation into a centrally-controlled socialist welfare state with significant pro-union, anti-business biases and uncertainties that hurt us all. These policies are not the foundation of freedoms upon which our country was created and which made America great. It’s time to return to individual liberties, free markets, sound fiscal and monetary policy, and limited government. It is time to take back our country!

The Old Guy PhD