Tuesday, November 09, 2010

Understanding the Crisis

I will start this post with a sincere statement of understanding for the millions of Americans around the country who are currently unemployed and are experiencing substantial financial issues. I know what it is like as I have personally been there more than once. I lived through the inflationary 1970's on limited income while raising four kids and with a spouse that suffered numerous medical conditions. So for those now caught up in difficult circumstances, I GET IT.

Having said that, I remain somewhat confused that the amount of people unemployed when compared to the total workforce could be causing a near collapse of our entire economy.

Using the numbers reported the national unemployment sits at 9.6% out of a possible 100%. Excuse me but doesn't this mean that 90.4% of workers ARE CURRENTLY EMPLOYED? During the past 60 years the average national unemployment rate has averaged approximately 6.1% (or 3.5% more than the current level). Most economists consider a 4.5% level to be "full employment". So in reality we are dealing with current level that is 3.5% above the 60 year average and 5.1% above a "full employment" condition. Granted the current unemployment rate is too high and certainly needs to come down to a level around the 60 year average.

BUT, do these above average unemployment numbers that we are experiencing now really have the power to offset the 90.6% of workers that ARE employed and cause the National crisis we hear about 24/7? REALLY?

How much of the "crisis" is political? How much of the "crisis" is blown up by the media for their own ratings because after all we Americans must have our constant stream of bad news, right? How much of the "crisis" has been a diversion tactic by the banks, credit card companies, home builders, and too many of the general public who spent themselves into hopeless debt?

Let me repeat, 9 out of every 10 American workers (aside from those who have stopped looking) ARE WORKING and for the most ARE paying their bills and mortgages and ARE out buying goods and services (granted at a lessor level than during the insane years of 2003 through 2007).

Are we Americans prepared to throw in the towel completely because we have an unemployment rate that is a mere 3.5% above the 60 year average? REALLY? Has American optimism been lost as well? Will we not at some point get past the problems just has we have gotten past so many immense problems in our nation's history? I'm not ready to believe that all is lost just yet.

What we need is to stop being consumed by all the negative talk and fear being thrown at us every day and start thinking and believing in a positive future. By continuing on this current path we are also projecting a "woe is me" attitude to our children and that is not good at all.

IF things are truly on the brink of total disaster at today's levels what would it be like if we approached the 25% unemployment levels of the early 1930'? YIKES!! What if mortgage interest rates were 13 to 15% as they were in those tough years of the 1970's? What if the price of meat, coffee, sugar, milk, bread, and other products doubled or tripled as they did in the early 1970's? Yet, somehow we Americans adjusted and recovered from all of those situations that I would submit were worse on family budgets than what we are experiencing today. During the hard times of my eventful life I knew of no other way out of negative situations than to roll up my sleeves and do whatever I needed to for my family and myself.  Trust me, it CAN be done!


Thursday, November 04, 2010

The Numbers Are The Numbers

We've had the mid-term elections and there will be many new faces in Congress for at least the next 2 to 6 years and the Republicans will now control the House (which they did for 12 of the past 14 years) while the Democrats maintain a slim majority in the Senate. President Obama will continue as President for at least the next two years. That is the landscape. Now on to the numbers.

I have been listening to candidates and elected officials for most of my adult life (and that's several decades now) promise that they would be the one to control spending, balance the budget, reduce the national debt and keep taxes low. Well it hasn't happened and there is no compelling reason to believe that it will suddenly happen now. The sound bite things that candidates utter has been intentionally vague about just HOW they plan to keep those promises. They couldn't be specific because the raw truth would probably cause them to lose their election. We Americans love to buy into the promise with little detail because that is easier than hearing the truth about the numbers.

So, as we all hope and believe that this group will finally be the ones with the solutions let me pose some plain and direct questions. Exactly how will a "balanced budget" be achieved? Exactly how will the National Debt be reduced? Exactly what "spending will be reduced or eliminated to make up for the 1.27 TRILLION dollar deficit projected in the current 2010-2011 budget? Can any of this actually be accomplished with no increase in Federal revenues (tax INCREASES)? It will soon be time to stop campaigning and FIX THE PROBLEM.

Here are the numbers for the 2010-2011 Federal Budget;

           Total estimated revenue - - - -- - -- - - 2,567,200,000,000

           Total estimated spending - - - - - - - -  3,833,900,000,000

           Estimated deficit - - - - - - - - - - - - - -  1,266,700,000,000

                    Total Gross Public Debt          15,144,000,000,000
                      (after adding the current year deficit)

Breakdown of spending;

          Pensions - - - - - - - - - - - - - - - - - - - -787.6 Billion (20.5% of spending)
           (Social Security, Fed Retirement)
                                                                                           (30.7% of revenues)

          Healthcare - - - - - - - - - - - - - - - - -  898 Billion (23.4% of spending)
                                                                                        (35% of revenues)
           (Medicare- - 473.3 B
            Public Health services - 4.5B
            Health R&D - 38.5B
            Vendor Payts (Welfare) 357.8B
              296.7B of this goes to States
              for Medicaid Programs

         Education - - - - - - - - - - - - - - - - - - 140.9 Billion (3.7% of spending)
                                                                                         ( 5.5% of revenues)

         Defense - - - - - - - - - - - - - - - - - - -  928.5 Billion  (24.2% of spending)
                                                                                         (36.2% of revenues)

         Welfare - - - - - - - - - - - - - - - - - - - 464.6 Billion  (12.1% of spending)
                                                                                        ( 18.1% of revenues)

         Protection - - - - - - - - - - - - - - - - - 57.3 Billion    (1.5% of spending)
                                                                                        (2.2% of revenues)

         Transportation - - - - - - - - - - - - - 104.2 Billion  (2.7% of spending)
                                                                                       (4.0% of revenues)

         General Government - - - - - - - - 29 Billion        ( .08% of spending)
                                                                                       ( 1.1% of revenues)

        Other Spending - - - - - - - - - - - - 151.4 Billion    (3.9% of spending)
                                                                                       ( 5.6% of revenues)

        Balance - - - - - - - - - - - - - - - - -  21.0 Billion       ( .05% of spending)
                                                                                       ( .08% of revenues)

        Interest - - - - - - - - - - - - - - - - - 250.7 Billion      ( 6.5% of spending)
                                                                                       ( 9.8% of revenues)

Those are the numbers. How can we get to a balanced budget and begin to reduce the national debt as promised? The newly elected Republicans and all who remained in office have continually promised NO NEW TAXES (and most want to reduce the current tax levels) so the prospects of increased Federal revenues are not good. therefore we will assume the revenue total will stand as estimated above. Defense spending has been a "sacred cow" for Republicans so we will assume NO cuts in defense spending. Social Security (why is this included in the Federal Budget at all?) is a lightning rod for both Parties so we won't touch that for now.

The stark truth is that to eliminate the deficit (for this fiscal year) Congress and the President would have to;

            Education - - - - - - - - 140.9 Billion
            Protection - - - - - - - - 57.3 Billion
            Transportation -  - -   104.2 Billion
            General government 29 Billion
            Other spending - -  - -151.4 Billion
            Balance - - - - - - - - - -21 Billion
                                              503.8 Billion

         By eliminating ALL spending and thus shutting down ALL Government services and protection the 2010-2011 deficit would still be 762.9 Billion. So, to the next step.


                                              464.6 Billion
          This would still leave the 2010-2011 Deficit at 298.3 Billion

          In order to get all the way to a balanced budget (still with no reduction in the overall public debt) AND with NO increase in Federal revenues and no cuts to defense spending or Social Security spending we would need to;

                                             298.3 Billion (33% of that budget)

Wow! Is there anyone out there who actually believes that all of the above can or will actually be done? Does anyone out actually believe that any politician would go this far to balance the budget while still maintaining a policy of no taxes increases and no cuts to defense or social security spending? I think not.

The Federal Budget cannot come into balance without doing one of the following or a combination of the following;

           A) A substantial INCREASE in taxes to the extent necessary to balance the budget.
           B) A flat 33% cut to ALL budget items (including Defense and Healthcare and Welfare)
           C) The ELIMINATION of ALL spending in the categories listed above (503.8 Billion)

Well, we have arrived at the end of the numbers and the time for action. If the people in Congress and the President are unwilling to go to the deep end of the pool and deal with the numbers all their talk and spin means nothing and we will continue to have deficit spending as we have for the past 62 years (except for 8 years, and only two years since 1961).

Of course,  the American people need to get past the campaign rallies and decide just what they are really willing to accept in order to "control spending" and "have limited Government" and "reduce the "National Debt". We can't have the services and aid programs and endless increases in defense spending and lower taxes forever without pushing the country and ourselves off the proverbial cliff. The Numbers are the Numbers.

Now it really is TIME TO THINK AGAIN.


Thursday, June 03, 2010


We are in the middle of a very interesting time. Expectations. What are they? Our economy has taken a major hit during the past two plus years. They will always be plenty of blame to go around with respect to the causes but this post isn't about that.

America and her people have grown from a rural and relatively simple society into an extremely diverse and complex nation. We, as a nation have overcome immense challenges to bring ourselves to this point in time. How did we do it? I would submit that a key factor has always been an unrelenting spirit that translated into solving whatever obstacle we've faced. During recent years we have allowed an atmosphere of doom to invade our country. At some point our political machine made the decision that the best chance at "winning" elections (and therefore gaining the power) is to paint a picture of failure and hopelessness to try and convince the voters. It appears that the strategy has convinced far too many of us that our situation is indeed hopeless. We have been losing our sense of hope and in doing that we make the situation worse. It is time to think again about what we are going to do to overcome our latest challenges.

My own family has been in America since the 1620's and generations have endured to this day. We fought in the Revolutionary War. We fought in the Civil War. We fought in both World Wars. In between we were farmers and merchants and doctors and mothers and fathers. My grand parents lost their business and their home during the Great Depression (the strain cost my grandfather his life in 1935). I lost my only Uncle in February, 1945 when his fighter plane was shot down over Germany. But most of my family have just been hard working citizens who struggled to build a life and help America evolve. As a family we always had a spirit of hope that we could overcome any difficulty. We had no expectations of anyone or any government taking care of us or making our decisions for us. 

There is a movement in the country that calls for our government to essentially go away. they say that they don't want government intruding into their lives. Do they really want this? They talk a lot about our Constitution yet most have probably never even read it. The Constitution was a document born of compromise. It established the foundation for our form of Government. The Bill of Rights that so many people use for their own agendas was not even a part of the draft of the Constitution that was sent to the States for ratification. It too, was a compromise. Slavery was not abolished in the original Constitution. Women could not vote with the passage of our original Constitution and they had few other "rights". About half of the white male population could not vote with the passage of our original Constitution. Still, it was a framework and generations of political leaders have added to it through amendments and gone around it through various "legal" steps. Those who call for a return to the principles of our Constitution should beware of what they are asking. Those who keep saying that the Constitution is somehow a document based in religion are simply wrong. The word God doesn't appear in the Constitution AT ALL. Those who debated and prepared the Constitution took special care to make sure that God (which God would it be anyway?) or religion would not be the basis for governing the United States of America. Many of the recognized "Founding Fathers" were not even at the Constitutional Convention. 

So, enough with using the Constitution as a misguided political tool. It does not belong to any particular political group. 

If our citizens have some expectation that our Government (Federal, State or Local) is going to somehow solve all their life problems they are looking in the wrong place. Citizens that rant for less government cannot then ask the government for help. Do they truly want less Government or do they simply want "their" Government? Do they actually want the protections of our military (and the spending that goes with it) to stop? Do they really want our Justice system (and the spending that goes with it) to go away? do they really want our highway system and our consumer protection agencies (and the spending that goes with it) to go away? Do they really want social security and medicare benefits and all other aid and assistance programs (and the spending that goes with it) to go away? Really? Or is all the ranting just a scam for the politicians in the minority to gain the majority again? 

If citizens have expectations that their poor decisions can or should be fixed or erased by the Government they shouldn't. Life deals all of us some bad hands. Loss of a job or a house or excessive debts or health issues are a part of the ride. It is not wrong for our government to have some programs to provide temporary assistance to those in need. It is part of the compassion that is fundamental to who we are. But too many of these programs are becoming a way of life for too many people. Politicians use the promise of these aid programs as a tool to get elected and that is wrong. We have about 45 million people receiving food stamps. We have millions of people receiving unemployment benefits and a very weak system for pushing these people to search for work. At some point the benefit ride must stop.

If citizens have the expectation that the Government can "create" millions of jobs and fix the employment problem they shouldn't. Aside from dealing with some business taxing issues the Government does not have the ability to get everyone a job. Our system is based on spending which is what created the bubble and caused it to pop. Our system is a catch 22 in that business hires people and buys or makes goods based on their expectation of selling those good and making money. The key factor is that the citizens will cooperate by spending their money to keep things flowing. Well, for too long too many people spent themselves into massive debt and when they could no longer keep spending business released workers and the down cycle has gotten worse. The debacle in the housing market was essentially a result of a systematic plan to get people into mortgages that they could not afford and the lure of the home blinded the homeowner to the reality. Home "values" got way out of line during the past 12 to 15 years and few realized that it couldn't continue. Too many people used the "value" of their homes to borrow against it so they could go out and buy more stuff. Now that "values" have adjusted downward that tool in largely unavailable and too many people ended up with monthly payments that far exceeded their real incomes and the result has been a huge number of foreclosures. Who is to blame? Everyone. Now, everyone must deal with it and get on with rebuilding their lives by whatever means necessary. 

If citizens have the expectation that either major political party actually has the ability or desire for a "smaller" government or to control spending or to reduce the national debt they are being mislead. A study of the past 40 years (with 26 years of Republican administrations and 14 years of Democrat administrations) clearly shows that the Federal Government has continued to grow and our National Debt has grown from about 380 billion in 1970 to the 13 trillion it is today. There have been a grand total of 8 years since 1948 that our debt has NOT increased and ONLY one since 1961!! All the talk about one side or the other "causing" our debt is just a smokescreen. We have an institutional problem and until both sides commit themselves to put this nation ahead of partisan politics the debt, the spending, and the hateful tone will continue to grow unabated. 

Anyone who does an objective study of our nation's history and reflects on the amazing accomplishments we have attained and the very serious things we have had to deal with as a nation should not see our situation now has anything but another call for America and her people to roll up our collective sleeves and fix it.

The hateful nature of our words and the projection of disaster on all fronts is eating away at one of our most valuable resources which is the AMERICAN SPIRIT. If that goes it truly will be the end of this great experiment that is America. 

Are we going to let it happen?

It is "Time to Think Again"

Tuesday, February 16, 2010

Abusing the Constitution

For a long time now "we the people" have heard numerous elected leaders, TV talking heads and other pundits ramble on about how proposals made by whatever administration that happens to be in power are unconstitutional and how we need to return to the type of limited and small Government that the United States Constitution and our "Founding Fathers" intended.

How many have actually read the United States Constitution?

A careful read of Article 1; Section 8 pretty much lays out the powers of  Congress. READ IT.

I find NO specific instruction in our Constitution that suggests or regulates that the "size" of government be constitutionally controlled big or small.

When Section 8 gives Congress the power to "lay and collect taxes" it places no specific limitations on those actions nor does it indicate that any particular political party would be in violation of the Constitution for asserting their Constitutional authority.

When Section 8 gives Congress the power to "borrow money on the credit of the United States" it doesn't grant this power to any particular political party.

Before you as citizens simply buy into all the "constitutional" attacks, please try and realize that virtually every argument presented by the minority against the programs or policies suggested by the majority (whether the current administration or prior ones) are NOT based on the Constitution but are rather simply varying opinions. 

Differences of opinion are a cornerstone of our system of Government and a healthy debate should be encouraged but when opponents attempt to portray proposed activity by the majority party as unconstitutional it is a lie and disgraceful. The various rules concerning the procedures for the House and Senate have, during the 223 years since the Constitution was drafted have certainly subverted the "intent" of those who prepared the document to create a vibrant and functioning national government. 

Remember that just because it may be the "opinion" of one party or the other that the proposals of their opposition are not the correct path, it is, in the end, just an opinion.

The most dangerous aspect (at least to me) about the current trend of national politics is that all respect for the TRUTH has disappeared. So much so that "we the people" are left confused and conflicted about the credibility of our own Government and that is a very bad sign for our Democracy. 

It may very well be too late already. If our Congress continues to wallow in the gridlock that has attached itself to National as well as many State Governments the entire system will soon collapse. If that is the "will of the people" so be it but somewhere in the hearts and minds of American citizens there MUST be a spirit that is more concerned about the very survival of this NATION than about the partisanship of one major political party over the other. 

WE as a nation have so many critical issues to address and overcome that we simply MUST find a way to work together. The alternative is the dissolution of the United States of America.

Very soon we will know the result.