“I have little interest in streamlining government or in making it more efficient, for I mean to reduce its size. I do not undertake to promote welfare, for I propose to extend freedom…..And if I should later be attacked for neglecting my constituents’ “interests,” I shall reply that I was informed that their main interest is liberty and that in that cause I am doing the very best I can.”
- Barry Goldwater, Conscience of a Conservative

Perhaps more than any other politician of the twentieth century, Barry Goldwater captured the essence of the American spirit – ferocious independence. This spirit depends upon the Constitution for its life and energy. Without our Constitution, our nation is nothing more than another geographic location; nothing but more real estate.

The Goldwater wing of the Republican Party has been asleep for decades, as the economists espousing Keynesian and Chicago School theories on the benefits of inflation became trendy and the American political aristocracy banished the Constitution to the wilderness, to be replaced with a holy mission to spread democracy with armed drones and replace civil liberties with state-managed dependency – what Barack Obama once referred to as “positive rights.”

Our nation is bankrupt; the unemployment rate is falling, not because people are finding work but because people are giving up and staying at home. While we still import millions of barrels of oil every day, we now export refined gasoline. As the Federal Reserve printed money to inflate the tech bubble, the housing bubble, five military conflicts, the bailout, the wealth conflagration referred to as the Stimulus, and the Treasury bonds sold to raise the money to pay the interest on the bonds sold to pay the interest on the bonds that were sold by Lyndon Johnson. The M2 supply (the number of dollars floating around out there) has more than doubled in the last ten years; as a result each individual dollar is now worth less. By doing nothing more than holding Canadian currency, the Canadian people now have the purchasing power to essentially outbid us for our own gasoline. This is what inflation looks like.

Prior to 1964 no American politician had ever referenced inflation in a political advertisement, and then Barry Goldwater did it. As Lyndon Johnson proposed to pay for a war in Vietnam and the Great Society programs of increased social spending, Barry Goldwater condemned the entire charade as a swindle, a hoax, and a fraudulent promise of perfect prosperity – if we print enough money, we will all be rich.

As the 1960’s gave way to the 1970’s, the bills began to fall due, and the government realized that its promises exceeded it’s abilities. With little more than a speech, Richard Nixon took us off of the gold standard. As it turned out, William McChesney Martin (then the Federal Reserve Chairman) had printed so much money to pay for Johnson’s war on poverty that the gold reserves were no longer adequate to back it up. Bye-bye gold standard.

Hello fiat currency. Since 2001, the Fed has expanded our money supply by upwards of $6 trillion dollars. They distributed it to the government – to pay for social programs that are necessary, not perhaps for our national strength, but for the reelection of our politicians, as well as to banks so that they could write mortgages to people who couldn’t pay them back. Nobody cared if the mortgages went bad; the banks had sold them to Fannie Mae, created by the government in 1939 specifically to buy mortgages from banks. Then, in 2008, the Federal Reserve printed the money needed to buy to bonds the Treasury needed to sell in order to fund the bailout of Fannie Mae and the banks.

In his pamphlet “Conscience of a Conservative,” Goldwater blasted what he called delusional dreams of the “Jacobins and leftists.” We in the conservative movement are not supposed to be allowed the luxury of idle utopian dreams, be they making the world safe for democracy, or making our domestic economy so wealthy (through housing and stimulus) that we simply wouldn’t need to save money, manufacture things, or export anything other that Treasury bonds. These goals are fantasies; they have led us to quagmires of humiliation, poverty, and degradation.

Will anyone dare to ask Barack Obama why, when the United States was consistently running trade deficits in excess of $40 billion per month, he believed our problem was a lack of demand? Will anyone ask why he simply assumed that if we paid people to buy new (foreign-made) cars, then our economy would improve? A trade deficit, by simple, logical definition, is the consumption of goods in excess of your ability to produce. Stimulus accomplished nothing more than the further impoverishment of the nation. Who will challenge Barack Obama on this issue?

Enter our Republican candidates, most of whom seem to think that we desperately need to print money to pay for a war with Iran. Is this really the best we can do? A choice between inflationary games to pay for socialism, and inflationary games to pay for a war that we cannot otherwise afford and could easily be prevented? Only one candidate warned of the inflationary bubble in housing as early as 2001. Only one candidate understands the fundamental problem of our economy – too much debt; too little production. Too much urgent government initiative; too little freedom.

“Extremism in the defense of liberty is no vice; moderation in the pursuit of justice is no virtue.” Barry Goldwater was roundly condemned as an extremist for these sentiments. We live in an age of bankruptcy, fear, and disappointment. Candidates of firm conviction, shrewd talents, or competent judgment are frequently passed over in favor of the candidates with the darkest nightmares, the most delusional promises, or the most artificial of Cheshire Cat grins, with their insistence that spending borrowed money will make us rich and powerful, and if you disagree then you are clearly a cynical malcontent, playing politics at a time when action is required; that is American politics in the 21st Century.

The Goldwater wing of the Republican Party – fanatical adherents to the Constitution, ferocious nationalists, resolute defenders of liberty and individual rights- has been asleep for decades. Without our Constitution, the United States of America is nothing more than real estate. The Goldwater wing of the Republican Party is awake now; and they demand to be taken into account. So far, only one candidate has.

Photo Courtesy of Dave Davidson, his fabulous work can be viewed at http://prezography.blogspot.com/

This is the second installment of a two-part interview, to read part one click here.

Education

Governor Branstad’s legacy-minded education reform proposal has struggled to draw support since its release on October 3rd, and you can count Mr. Landon as one of those lacking in enthusiasm.

A core tenet of Landon’s philosophy is local control. The benefit he sees in applying this principle to education is that the parents of each child, and the teachers in the actual class room, will have their voices better heard and their concerns more directly dealt with,

“My first reaction (to the governor’s plan) is that it drives us towards more state control and more mandates on levels of performance. I think that we are going to have to reform the system, but I think that instead of less local control we need to focus on more local control. I think we need to make sure that the families, the school teachers, and the administrators all have their say on how this should be done. I really believe that parents and school teachers, the people who are in that sector, know the best for their kids”.

Health Care

The Democrats failure last session to construct Iowa’s insurance exchange program in accordance with Obama Care means that a nasty, brutal fight awaits next year. By all accounts this will be one of the three most high-profile issues debated by the Iowa Legislature in 2012, and one that ultimately drew fellow candidate Stacey Rogers (R-Ankeny) into the race. Landon, for one, would have voted no last year on SF 404 and sounds ready to engage in the fight,

“What would guide me is local control. The rights of District 37 residents and the rights of Iowans have to come first. Anything that’s done has to be for their benefit and their economic interests. And frankly, I view Obama Care as unconstitutional from the get-go. I am not in favor of taking care of this through the government because they (the people) will not be taken care of the way they should be.”

On Illegal Immigration

“I am a proponent of legal immigration. It is probably not that big of an issue in this particular district, but there are areas in Iowa where it is. As a state issue I would say that the Federal government, like in so many other things, has failed. I am against the taxpayer having to pay for the upkeep of people who have come here illegally.”

Barring an unexpected Federal resolution to this problem Landon indicated a willingness to possibly engage at the state level, “If the Federal government won’t do it and they are going to continue to let the border be porous, from the standpoint of public safety and who is going to protect the taxpayer, there has to be a process that protects you the citizen.”

On Varnum (Gay Marriage)

“That should have been decided by the voters. That is a monumental shift in society and voters need to have their say. If a constitutional amendment is the only way for voters to get their voice heard on it, then we need to do it.”

On The Tea Party

In response to a question seeking his thoughts on the Tea Party and if he would consider himself a “Tea Party-ish” candidate, he answered, “I haven’t found anything in their platform that offends me or that I take issue with. I am for individual rights. I think people can make their own decisions and government would be well advised to pay attention to that. Having said that, I am part of the process and a consensus builder, I just don’t think you can go out there as a maverick and get a whole lot done. What I want is for Lincoln and Douglas townships to flourish and for Ankeny to flourish. The only way I can do that is by being an effective voice, and the only way to be an effective voice is to be a part of the process.”

Race Analysis and Summary

The contest for the Republican nomination in House District 37 will be of elevated importance as the probability is high that the nominee will ultimately be the Representative. Due to the fact that the district has a 2,400 advantage in registered Republicans over registered Democrats in what is already shaping up to be a Republican wave year, it is likely that the nominee may run un-opposed. Even more likely is that if the Democrats do choose to field a candidate they will not bother to recruit a top-notch challenger or commit substantial resources to the effort.

In what could end up being a crowded field of Republicans, John Landon is a serious contender who will be in it for the long haul. He appears both fired up for the race and ready to put in the time and work that will be required to win the seat. The major pillars that his candidacy will be built on are: less intrusive government, more local control, simplicity in legislative solutions, sensitivity to Iowa’s taxpayers, and a vehement opposition to unfunded mandates.

In particular, emphasizing that the failure to make budget cuts leads to higher taxes and a crusade against unfunded mandates could garner wide-spread appeal in District 37.

As his background suggests he is clearly positioned in the race as the “business candidate.” While often times the “business candidate” moniker is attached to folks who have had professional success, it’s worth noting that the business-like way Mr. Landon breaks down large issues as he thinks through them suggests that he would translate these skills to governance should he be elected.

Though we are early in the process, as Republicans begin to look at the field they will find much to like about John Landon as a person and as a candidate.

The population explosion the city of Ankeny has seen over the last ten years has brought many changes to this Des Moines suburb. Along with construction of a new high school and the surge of large retailers that accompany a population growth from 27,000 to 45,000 in one decade, Ankeny has also received a make-over in its state legislative districts.

In terms of the Iowa House, what resulted is for the first time Ankeny has been split into two House districts. Replacing old HD 70 are new political territories HD 37 and HD 38 (click for maps). While former HD 70 Representative Kevin Koester (R-Ankeny) is running in HD 38, the city’s other new district, composed of north Ankeny extending to Alleman and east to the Bondurant city line, finds itself without representation.

Recently I sat down with one of the candidates vying to be this district’s inaugural public servant, Republican John Landon.

Any voter sizing up a candidate who will speak for them at any level of government needs to seek answers to three basic questions—who are they?, where do they stand?, and why do they stand there? The following should give you a good feel for all three.

The Candidate

Mr. Landon is a fourth generation Iowan who grew up working on a family farm in Marshall County. After serving two years in the Navy, which included a tour in Vietnam, he returned to Iowa and earned a degree in Ag Business from Iowa State University. Following school he embarked on a 28 year career working for two international grain companies. After retiring from that business in 2002, he became a partner in the Iowa based Peoples Company. He, his wife Marvis, and their two children moved to Ankeny in 1994 where he became active in both his church and the Boy Scouts.

His reasons for getting into politics, and ultimately deciding to make this run, are both numerous and specific, “I became increasingly dissatisfied with state government over the last 12 years.” The root of this dissatisfaction first emerged from the exposure his business career gave him to industry regulations, “Lots of people in the Legislature make all these rules and say ‘hey that’s great,’ but they don’t understand the impact that they’re having on people and business—it has gotten to be a heavy blanket over business.”

While his business dealings with the government may have laid the foundation, it was a trip to the State Capital over an issue that flared up in 2009 that proved to be the final impetus,

“There became a discussion in the state about the deductibility of Federal income taxes on our state returns. There was a public hearing and we drove down to the Capital and went into the House chamber for that hearing. And I saw the Speaker of the House rule over it like a little dictator with an iron fist, and eventually he threw us all out and cleared the gallery. I realized at that point just how far state government had become removed from the average citizen, and that got me activated.”

The Issues

The Budget

When asked if a $6 billion annual budget was appropriate for Iowa, Mr. Landon clearly indicated that he would come in shooting for a much lower number, “I am strongly in favor of people keeping as much as their money as possible . . . we need to break this down and see what we are getting back for the taxes that we pay—and I’m struggling to see what we get back.”

Directly related to the spending cuts that would be necessary to shrink our yearly outlay, I specifically asked about the $42 million in “targeted reductions and savings” the governor will be asking the legislature to approve next year and the political peril this may entail. He responded, “It’s going to be used as a hot issue no matter what happens, because you are dealing with people who are receiving public aid for their health care.”

Though no specified cuts have been proposed, he would stand with the governor on this issue in theory, “We are talking about trying to find 2%-3% spent in inefficiencies,” a percentage he felt could in part be found using the Six Sigma method.

While noting the complexities involved, he is quick to draw a direct line from the failure to make budget reductions to the eventual higher taxes that they lead to,

“I want Iowans to have the best care possible but I also have a heart for the people who are paying taxes, I understand how complicated that balance gets. This is about the will of the people. This is the time where people have to stand up and say either I am satisfied to give up half my income or not. If that’s what they choose then fine, but I am here to tell you that it’s not fine, and it’s not working. There is no way that people can feel good about the current tax structure and what is going on. We cannot succeed by taxing ourselves to prosperity.”

Taxes

One of the major issues to go unresolved last session was tax reform, and center stage in that debate was how to go about lowering commercial property taxes in Iowa. Should this issue come before a Representative Landon he would be inclined to support the largest reduction plan on the table. Interestingly, in addition to standing for cutting taxes he has some proposed solutions to address the root cause of our ever-growing tax burden, “When these school boards and community boards are faced with mandates for a rule the state is making and they are not sent any money to do it, it is going to end up in your tax receipt just as plain as day. And I think unfunded mandates ought to be absolutely unconstitutional and illegal in the state of Iowa.”

When asked if this is something he would propose in legislative form on his arrival to the chamber, he replied, “That is a bill that needs to be brought forward and something there needs to be a good public discussion about.”

Note: To read the rest of the story click here for Part 2

The lead up to every Presidential Primary debate is accompanied by media hype and pundit proclamations that this or that candidate has to “do well” or they are doomed going forward.  Often times the hype out measures the eventual importance of the proceedings and the proclamations prove to be mere misguided conventional wisdom.

Since last cycles debut of the “interactive” debate (CNN’s YouTube offering) saw ridiculous questions from a melting snowman (on global warming) and a citizen holding an assault rifle (on the 2nd Amendment), one sure would have been justified in being skeptical.  That said, for many reasons this debate certainly seemed to be elevated in its importance.

First of all the field is firmly settled at this point—Perry is in and Ryan, Rubio, Christie, and Palin are clearly not joining the party.  Secondly, the debate took place in arguably the most important swing state in the nation.  As we have seen in all recent Presidential elections—whoever wins Florida likely wins the White House.

The following is an evaluation of how we at The Conservative Reader viewed the performances of all nine candidates on the stage last night, and why their performances merited inclusion in one of the three following groups—The Winners, The Maintainers, and The Losers.

The Winners

Mitt Romney (Art)

Mitt Romney provided one of the better examples of how to look presidential.  Which he pretty much does best when he is just standing there.  But Thursday night his presentation continued to improve from the past and demonstrate an ability to ward off any and all attacks simply by ignoring or denying them.  Although nothing he said provided any substance (which is, admittedly, hard to provide in this setting), he provided good strong answers on Foreign Policy (he expressed unwavering support for Israel), Education (not just localize education decisions, but complimenting Education Secretary Arnie Duncan on his direction to evaluate teachers), jobs (adjust corporate/employer tax rates to globally competitive levels) and defending Massachusetts Health Care program.  His sparring with Rick Perry over Immigration, Social Security and Health Care did not reflect well on either of them, but Romney seemed to keep his cool throughout and act almost Reaganesque  by responding to some attacks with “Nice try.” (Reagan o
ften responded to reporters’ challenges with “There you go again.”).  His best like of the evening, in response to a question about the Middle East, was “You stand shoulder to shoulder with your allies.”  Although some of his answers were not answers at all (“Strong Leadership” does not qualify as an answer in my book), Mitt clearly held his own and kept himself in the forefront of the debate.

Newt Gingrich (Art)

Newt was his usual confident, concise and slightly comical self.  He seemed unable to answer any question without first dropping some kind of one-liner.  He has always been on target with his answers, reflecting years of solid experience and ability to work with leaders both domestic and foreign.  His reference to the New Contract with America, set to be released soon in Des Moines, showed his campaign is starting to make some progress, but does not quite have enough solid support and attention as some of the more charismatic candidates.  Strong answers included Education (Pell Grants are a nice detail), moving to a business investment model for foreign aid instead of the US government funding other governments directly (Government-to-government encourages corruption), tying mandatory business funded training to extended unemployment programs.  Although Newt’s demeanor really hasn’t changed much, the expression of his ideas are a little easier for the public to grasp and the fact that the panel questions are
much better than past Fox debates allowed Newt to clearly demonstrate his grasp of issues and ability to present his ideas cogently.

Herman Cain (Justin)

Cain received perhaps the warmest and most enthusiastic response from the crowd throughout the entire night—which was somewhat surprising.  He no doubt had a good night and this was likely his best debate performance so far.

The biggest positive he possesses is his powerful, warm, and immensely likeable personality— and it was on full display last night.  The lack of specifics that hurt him in prior debates were not a factor in this one.  This was due both to his answers being more detailed and to the fact that other candidates have taken to being increasingly vague (especially Rick Perry).

One of the debates great moments was the long ovation Cain received for battling and surviving stage 4 colon cancer.  He followed this with a fantastic answer explain his potentially provocative statement that under Obama Care his condition would have resulted in his death.  Mishandling the reasoning for this claim would have been disastrous but he instead hit it out of the park.

His strong performance was driven by him focusing on his 9-9-9 tax plan (which had been cleverly panned as sounding more like a pizza deal), a clear and muscular position on Palestinian state-hood and Israel (“If you mess with Israel, you mess with the United States of America”), and his twice evoking Reagan doctrines in his answers.

His placement in the winner category is due to the fact that, after being a side note the last couple of debates, this performance surely raised his relevance level back to the upper second-tier status.  In my view he joins Rick Santorum as the two hands down best VP possibilities among the 9 candidates running.

The Maintainers

Ron Paul (Brian)

Congressman Paul did what the gentleman from Texas always does: he entertains by being quirky, right to the edge of concern over his overall mental health. In the debate last night, his libertarian politics were once again in fine and fiery form, and all good conservatives love his anti-government, anti-Federal Reserve rhetoric. At the same time, when every question that is asked brings forth the same response (“Get the Federal Government out of it”), it is impossible to truly understand who this man really is. The narrow sub-section of conservatism that is libertarianism continues to delight the audience, but fails to address in sufficient detail the manner in which he thinks. It is unfortunately possible to program a computer to replace Ron Paul in the debate. He is undoubtedly a very smart and well-educated man. We all enjoy him, and we did again last night. But he remains only an interesting part of the scenery.

Rick Santorum (Brian)

Senator Santorum is always an impressive human being. He is the model of what a “compassionate conservative,” rightly and positively defined, looks like to many in the audience. He embraces the deeply spiritual notions of human dignity and human depravity, and he understands how those attributes fit within his very principled understanding of the world. He speaks from his heart more directly than anyone else on the stage. He might be the most respected human being amongst the candidates. Last evening’s performance did nothing to alter our long-standing sense of who Rick Santorum is.

Unfortunately, the executive leadership issue looms so large in this contest that it makes little difference what the good Senator from Pennsylvania says. His resume is just not sufficient. He will fit well somewhere in the next administration.  And he should be counted on to make a very significant contribution to the conservative cause.

Jon Huntsman (Art)

Jon is a very likable guy and expresses his thoughts effectively.  Unfortunately, he is seen as week on subsidies (he is okay with them sometimes) and doesn’t explain his position on this well with regard to natural gas subsidies, nor did he go as far as others on the stage as to support elimination of the Department of Education.  He did reiterate an important point regarding the impact of ObamaCare and Dodd/Frank on small businesses, and took the initiative to jump into the conversation with Santorum regarding the keeping of troops in Iraq and Afghanistan.  Strong answers from Huntsman included: Dodd/Frank and ObamaCare are brining too much uncertainty to the market place, our nation’s competitiveness is tied to Education, and “America can’t save Pakistan. America can’t save Afghanistan. Only America can save America.”

Gary Johnson (Justin)

I am going to spend about as much time on Gary Johnson as he was given air time during the debate…which is to say not much.

Back after a three debate hiatus due to irrelevancy, his performance was relatively strong and markedly better than his last appearance (the first debate in South Carolina).  In the brief time he spoke he was much more demonstrative and much less “quirky” than he came off during his first debate appearance.

On a policy level his main initiatives are a promise to submit a balanced budget to the Congress as President in 2013 (a point he mentioned in literally every answer), and replacing the entire tax code with the Fair Tax.  The way he would balance the budget starting next year is to cut 43% from nearly every government agency (including defense), thus simply eliminating the 40 cents out of every dollar that we currently borrow in order to spend.

While I am not usually taken with the “light hearted” moments in these debates, former governor Johnson uttered hands down the funniest thing I have ever heard in a debate by saying, “my next door neighbors two dogs have produced more shovel ready jobs than this administration.”

He is a maintainer on this list, but unfortunately what he is maintaining is irrelevance.

The Losers

Rick Perry (Brian)

Governor Perry entered the GOP contest as the candidate that everyone could agree on. He appeared to have the full set of credentials as a tested executive leader necessary to bring the party together. As he entered the race, the hope was that with his appearing he might potentially obviate the need for a messy and divisive GOP primary. After last evenings debate, that dream is no longer a reality.

Governor Perry suffered in the debate along three significant fronts. The first is that he seems to lack the ability to attack his fellow contestants with any level of force or credibility. The art form which is the political attack is performed well by only a very few. Governor Perry seemed both ill-equipped and ill-prepared to make his attacks on Governor Romney…and not because Romney defended himself all that well. The second problem is that he seems unable to retain the fine balance of espousing simple solutions without coming across as mentally simple himself. Only when the simple comes from a base of perceived intelligence does simple work. And lastly, his support of mandatory HPV treatments and tuition grants for the children of illegals, while undoubtedly coming from a heart of caring, seems the type of compassionate conservatism that has been tested and rejected. The cruel reality after last night is that Mr. Perry, contrary to the hopes of many, is probably not going to be the GOP candidate.

Michelle Bachman (Justin)

The conventional wisdom was that this was a “now or never” moment for Rep. Bachman and that she may be the candidate going in with the most to lose.  I happened to agree with both of these assertions and feel that clearly lose is what she did.

For whatever reason all her flaws as a candidate seemed to be highlighted on this night—namely her penchant for not directly answering questions, her need to spend time defending unnecessary and questionable statements made on the trail, and her inability to effectively handle questions in a way that maximizes benefit to her (something that Romney is quickly becoming a master at by the way).

She started the night being asked to take another shot at answering a question she was asked in the last debate and failed to answer.  Amazingly she failed to answer the question (in a realistic way) yet again, and things didn’t get much better after that.  A shot at Perry about financial contributions he received from a drug company and a possible connection they had to an executive order he issued failed to resonate the way she no doubt expected it to.

On a policy level not much new was made known.  She was strong on immigration (“We should build a fence on every mile, every foot, every inch of that border”), made clear she would abolish the Dept. of Education, and was once again a bull on repealing Obama Care.  Her willingness and insistence on making this issue a near obsession is, in my view, the strongest thing her candidacy has going for it at this point, and I am continually surprised that more of the others don’t hammer away at this issue as intensely as she does.

Her biggest problem is two-fold.  For being no lower than forth in any poll she gets relatively low air time, and much of the time she does get is spent explain misstatements and largely missing opportunities to score maximum points with her answers.

She is a “loser” on this list because the aforementioned reasons are coupled with her being compared to more skilled candidates, and the recent rise of Newt Gingrich, Rick Santorum, and the re-rise of Herman Cain.

First of all, failing to raise the debt ceiling would not automatically lead to a default on the national debt. The federal government would continue to collect revenue, and could use that revenue to pay debt obligations as they fall due, or in other words, pay the coupon interest on time. This would involve deep cuts to everything else, and if you are a professional politician that is synonymous with impossible, so there is an assumption that default would be the result.

And that default would be “apocalyptic,” “a catastrophe,” “a disaster,” or would “cost us our credit rating,” – which is doomed anyway because it is a mirage; the federal government is borrowing 40% of the money it spends this year and is projected to do so for the next ten. This is not a debtor worthy of a AAA rating, and the only reason we haven’t seen a failed bond auction is because the Federal Reserve has been buying everything in sight.

Professional politicians who never saw a dollar belonging to somebody else that they wouldn’t spend, now lecture us on the importance of borrowing money to pay the obligations on the money they borrowed to spend on political goodies. We are told of the need to increase our debts to stay current on our debt payments.

When individuals pay debts with new debts (called “Surfing” by finance experts) it is usually the last desperate trick before they call a bankruptcy lawyer. When our political overlords do it, they demand to be: 1. Re-elected; 2. Paid more; 3. Given a medal or an honorary Ivy League doctorate.

The apocalypse for the Democrats is that this issue is coming to a head too soon. Over the next ten years, a majority of the baby-boom generation will be enrolled in Social Security and Medicare. And, as the American economy continues to die over the next ten years, it is thought that these voters will be more frightened of losing benefits than of the country collapsing under the weight of the debt. Government dependency is the Democratic Party’s stock-in-trade, and they will be there to defend all government spending with borrowed (or more likely, printed) money.

In their calculation, if they can only delay the eventual tipping point where the economy just can’t take more debt, then as things continue to get worse more voters will fear losing Big Government than losing everything to Big Government.

While we’re talking about Medicare, some time soon you should do a web search for “unemployed college graduates,” and see how many news articles you can find. Think about this: A generation wants to get government-financed benefits, while a younger generation is chronically underemployed and not paying much money in FICA (Federal Insurance Contributions Act), the tax that funds Medicare. No job means no wages; no wages means no FICA; no FICA means no Medicare – unless they print the money and finance it with pure, un-tempered inflation.

The professional politicians cannot get us out of this problem; it is in their best interest to make the problem bigger. The cynicism is downright psychopathic – make sure that so many people depend on your appropriations that you cannot lose power even if the country is completely bankrupted. This, I fear, is what most Congressional Democrats, and probably most Congressional Republicans, intend to do.

It must stop. It is time to stop rewarding politicians who successfully loot the public treasury by affixing their names to schools, institutes, nature trails and wildlife refuges as recognition of their long and illustrious careers of running the nation into serfdom.

I’ve been told that veteran bankruptcy lawyers have a common speech they give to their clients who feel guilty or ashamed about the debts they’ve run up. They say “Stop that. Do you think corporate CEO’s feel guilty when they restructure debt? No! You are Mr. and Mrs. X, Incorporated, and you are getting out of debt.”

We need to put down the pride, the guilt, and the illusions of prosperity fashioned by self-interested politicians, and declare that we are the United States of America, Incorporated, and we are getting out of debt. If we don’t, we will default eventually anyway either directly or through currency devaluation, but by then our nation will not have a future. At all.

[Note: The first article “On National Debt, Default is Inevitable,” the numbers in the article were from the Monthly Statement of the Public Debt, June 2011, but the link inside the article was to the Monthly Statement of the Public Debt from June 2010. Apologies for the error.]

Photo Becky Stares – Fotolia.com

The following is the second installment of a two part piece. The first is entitled “The Stench of Impropriety: Tom Harkin, Al Franken, Herbalife International, and The F.R.E.E.D Act”, and can be viewed below.

In part one of this piece, I introduced you to the relationship between Tom Harkin and his largest campaign contributor, Herbalife International. A partnership that demonstrates the perils of an incestuous system of politics and money, and ultimately played a part in Harkin’s introduction of the F.R.E.E.D. Act in the U.S. Senate. As bad as that looks, what the bill actually proposes to do is just as bad.

The act itself is only impressive in that it manages to hit the Liberal trifecta—it is completely devoid of any traditionally rational Constitutional basis, it increases and empowers an unelected bureaucracy to spend our money, and is a blatant attempt to further grow the entitlement base (which we can’t afford as it is now).

As the name suggests the stated mission of the bill is “to enhance and further research into the prevention and treatment of eating disorders, and for other purposes”. The bill opens with an assortment of claims and statistics meant to spur the reader into supporting its “heroic” intentions. Included here is that, “estimates, based on current research, indicate that at least 5,000,000 people in the U.S suffer from eating disorders including anorexia nervosa, bulimia nervosa, binge eating disorder, and eating disorders not otherwise specified” and “anecdotal evidence suggests that as many as 11,000,000 people in the U.S, including 1,000,000 males, may also suffer from these disorders”.

Naturally, the way this legislation would solve this problem is to create more agencies, throw an undisclosed amount of money around, and as mentioned above, amend and expand the Social Security Act of 1935 to ensure that we as taxpayers pay as much as possible in curing our fellow citizens’ ills.

The additional bureaucracy it proposes creating would exist inside The Department of Health and Human Services and be named—I kid you not—“The Interagency Eating Disorder Council”, and be funded from 2012 through 2016. To run this Council and to award grants (i.e. our tax dollars) would be the Director of The National Institute of Health, Francis S. Collins. His job would be to hand out money, as he saw fit, to various non-profits, colleges, State or local health departments, and community based organizations.

The bill states that the grant money is to be awarded for, among other things, the following reasons: to conduct a study regarding the economic costs of eating disorders that would “examine years of productive life lost, missed days of work, reduced work productivity, costs of mental health treatment, costs to family, and costs to society as a result of eating disorders”. In addition, money would also be required to go to “promoting positive body image development, positive self-esteem development, life skills that take into account cultural and developmental issues and the role of family, school, communities and the connection between emotional and physical health, and the prevention of bullying based on body size, shape, and weight.”

In short it is an embodiment of the kind of financially irresponsible, Constitution-shredding, emotionally-driven, nanny-state legislation that modern day American liberals have become synonymous with.

When it comes to co-sponsor Sen. Franken, though Herbalife did throw him $250, my sense is that he is in it for the pure ideological benefit of expanding the entitlement base…otherwise known as Section 938 of the F.R.E.E.D Act.

Section 938 is entitled “Grants to Support Patient Advocacy”, and would essentially require an unspecified amount of our tax dollars to be spent “diagnosing” people with eating disorders and enrolling them in Federal programs. In the bills words, the funds would be spent to “provide education and outreach in community settings regarding eating disorders and associated health problems, especially among low-income, minority, and medically underserved populations”, (Sect. 938(c)(1)); “providing education and outreach regarding enrollment in health insurance, including enrollment in Medicare, Medicaid, and the Children’s Health Insurance Program (SCHIP)”, (Sect. 938(c)(6)); and for, “Identifying, referring, and enrolling underserved populations in the appropriate Health Care agencies and community based programs and organizations in order to increase access to high quality health care services”, (Sect. 938(c)(6)).

It has long been believed by liberals that the surest way to get to a single payer health care system is to get enough people dependent on the government for this service that the private insurance sector can no longer exist. My view is that Sen. Franken (and probably Sen. Klobuchar and Sen. Harkin) wrote this part of the bill to hasten this process by further adding to the 16 million people that Obamacare is already slated to dump into Medicaid in the coming years.

Indeed this bill has a little something for everyone. The citizens among us deemed to have an eating disorder would get free medical attention, Herbalife International would be eligible to bill the Federal government for weight loss and eating disorder “treatments”, Al Franken could successfully move us one step closer to socialized medicine, and Harkin, well he has already gained $137,916 in campaign contributions (no matter the ultimate fate of the bill).

Those left among us who still respect the Constitution and its clear vision of the role of Federal government know that somewhere along the way we have failed it. Every single element of this bill, from the spirit in which it was offered, the language it contains, and the system it arose from is the epitome of this failure. I would argue that not only does this bill need to be stopped, but the institutionalized system of political donations from private companies needs to be abolished. Until such reform comes there will be no reprieve to the endless wave of disastrous special interest legislation that this bill represents.

It is we the American people that need to be F.R.E.E.D.

Richard Doak – What if the founders were around today?

Donald Kaul – My favorite 4^th of July speech

Dean Baker – Keep Social Security safe from politicians who want to save it

This week I will focus my comments on Dean Baker’s article sub-titled “Real patriotism requires coming to terms with the grimmer side of American history”. Mr. Baker is co-director for the Center for Economic Policy Research (CEPR). The CEPR home page lists 10 funders, mostly far left organizations including the Open Society Foundations, which was founded by and led by George Soros.

Dean Baker-He advises the reader that two thirds of people age 65 rely on Social Security for more than half their income. He notes that “with traditional pensions disappearing and many near retirees losing much or all of the equity in their home, and also seeing 401(k) assets plummet”, hence “the next generation is likely to be even more dependent on Social Security”. He then proceeds to explain “Fortunately the program (Social Security) is fundamentally solid”. He goes on to summarize various facts about the trust fund and speculates about various ways to further improve the long term health of the program. He says “Many opponents of Social Security insist that its $2.6 trillion trust fund does not exist or that it is “just sheets of paper”. He acknowledges that “the trust fund is held in the form of U.S. government bonds, which are indeed sheets of paper. However, investors everywhere eagerly seek out these ‘sheets of paper’ as the safest asset in the world”.

• Public reliance on Social Security-Mr. Baker is not providing a fully accurate picture in his description of the American public’s dependence on Social Security. I checked several sources for my information and found them to be relatively consistent, so I have only referenced three of them. My conclusion is that Americans who have lived within their means, saved money, invested prudently and maintained marketable skills are relying properly on Social Security as a meaningful component of their retirement. Social Security was never intended to be more than that.

• Average U.S. Home Prices[1]

• The median price of homes in the United States in 2004 was $221,000. It peaked in 2007 at $247,900. In 2010 it was $221,800. Baker’s statement about near retirees losing much or all of their equity would only have occurred if they leveraged their home equity for other reasons. If they had been in their home for 20 years, even the depressed 2010 prices reflect a gain of 80%.

• Americans age 65 and older receive most of their income from four sources: employment, Social Security, pensions, and asset returns, according to a recent Congressional Research Service report. The prevalence of each of these types of income has shifted somewhat since 1980. More Americans now continue working past age 65 and fewer people bring in income from assets. Here’s a look at how the biggest sources of retirement income have changed over the past 30 years.

• Employment. In the 1980s and 90s about 16 percent of seniors worked, a number that steadily increased to 20 percent in 2008. Earnings now make up over a quarter (26 percent) of income for Americans age 65 and older, with the typical senior bringing in a median of $20,000 annually from work.
• Social Security. Social Security remains the most common source of income for people age 65 and older. About 86 percent of seniors receive these monthly checks for a median of $12,437 annually. This entitlement makes up 39 percent of the typical senior’s income.
• Asset income. Just about half of Americans (54 percent) receive some income from assets, down from 67 percent in 1980. But most Americans don’t receive very much in the form of interest, dividends, rent, or royalty payments. Interest rates and dividend yields have fallen since the early 1990s. The typical American made just $1,054 off their assets in 2008. Asset returns account for approximately 13 percent of retiree income, down from 24 percent in 1990. (Writer’s note: The Federal Reserve is “saving the economy” with 0% interest rates. Unfortunately this punishes millions of retirees who saved for their retirement and were counting on fair returns on bank deposits, CD’s etc..)
• Pensions. The proportion of Americans with a pension from a former employer has fallen slightly from 37 in 1990 to 34 percent in 2008. Pensions payout a median of $10,800 annually which makes up about 20 percent of the typical retiree’s budget.

My main issue with Mr. Baker is his insistence that the Social Security Trust Fund is secure. The current crisis over the debt ceiling now exposes that lie completely. President Obama has admitted that checks may not be issued if the U.S. Treasury cannot continue to borrow next month. If the Social Security Trust Fund held real assets, rather than government paper, they could sell those assets and pay benefits independently from the General Fund. As noted above, long term investments in real estate, stocks, bonds, commodities (gold), etc. have real value. Unfortunately all we have is paper made worthless by closet socialists like Tom Harkin and Barack Obama. I wish this were not true. I have paid into these programs at maximum levels for most of my working career. Privatize Social Security? Absolutely. Young people should demand it. The Ponzi scheme is over!

I refer you to the following article, The Fraud of the Social Security ‘Trust Fund’ Exposed by a Most Unlikely Source by Don Boudreaux on July 16, 2011[4]

If Americans choose to accept the misinformation of socialists like Mr. Baker as fact, then they deserve the government and fate that they choose. The Republicans have proposed a plan and until President Obama does likewise, they should be applauded for at least recognizing the problems. Mr. Baker knows better. He is simply a socialist who hopes to use the budget crisis to tax the private sector out of business, redistribute an ever shrinking American economic pie, and secure power for global elites like George Soros.

Photo: Gino Santa Maria – Fotolia.com

The debt has many component categories, the largest of which is called Marketable Debt. That means the portion of the debt that was issued in treasury securities that can be sold in the secondary bond market, and it is around $9.2 trillion. The rest is Non-marketable, and held mainly by the Social Security Administration through bonds that cannot be sold.

The Marketable Debt also has its own sub-components, based on the type of security that was sold to incur the debt in the first place. Treasury Bills mature in 1 year or less and accrue interest; Treasury Notes mature in 2, 3, 5, 7 or 10 years, and Bonds mature in 30 years – and the Notes and Bonds pay coupon interest every six months. Each bond is sold at the prevailing interest rate at the time of the sale.

Here is the part that is frightening: Starting under President Clinton, expanding under Bush, and exploding under Obama, the federal government has shifted its borrowing from traditional 30-year Bonds to the shorter term securities.

According to the US Department of the Treasury’s Monthly Statement of Public Debt dated May 31, 2011, of the $9.2 trillion dollars of Marketable Debt, only about $965 billion are 30-year Bonds. More than $6 trillion are on Notes, with maturities ranging from 2 to 10 years, and a whopping $1.5 trillion are on 1-year Bills.

We are running record deficits, so we aren’t paying any of these off when they mature – we just roll them over onto new securities. We’re also adding another $1.6 trillion on to the pile.

Right now the Federal Reserve is fixing interest rates at levels so low that they cannot be maintained forever. When the Fed raised interest rates to more than 20% back in the 1979-82 recession, the Treasury actually sold some bonds at interest rates of 20% or higher. Imagine if interest rates went up to just 10% today, and stayed there for a couple of years. All of those Bills and Notes that mature and are rolled over will roll over to higher interest rates.

The interest payments alone will easily top $700 billion dollars a year, and since the debt is likely to grow further as interest rates go up, the country is likely to pay well over $1 trillion per year in coupon interest alone -which will be financed by the issuance of new Treasury Notes.

Imagine a world where the Army is disbanded, Medicare covers only critical care needs, the Social Security age is retroactively raised to 75, and the all retired government officials lose their pensions because the United States needs to dedicate so much of its budget to paying the interest on the debt. These are politically impossible measures.

The only other way to avoid direct default is to print money – destroying the nation’s economy with hyperinflation but technically making the interest payments, albeit with dollars devalued to near worthlessness. That’s how the Federal Reserve managed to keep interest rates so low up to this point – by buying Treasuries at artificially low interest rates with printed money. That is why Bill Gross of PIMCO dumped every piece of US Treasury paper his hedge fund owned – the returns on these bonds would have been eaten up by inflation.

There it is – either we ruin the dollar or we default. Default is by far the better option; we can restructure our debts to something more manageable. This will ruin our credit rating forever, so future politicians will not be able to run deficits for vote-buying projects and illegal “Kinetic Military Actions,” whatever those are. There are silver linings everywhere.

My first cataloguing thought was that the Massachusetts tornado was the most bizarre thing that happened this week; but I concluded it only scored 8.0 on the 10 point scale. After all, the weather has been crazy this year. Then it occurred to me that “Weinergate” was about as weird as it gets. And it did involve the Honorable US Representative Anthony Weiner from New York…making it a natural candidate, by definition.  Many of us would have been more comforted by simply hearing him say “That is not mine.” as opposed to “It was pranksters.” But even allowing for a couple of additional Anthony Wiener style points, he only merited 9.0 on the Bizarre Scale.

I then gave passing consideration to Barack Obama’s honoring of our fallen war heroes with an “18 flag tribute” at the local golf club on Memorial Day. And that might have been a winner had the event in any way stuck out from his normal complete lack of respect for people who actually believe in what America stands for. While scoring an impressive 9.5, the President’s behavior still fell short of this week’s winner.

The winner for the most bizarre thing that happened this week, with a score of 9.7, was Clinton’s former Secretary of Labor, Professor Robert Reich, from (of all bizarre places) Cal Berkeley.

In an article in (of all bizarre places) the San Francisco Chronicle, he is quoted:

In response to slow economic growth: “Right now we need more public spending in order to get people back to work. And we need a new Works Progress Administration to get the long-term unemployed back to work.”

In response to declining home prices: “That means most Americans have to save big-time if they’re going to be able to retire or even send the kids to college. As a result, consumer spending will stay anemic and unemployment will remain high – unless Washington fills the gap.”

And he teaches our children this stuff…

So if the federal government is currently spending $1.5 trillion more than it receives (an annual deficit representing nearly ten percent of the entire economy), that is not enough government stimuli? What amount might be enough, Mr. Reich? (In the good professor’s defense, he does likely make the highly nuanced distinction between normal unproductive and wasteful federal government spending and targeted unproductive and wasteful federal government spending.)

And what gap is it that Washington needs to fill? I guess this assumes that irrespective of how poorly the economy is managed, and unrelated to how little money consumers have to spend, that the government can just step in and “create an economy.” Does he really not understand the notion of rational investment and the resultant productivity increases that singularly drive economic growth? Is his whole world just one very large social and political abstraction for Mr. Reich? Whatever it is, it is truly bizarre.

Apparently, this is the thinking of people like Mr. Reich: If something isn’t working, has never worked, and will very likely never work, and yet you believe in it very strongly…just do more of it. If you do not find yourself tortured enough by running outdoors in temperatures of nearly 100 degrees, slap on a sweatshirt! The underlying logic embedded in both of these scenarios is both beautifully and brutally consistent.

For his remarkable jeremiad, Professor Reich is credited with a score of 9.7, and is the winner of the “Most Bizarre Thing of the Week” Award. Well done, and congratulations, Bob!

Chet’s speech was a big “cheer” for IJOBs, a contentious program at best, and he was heavily defensive of the program bought with our grandchildren’s taxes (if they become gamblers).  Rightly so, the Governor promoted the “successes” of the past year, many of which Iowan’s should be proud, such as the late year AFSCME agreement and progress in rebuilding from weather-related disasters.  But while proclaiming that the new budget will be balanced, he provided scant information on how that would be accomplished aside from a priority to “reorganize government”.

And for the hundreds of Iowans who showed up today on both side of the Definition of Marriage issue, not a peep.

Of course, he also did not speak to Fair Share, Prevailing Wage, or repealing Federal Deductability.  But then, why stir the pot?

It has taken far too long for the Governor to respond to critics regarding his handling of the state’s budget, a problem which started a year ago (or even prior to that, but let’s not digress) when the Governor presented a monstrous budget recommendation which led to the largest spending plan Iowa has ever seen (during a recession no less) and pressed for legislators to borrow $650 Billion (costing Iowans $1.4 Billion).  The problems this has created didn’t just get dropped on Culver’s doorstep last week… it’s been worsening since the 2009 Legislative session concluded.  His effort to “set the record straight” on his management of the budget this past year amounted to little more than the usual creative accounting and deflection.  His answer to critics: “Our budget has been balanced every day”.  Eyes were rolling throughout the chamber during that line.

As far as his “big, bold” ideas are concerned, there’s no doubt it’s big.  The Governor is clearly anxious to continue spending money he doesn’t have, and wants the legislature, among other things, to take money from the Roads Fund to pay for increases to the State Patrol and Department of Public Safety.  This amounts to cost-shifting, and it will quickly catch up with us.  If we can’t operate from the state’s operating revenues, we’ll have more of the same mess that was created last year by using Federal Stimulus money to finance operating expenses.  The problem: when that money is gone we won’t have anywhere else to go.  To fund these great ideas, at the end of the day, we will be raising taxes, whether by repealing Federal Deductability, raising fees, or raising those things actually called “taxes”.

Culver’s number one priority, rightly, is Jobs.  His solution, funding training programs, is wrong.  What’s needed are changes in government policies to help businesses be more productive and consumers to have more resources to stimulate economic growth.  No amount of money poured into training is going to create jobs.

The “surprise” for schools is exactly that… a 2% increase in spending on schools.  This was not just a surprise for the school districts… the collective “gulp” from Democratic lawmakers was palpable.  It will be interesting to see if that’s an increase over the original spending level or the post-10% reduction.  Either way, this increase means even more money will need to be cut elsewhere, and neither the Governor nor the Legislature has shown the gumption to stand up and say what everyone else knows: we have to start completely cutting unnecessary programs.  But as long as the Governor is “proud” of such things as the fact that we will have the best 21st century Veterans Home, we will be fighting a losing battle.

If the Governor is serious about funding quality education in the state, this plan still does not get us there.  Forcing schools to use up their cash reserves doesn’t help either.  Culver and the legislature need to grasp that the state can’t necessarily solve every education problem.  Far better to work toward real consolidation as Iowa’s school district populations fall, and hold school districts accountable for how they spend state money.

Clearly, our Governor is trying very hard to get Iowa back on it’s feet.  But trying hard and succeeding can be two entirely different things.  The Governor, although starting to understand the realities of economics, is still flailing around in hopes of being lucky enough to hit that perfect solution that solves all of our problems at once.

It’s not going to be that easy.

The fact is, we need to cut this budget back to the bones… or perhaps just start over again.  What do we really need the government to do for us?  Unfortunately, there is an awful lot of money being spent on Iowans “wants”.  This should not even be the focus of government, but that’s what it has turned into.

And no one in power in Des Moines has the will to do what’s needed.

~ ~ ~ ~ ~

One other point: the Governor mentioned that he and the Lt. Governor (Patty Judge) will be going on an “Iowa Jobs Tour”.  You’d think he might want to combine this tour with his upcoming campaign… oh, wait…