by Dr Bob Stouffer | Jun 27, 2011
For the past few years, I have been watching my weight carefully. I value the life I have been given, and I want to take good care of myself through proper sleep, diet, and exercise. In March, my mother-in-law died, and it only took a couple weeks of constant grazing through the meals of generous friends and families to result in a weight bulge. I could feel the extra weight at my waistline. Try as I might, sucking in my stomach didn’t make the problem go away. A similar lack of discipline with spending has put Iowa and other states in financial messes.
The Iowa Legislature annually engages the state’s school funding formula to provide “allowable growth†to public school districts. Because of the state’s challenging financial situation, the Republican Governor and Republican-controlled House have been attempting to hold the line with a proposed 0% allowable growth against the Democrat-controlled Senate. Impasse occurred. Public school superintendents lobbied hard for a 2% increase. Typical partisan politics have thus far prevented a final budget deal, and the Legislature is several weeks past their anticipated adjournment as a result.
I have an interesting perspective on this issue of educational spending, because I spent the first 20 years of my career as a teacher, coach, associate principal, and principal in several public schools of Iowa. For the past 11 years, I have served as the superintendent of a non-public school.
I am embarrassed to admit some of the spending habits in practice during the first phase of my educational career. We didn’t do anything illegal. And there were no $500 hammers. But, as I look back on those days, we could have been MUCH more effective stewards with the monies entrusted to us by Iowa’s taxpayers.
As we were closing out the books on fiscal years, we were sometimes left scrambling to figure out how to spend balances of General Fund accounts which could not be carried over to the next fiscal year. Budget makers too often padded accounts from year-to-year for “wants,†not “needs.â€Â Such was why I was always a strong advocate of zero-based budgeting, but I was seldom successful in implementing that practice in its purest form.
I vividly recall attending a meeting of government officials who were charged with explaining the process for submitting proposals to obtain Obama stimulus monies for Iowa’s schools. A surreal moment occurred when one of the policymakers actually said, “There is so much money, I don’t know if you can figure out how to spend it all by the deadline.â€Â I shook my head in disbelief at that time. Did he really say that? I thought. He did. No question.
My perspective on educational spending changed dramatically when I entered the arena of non-public education. Our schools survive mainly on the tuition dollars of our parents and guardians, with additional dollars raised through fund-raising. Non-public school leaders take their fiduciary responsibilities very seriously, because we definitely need to give a strong return on the investment of parents and donors. The business practices are much more conservative in non-public schools than in public schools. Waste not, want not.
If I said aloud to my public school colleagues what I am about to write publicly, I would probably be met with fairly defensive responses, but I must say the “unpardonable.â€Â Just as federal and state governments should be attempting to tighten their belts by eliminating duplicated programs and wasteful spending practices, so, too, should the state’s schools carefully scrutinize all line items and expenditures.
Iowa’s schools so often look at increased funding as THE answer to any problem. But I contend that millions of dollars could be saved through concerted streamlining. To whom much is given, much is expected. Accountability is crucial. ALL of the schools in Iowa – public and non-public – must do their parts to be excellent stewards with the financial resources entrusted to them. Times are tough. We’ve got to figure out ways to stretch our dollars. Time to stick to the basics. We’ve got to lose some of that fat which has come to too often characterize our budgets. Discipline and dieting will put Iowa’s schools in better shape.
by | Jun 23, 2011
“The Conservative also recognizes that the political power on which order is based is a self-aggrandizing force; that its appetite grows with eating. He knows that the utmost vigilance and care are required to keep political power within its bounds.†– Barry Goldwater
Evidenced by the fact that I recently finished re-reading Barry Goldwater’s The Conscience of a Conservative on a kindle—much has changed since it was first published in 1960. However, by the staggering parallels that its content has to the political realities of 2011, one could say that not much has changed at all.
Anyone who chooses to invest the few hours necessary to read this book will become apprised of the historical context in which the political and ideological battles of our generation fit into the course of our Country’s history. Indeed it becomes clear that the rise of the Tea Party is not the first attempt to reconfigure our relationship with government, but is merely the continuation of a movement first given voice to by Barry Goldwater 51 years ago.
Written with eloquent clarity, its importance rivals, and perhaps even trumps, the documents surrounding our Nation’s founding in importance based on its remarkable relevance to our day. While the theory behind the writings of Thomas Jefferson, The Federalist Papers, and Common Sense are inarguably still viable, Goldwater is able to make his case specifically against things that did not exist in the 18th century, but did both in the 1960’s and today. In fact, if you replace the word Communism with Terrorism, the entire list of topics that he addresses—a growing federal government, National debt, the welfare state, The United Nations, the erosion of personal freedoms, and labor unions—all remain the exact flashpoints of our modern day political struggles. Here are just a few of the many examples.
Federal Spending
“Now it would be bad enough if we had simply failed to redeem our promise to reduce spending; the fact, however, is that federal spending has greatly increased during the Republican years. Instead of a $60 billion budget, we are confronted, in fiscal 1961, with a budget of approximately $80 billion.†– Barry Goldwater
It is slightly comical, and certainly sad, to read Goldwater bemoaning the entire federal spending for a year approaching, in his mind, the absurd level of $100 billion. The reaction of his contemporaries to his concerns on spending were much the same fare that we are fed from our political leaders today—a set of recommendations from the Hoover administration claiming that the government could save the taxpayers around $7 billion a year just by eliminating extravagance and waste. Sound familiar?
This was useless lip-service then, just as it is now, and prompted Goldwater to lay down a far different doctrine—“The root evil is that government is engaged in activities in which it has no legitimate business. . . . The only way to curtail spending substantially is to eliminate the programs in which excess spending is consumed. The government must begin to withdraw from a whole series of programs that are outside its Constitutional mandate . . . and all that can be performed by lower levels of government, or by private institutions, or by individuals.â€
Taxes
“Government does not have an unlimited claim on the earnings of individuals. One of the foremost precepts of the natural law is man’s right to the possession and use of his property.†–Barry Goldwater
Unlike today’s Republican who largely pins their argument for lower taxes on the received benefit of spurring economic growth, to Goldwater the issue was far more a moral one. He asks, “How can he be free if the fruits of his labor are not his to dispose of, but are treated, instead, as part of a common pool of public wealth?†Not only does this argument seem superior to the present day Conservative one, so do his other thoughts on the subject.
While acknowledging that every citizen has an obligation to contribute a fair share to the “legitimate functions of governmentâ€, he quickly does what politicians on the right nowadays fail to do effectively—tie the size of government’s rightful claim on our money to the definition of “the legitimate functions of governmentâ€. Though it seems overly simple, telling a person what they have to gain financially by restricting government is much more effective than making broad Constitutional arguments. One can’t help but think that advocates for eliminating federal agencies, and in general returning to only the expenditures authorized by the enumerated powers, would get much more traction by clearly making the connection that for every function of government that we can do without, you will keep more of your own money.
He also makes it clear that were he alive today he would be leading the charge for the flat tax, by calling our system of graduated tax rates “confiscatory†and “repugnant to my notions of justiceâ€.
The Welfare State
“The effect of Welfarism on freedom will be felt later on—after its beneficiaries have become its victims, after dependence on government has turned into bondage and it is too late to unlock the jail.â€-B. Goldwater
Among the most poignant and impassioned arguments Goldwater makes are against the continued creation of the welfare state. Largely due to the fact that when he wrote the book the programs that make up our welfare state were not yet insolvent, massively-unfunded liabilities, the nature of his resistance is mainly on moral grounds and the effect that he envisioned it having on the recipients psyche. Just as it remains today, he predicted that the emotional impulse of voters and the temptation it presents to politicians would combine to make it a deeply entrenched and ever expanding problem.
Though in its infancy at the time, he saw the building of a welfare state not only as a political strategy by the left to move the Country in a Socialist direction, but as a corrosive practice that placed the individual at the mercy of the State. It was his sense that this relationship would, over time, sap the welfare recipient of the sense of personal responsibility required to be anything but dependent.
His position is not that there be no welfare, rather that it be administered either voluntarily from citizen to citizen or through local institutions and governments. Indicating that the political perils of this position were just as present then as they are today he states, “I feel certain that Conservatism is through unless Conservatives can demonstrate and communicate the difference between being concerned with these problems and believing that the federal government is the proper agent for their solution.â€
Goldwater 2012
Reading The Conscience of a Conservative is in many ways bitter-sweet. Sweet in that it gives such clear voice to our founders’ ideals, freedom, and Conservatism; but bitter in the realization one is left with that had these battles been fought and won in his time, they would not need refighting now. Perhaps the most important thing the reader takes away from this book is a sobering reminder of how high the stakes are in the upcoming election. Armed with the knowledge of what has transpired from 1960 until now, one shudders to conceive of the consequences of not winning the battle this time around.
In further illustrating how worthwhile and relevant this book remains in 2011, let me close with what Goldwater sees as being the moment that Conservatism will defeat Liberalism: 
The turn will come when we entrust the conduct of our affairs to men who understand that their first duty as public officials is to divest themselves of the power they have been given. It will come when Americans, in hundreds of communities throughout the nation, decide to put the man in office who is pledged to enforce the Constitution and restore the Republic. Who will proclaim in a campaign speech: “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. My aim is not to pass laws, for I intend to repeal them. It is not to inaugurate new programs, but to cancel old ones that do violence to the Constitution, or that have failed in their purpose, or that impose upon the people an unwarranted financial burden. I will not attempt to discover whether legislation is “needed†before I have first determined if it is constitutionally permissible. And if I should later be attacked f
or neglecting my constituents’ “interestsâ€, I shall reply that I was informed their main interest was liberty and that in that cause I am doing the very best I can.
Goldwater in 2012 indeed.
![Politicians, Bailouts and Bank-Owned Houses]()
by Steven Waechter | Jun 21, 2011
Around the corner from my former apartment in Newton was a house that was taken in foreclosure. The “For Sale†sign had been there for a very long time, the lawn wasn’t mowed regularly and the shrubs had died in the winter but hadn’t been removed.
Walk around your own neighborhood and see how many houses are for sale. Sometimes the sign openly states that it is bank-owned, other times you might have to search on the county assessors website. There are plenty of bank-owned houses in Iowa; there are many, many more in California, Nevada, Michigan and Illinois.
The point is this: With such a large supply of bank-owned houses, of course houses will continue to fall in price. When a store has excess inventory, they need to have a discount sale to get rid of it, the same is true for houses, and banks are taking more houses every day.
Banks live and die by their balance sheets. If a bank has the cash to keep these houses in their possession, hoping that the prices will stabilize and that they can sell at prices that allow the banks to recover the unpaid mortgage, then they will keep on trying to sell houses in the usual retail market. As soon as a bank runs short of cash, or can no longer carry the costs of the property taxes and the maintenance for all these houses, they will sell their houses at fire-sale prices, probably even at auction. No reserve bids, the highest price gets the house free and clear.
This should have happened back in 2009-2010. Banks, short on cash and overloaded on houses and notes for houses, would have had to dump them for whatever they could get. This would have caused a sharp decline in housing prices, but as the houses were sold and put back to work – the job of a house is to shelter people – the supply would have been worked through and housing prices would have recovered and stabilized in relatively short order.
And then came the TARP bailout. The federal government gave billions of dollars in checks to the banks, giving them a “capital injection†– putting cash on their balance sheets – hoping that the banks would lend it out. They didn’t. They kept it in cash, and were able to carry thousands of foreclosed homes on their books through the crunch of 2009-2010.
Instead of a flash drop followed by a recovery, the American homeowner was “spared†a deep but short fall in home prices and instead have been subjected to this long, slow death march of declining home equity. The decline we got may have been slower, but it will be longer, guaranteeing that more private home owners will be forced – by a bad economy, relocation, or retirement – to try and sell their most expensive asset in a market that is still actively falling. As for potential buyers, the odds are that the longer they hold off making a purchase, the better deal they will get.
If we had skipped TARP, then this glut of houses would have been worked through by now, sold at auction either by the banks or by the bankruptcy trustees of the banks that didn’t get the message of the markets.
Politicians that supported TARP are still finding ways to rationalize it. “We needed to preserve the financial system.†“We needed to prevent chaos,†and on, and on, and on. All they achieved was to prevent real bargains and guarantee continued oversupply. They need to be held accountable for their support of that pathetic misstep passed under the cover of hysterics.
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![Politicians, Bailouts and Bank-Owned Houses]()
by | Jun 15, 2011
Seven Republican Presidential contenders took the stage in New Hampshire Monday night in attempts to sway the primary electorate in their favor. Though the performances of all were respectable, their level of success in making their cases was varied. The following is a recap of what went down, who went up, who maintained, and what surely raised some eyebrows.
The Format and The Field
In general CNN did a nice job making the debate informative and substantive. What did not work was attempting to do away with the traditional bell or buzzer to limit each candidates response time and giving them only 30 seconds to answer the questions. Thirty seconds is simply not enough time for anyone to explain their position on complex issues, especially when the questions are multi-faceted. The result of this was moderator John King, who I very much respect, constantly trying to interrupt the participant’s responses, some of these interruptions were justified, most were not, and all were distracting.
In terms of the candidates, it was stunning both how cordial they were to each other and how little difference existed between them on the vast majority of their positions. Anyone who closely followed the 2008 primary debates could instantly tell that the Republican Party has shifted further to the right than it was four years ago. To Conservatives this is not only a positive on substance, but is also comforting as it guarantees that the 2012 election will be a clear ideological choice for the rest of the Country. This is something that you could not necessarily say about McCain vs. Obama in 2008 as, though it is hard to believe now, Obama actually ran as a “unifying†moderate Democrat (no chance he gets away with that this time!).
Eyebrow Raisers
Here is a snap-shot of both the good and bad headlines that were made and the things said that could have a lasting impact on the race.
1) Though provoked, Tim Pawlenty inexplicably chose not to attack Romney on health care and Rick Santorum took a pass at wounding Romney on his abortion flip-flop.
2) Michelle Bachmann replaced answering the first question asked of her with the unexpected announcement that she is officially running.
3) Bachmann played into the potential “extremist†label by implying that she believes a pregnant woman whose life is in danger, has been impregnated by a family member, or is the victim of rape should be legally required to give birth to the child. I realize that many hard-line Republicans may agree with this and that often these exceptions can be a ruse to justify an abortion, but the point is that, by and large, this will be controversial to the general electorate.
4) Even after months of running for president Herman Cain still refuses to provide any level of specificity regarding foreign policy, even after being widely criticized for his failure to do so in the first debate.
5) Newt Gingrich “re-back tracked†on his statement that Paul Ryan’s Medicare reform proposal is “right wing engineeringâ€. After saying this initially, then the following day saying his comments were “unfortunateâ€, last night he dug in and defended his original words (though he gave a fairly effective, all be it nuanced, explanation).
6) Ron Paul, in responding to what he would do regarding our current troop deployment, gave probably the best answer of the night by saying “I wouldn’t wait for my General’s; I’m the Commander In Chief. I make the decisions, I tell the Generals what to do, and I’d bring them home as quickly as possible.†This was great in that it shattered the multi-administration practice of using the Generals and there recommendations as an “excuse†to avoiding making the hard decision of ending a war. As soon as a General says, “I think we should lose this war now and leave immediately†I will characterize this practice differently.
7) Paul emphatically said that as president he would not authorize drone attacks on Al Qaeda in Yemen or in Pakistan (and presumably anywhere else).
8) Paul also said that hospitals should not be required to give illegal aliens (in this example a 5 year old child) emergency room medical care. Now even the most passionate Ron Paul supporters have to realize that, regardless of what merit one might think it has in theory, you simply can’t say something like this in presidential politics and expect to win anything.
The Winners, The Maintainers, and The Losers
This debate saw three candidates gain a great deal; two do enough to keep their position in the field unchanged; and two who likely saw the status they have worked hard to build up diminished. The following categorizations are all based on individual expectations coming in and what they needed to do to boost their place in the pack.
The Winners
Michelle Bachmann—It’s hard to imagine her first appearance in the race, and on the National stage, going much better than it did. It was not only obvious that she belonged in the race, but that she is very near the top tier already. She confidently displayed her firm grasp on the issues, effectively alluded to her large and ongoing role in the fights on Capitol Hill, and emoted aggressiveness in going after Obama—something that Republicans are starving for. She said she would not rest until Obamacare is repealed and would spur job creation by bringing down tax rates substantially and reforming/repealing the EPA. You know it was a good night for her when the only indecisiveness she showed was on the question of who she preferred between Elvis and Johnny Cash, her answer…both.
Newt Gingrich—Anyone who thought Newt was going away anytime soon must now consider that opinion a gross overreaction. Of all the candidates on the stage it was clear he was the most steeped in history, policy, and that he was the most natural debater. The immediate post-debate reaction from the CNN crew tried to make his statement that he would demand anyone in his cabinet be committed to the country and the Constitution akin to McCarthy-ism. That is complete rubbish. He called the Obama administration a “destructive forceâ€, said he would repeal the Dodd-Frank financial reform bill as well as defund the National Labor Relations Board, and would quickly work to repeal Obamacare. Speaking of Obamacare, he was the only candidate to acknowledge the importance of a Senate majority in achieving repeal. He also said that he would re-assess our whole involvement in the Middle East and would bring our troops home as soon as possible (pursuant to their safety).
Rick Santorum—Anyone who sleeps on this guy’s chances is making a huge mistake. His two debate performances have been impressive and even if he is not able to claim victory, he has VP shortlist written all over him. Though you are not hearing a lot of buzz about him he actually gave the evenings most decisive and specific answers, and once again proved that this stage is not too big for him. He fully embraced both Paul Ryan and the Tea Party, said he would cut the capital gains tax rate in half (after 5 years of 0% capital gains), and had a well thought out and specific plan to phase out ethanol. He very successfully made the case that Obama would begin cutting Medicare in 2014, while saying his approach would be to turn the whole system into something very similar to Medicare Plan-D. Overall he delivers clean, forceful sentences and already has a large natural base with the religious right (which either Romney or Huntsman would covet in a running mate should they win the nomination).
The Maintainers
Mitt Romney—Coming in as the perceived front-runner, he likely did enough to maintain this position. He made no mistakes while intentionally breaking no new policy ground. On all major issues he spoke in the most fundamental terms of all the candidates, likely foreshadowing a strategy of staying broad-viewed and specific free in the races early stage. The biggest pluses for him on this night were that he gave the most coherent and convincing defense of Romneycare to date, and was not subjected to repeated attacks from the rest of the field, as was expected.
Ron Paul—Paul gave his standard strong performance, which unfortunately also included his usual hammering on a handful of his positions that make him an unrealistic general election candidate. He is so right about nearly everything in the domestic realm, but no Republican (or Democrat) will ever win the presidency by refusing to pro-actively attack Al-Qaeda with drones. The only way this position would be feasible is if you took the drones off the table while simultaneously offering an alternative strategy to protect us from the threat of terrorism. There is no doubt that the American people would support ending all our current engagements in the Middle East, but just implying that this alone would end the risk of being attacked is never going to fly. It continued to be obvious just how much the Republican Party has gravitated his way over the last four years by how many times the other candidates referenced both his view points and his answers (something that never happened in the 2008 primary debates).
Not only did many of the candidates say, as Paul has forever, that it is time to quickly end all three wars, but I have never heard “states’ rights†mentioned so many times in a debate before…and for that we thank you Ron. If the election only concerned domestic affairs I think it would be shocking how well he would do.
The Losers
Tim Pawlenty – For a candidate that so many expect to break through any day now—the wait continues. Though his performance was solid he really needed to do more, and he had the chances to. Not only did he inexplicably fail to challenge Romney over health care, he also failed to capitalize on being the only candidate so far to have released a specific economic growth plan, which he did last week. Talking his plan up should have been the first thing on his agenda (and the second…and the third). He absolutely could have drawn the distinction between himself and the rest of the field that he desperately needs by saying “I am the only candidate on this stage that has a concrete plan to turn the economy around, the rest of these people are only offering wordsâ€. That being said, he did give strong answers on fair trade, right to work, and was the only one to mention the importance of appointing Conservative justices to the courts (which he had a good record of doing in Minnesota).
Herman Cain—While he was able to shine with the lower-tier candidates in the first debate, Cain struggled to stand out amongst the heavier hitters. What hurts him the most is that while others are able to point to decisions they have made, votes they have taken, and legislation that they have championed, he is not able to do the same. Not being able to cast himself in those roles creates a perception, probably an unfair one, that he is removed from the fight. He could counter this by bringing to the debate specific, innovative, and well thought out solutions, but as of yet these are in short supply. Driving this point home was the fact that, despite being the former CEO of a restaurant chain, he did not even have a specific opinion on the FDA—saying in response to a question that “maybe†they need to be reformed or stream-lined. There is a lot to like about him, and he did have some good moments, but how he thinks, after months of running for president, that he can refuse to give specific foreign policy opinions is beyond me. If anyone has the personality to make some populist noise it is him, but more than any other candidate he needs to be offering unique, brilliant, and very specific proposals to stand out. If he does this he will elevate his status, until then he will remain buried in the pack.
Photo courtesy of TEApublican.
by Steven Waechter | Jun 13, 2011
Imagine a plot of land in the desert, consisting only of mesquite scrub and dust. If you assembled a system of sprinklers on this desert land, and ran them heavily enough, you could make the desert green with grass, corn, or even water loving willow trees. But then the water supply you are stealing from runs dry, and the sprinklers sit there, idle. The greenery of your efforts wilts, dies and turns to dust.
This is the story of government stimulus. First, the federal government stole – yes, I said stole – hundreds of billions of dollars to bail out first the banks, and then General Motors, and then spend hundreds of billions more on the President’s stimulus package, which promised to reignite the economy, fight of the recession, and reduce unemployment. The federal government crowded out private borrowers from the capital markets with their enormous deficits, damaging other sectors of the economy – but no matter. The stimulus program would create or “save†jobs elsewhere, making the whole thing worth while, somehow.
It didn’t work. It was never going to work. All we were left with was another economic bubble; this one not in stocks or in housing, but in government spending. Now, the cash supporting this situation – the air inflating the bubble – is being printed, at the cost of inflation and rising prices on everything; essentially theft through increased costs of living. Consumer spending is shifting to cover the increased costs of food and fuel, to the detriment of other goods and services.
As it became an obvious failure, the first impulse was to double down with another stimulus program – digging a deeper well. But not this time; the wealth of the country was depleted, the water was gone.
Now, we stand at the beginning of the double-dip recession – a recession within the depression that was born from the last recession. This time there is no way out and no way to delay. The economy as a whole can no longer afford to supply the cash to keep the government spending bubble inflated, a bubble that never should have existed in the first place.
It is time for the economy to be purged of all the mal-investments of both government and business and finally rebalance itself, something which it has not had a chance to do. Government stimulus was doomed from the beginning because it only stimulated a portion of the economy that depended entirely upon government money; the rest of the economy was damaged by this, not improved by it, and governments can, in fact, run out of money.
The next phase of the recession will be more painful than the first; with an economy that has been further weakened and a government lacking the resources to do much of anything, the next big dip is going to be one for the history books – which is terrifying.
For the past few years, I have been watching my weight carefully. I value the life I have been given, and I want to take good care of myself through proper sleep, diet, and exercise. In March, my mother-in-law died, and it only took a couple weeks of constant grazing through the meals of generous friends and families to result in a weight bulge. I could feel the extra weight at my waistline. Try as I might, sucking in my stomach didn’t make the problem go away. A similar lack of discipline with spending has put Iowa and other states in financial messes.