travisthornton.net

My apologies for the last string of posts.  I was boring myself with them, honestly.  You probably don’t want to hear me drone on and on about the decline and fall of Western Civilization – it’s depressing.  The data is there if you want it.  You really don’t need me to simply repeat it for you.  The argument always deteriorates into something I never wanted to get into:  first, I present the facts; then, I give my opinion on the facts; but after that, I start questioning motives, saying things like “Obamacare is not about health care at all – It’s about control.”  I mean, how could I know that?  Are the President and Congress deliberately driving the nation over the brink?  Who am I to say?  In the parlance of the President, that’s “above my paygrade.”  That’s between them and God.

This week, however, I reached an inflection point, at least in my own mind:  if I had to guess, I’d give the United States a fifty percent chance of making it as a (free) nation.  Why do I say that?  Well, this week, the White House Budget was released, and it’s quite ridiculous.  With a record-breaking $1.6 trillion deficit, the federal government is set to spend $3.8 trillion in 2011.

Does this make any sense to you?  Is this how people live?  Oh, right, right, we have to do all this, certainly because of something George W. Bush did.  I hear it almost daily.  This liberal trope has run its lifespan; the largest of the Bush deficits, of which this Administration “inherited,” was less than $200 billion (one-eighth of Obama’s, if you are not mathematically inclined).  I’d call it “doubling down cubed” on the worst parts of Bush’s policies.

Although I promised not to go into the stats – yeah, I’m already slipping – but our deficit-to-GDP ratio is 10.6 percent.  To put this in relative terms, the EU is set to order Greece to reduce theirs from a current 12.7 percent level to 3 percent.  What would we do if China ordered us to do that same thing?

Which leads me to conclude we are in a free fall, held hostage by the most irresponsible public servants in our nation’s history, unwilling to make the hard choices, unwilling to sacrifice, like Castor for Polydeuces, an “entitled” level of comfort to sacrifice for others, namely, our children.  Both parties lack the willpower to do so.  Is there any HOPE?  Tell me what you think, because I’ve said my piece.

I’ll re-double my efforts and focus on abstraction.  Take a ride with me, through my personal life and a bit of history, and see if you can follow a couple of themes, which have, in fact, already begun.

Boots or Boat Shoes?

Since getting a pair of boots last month, every morning, I face the same question.  Do I wear my boots, with the hardest working soles I’ve ever owned, or my typical boat shoes, which are, by nature, flimsy.  It should be noted I have three serviceable pairs of boat shoes, five total, but only one pair of boots.  I feel like a boss in either manner of footwear, so the question is independent of preference, because I like them both equitably.

Why does it matter?  Not accounting for the ambulatory requirements in the record snow now outside my house, this is indeed an existential question.  Boots of all sorts are generally worn by people in a field of work involving something physical – I reject the term “working class,” as well as “middle class,” as I oppose any kind of feudalist order and terminology – while boat shoes are worn by, well, the “sailing class.”  That’s sarcasm.  Also, in a way, both of these shoes represent and pay homage to two distinct parts of my life.

And while the question is multi-faceted, the answer is not:  depends on the pants.

Bluegrass or Old-Time String Music?

My favorite music spans these two genres.  Admittedly, the two styles are intertwined, like siamese twins, hinged at the hip.  Where one begins and the other ends is sometimes indistinguishable, while the extremities of the two are immediately recognizable as separate.

Bluegrass has a boom-chuck-boom-chuck rhythm, usually established with a bass and a chop from either a mandolin or a guitar, and filled with a rolling banjo and likely a fiddle.  Bluegrass is immediately recognizable and often fast in nature.  ”Old-timey” music sounds like Depression era hymns, are slower in nature, and are meant to be uplifting, healing, or simply provide comedy relief.  What is more entertaining to see is how iTunes labels this music, especially when the former ventures into classical styles, such as chamber music, or jazz, as with the Flecktones.

Why do I like this music so much?  Perhaps it’s because of our similar origins in Appalachia, and before that, back across the pond.  Unlike steel, though, DNA is not made stronger by folding (and re-folding) it onto itself.  Somewhere deep in my DNA lies a proclivity for the pairing of a banjo with fiddle (or two, best represented with the twin fiddles of Mark O’Connor and Stuart Duncan on Bela Fleck’s “Up and Around the Bend“).  More than likely, my ancestors have been playing music like this for centuries.

This kind of music evokes an emotion within me other types of music simply cannot.  Why try to classify any of it?  I mean, what, exactly, does Doc Watson play?  I don’t know, but I know I like it.

Wilson or Coolidge?

In our history books (and Wikipedia), one of these men is lionized, while the other is demonized.  That’s not surprising, as the American system of learning has been hijacked by leftists, perpetuating the problem by producing little leftists.  If you couldn’t tell, I obviously have a different take on it, for the following reasons, which are not spelled out by the Trotskyites who plagiarize their professoriat for Wikipedia.

Before Woodrow Wilson, there was no permanent income tax.  There was no Federal Reserve, and no Internal Revenue Service (as we now know it).  When first implemented in 1913, the upper income tax rate was 7 percent.  Eight years later, the upper rate had been increased to 77 percent.  Admittedly, much of this was a result of World War I, but most was due to an expansion in the role of government in everyday life.

Something odd occurred as a result of these high income taxes.  Instead of raising revenues, the national debt increased from $1 billion to $24 billion under Wilson.  Why is that?  Well, instead of taking the risk of failing and losing everything, or succeeding and keeping 23 percent, would-be innovators simply decided not to play.  Unemployment was eleven percent when Wilson left the Presidency, although unemployment tends to drop during wartime.

This was the financial situation Warren Harding “inherited.”  Harding was personally ravaged by scandals (such as Teapot Dome) that plagued his Administration, due greatly to his character deficiencies, and he up and died two years into his term.  During those two years, however, he put forth the framework for cutting the income tax, something Calvin Coolidge acted on.

Coolidge, along with his Congress, cut the top tax rate to 24 percent, with only the top 2% of wage earners paying any income tax at all.  Unemployment, as a result, fell to 3 percent, and inflation flatlined at 1 percent, producing what is commonly referred to as the Roaring 20’s, with the lowest “misery index” in our nation’s history.  As a direct result of his tax (and spending) cuts, Coolidge (with Treasury Secretary Andrew Mellon) drew down the national debt by $7 billion and experienced six years of budget surpluses during his Administration.  He is, in fact, the only President who had a surplus every year of his tenure.  How?  By doing less, not more.

So, in my mind, one of these men is a Saint, and the other is a Monster.  Long live laissez faire.  Case closed, right?  Well, another piece of history came about, but it’s a bit different than your teacher told you.

Miscalculations

When the stock market crashed, President Herbert Hoover took bold action to stop the hemorrhaging, but instead, made it worse, by raising the upper tax rate from 24 to 63 percent, and signing the Smooth-Hawley Tariff Act in 1930.  He took a lot of blame for not doing anything about the crash, and then came Franklin Delano Roosevelt, a true Wilsonian if there ever was one.  (Note: Vice President Biden has a different take on this.)  FDR raised the top income tax rate first to 79, and later to 90 percent.  In 1941, FDR proposed a 99.5 percent marginal rate on all income over $100,000.  When an advisor questioned this proposal, his response was, Why not?”

When that proposal died in Congress, Roosevelt issued Executive Order 9149 on April 27, 1942, taxing all income over $25,000 at a rate of 100 percent, effectively establishing a maximum wage in the United States.  The next day, FDR addressed the American people, saying, “I do not think that any American citizen should have a net income in excess of $25,000 per year after payment of taxes.”  Today, FDR’s $25,ooo is equivalent to about $250,000.  Where have I heard that number before?

Congress eventually overturned that executive order, but not before FDR lowered personal exemptions to $600, meaning most Americans now paid some form of an income tax.  What happened to the unemployment rate under FDR?  It skyrocketed to 24 percent, until World War II evaporated unemployment in the United States, as the future of our nation depended on every able-bodied person.

We face the same situation today, with a similarly progressive leadership, who want to tax and regulate anything that makes a profit, until they need to subsidized just to survive.  I believe we need taxes, and regulations, but I equate the proper regulation of capitalism to the act of establishing a bowling lane for kiddos with gutter bumpers.  Regulations serves as the bumpers.  If the ball is moving in the wrong direction, you don’t go running down the lane to push it one way or another.  You let it go.  This is something the Keynesian central planners cannot, by nature, understand.

Historical statistics, as well as basic economics, proves that wage intervention produces unemployment.  Instead, our central planners get involved in everything, targeting specifically those industries that make a profit, in that way, acting as locusts that feed on one field and then move to another, moving quickly to disrupt and dismantle the capitalist order upon which innovation and production is built.  Gee, where did American production go, exactly?

Final Thoughts

I personally believe half the country is perfectly fine with what’s going on, if not complicit, then oblivious to the deleterious effects of our government’s policies.  A recent Gallup poll supports the idea that more are complicit than oblivious, reporting 36 percent of Americans viewing socialism positively, with 61 percent of liberals, 20 percent of conservatives, and 39 percent of moderates expressing this sentiment.

Let me ask you: How did Rome fall?   A once-great nation was spread too thin with two acting capitols, out of resources, militarily weakened, letting the Visgoths silently infiltrate them.  By the time the Romans realized what was happening, it was too late, and no those who noticed didn’t really care anymore.  What’s that got to do with us, you ask?  Lech Walsea, co-founder of the Polish Solidarity movement, Nobel Peace Prize winner, and former President of Poland, put it bluntly this week, at the Foundation for Human Rights in Cuba:

“The United States is only one superpower.  Today they lead the world.  Nobody has doubts about it.  Militarily.  They also lead economically, but they’re getting weak.  But they don’t lead morally and politically anymore.  They world has no leadership.  The United States was always the last resort and hope for other nations.  There was the hope, whenever something was going wrong, one could count on the United States.  Today, we lost that hope.”

But there I go again, questioning motives.  Complicit or oblivious?  Let’s get back to the peripherals.  In Greek mythology, Castor sacrificed his deity for his dying half-brother Polydeuces, so they could both live together on earth, as Homer put it, bound to “the corn-bearing earth that holds them.”  Will this generation give up it’s so-called “entitlements” (Social Security, Medicare and Medicaid) to save an entire nation?

Castor made the sacrifice, and now both brothers are immortalized in the sign of Gemini, represented by the planet Mercury, faster than any other planet in our solar system, taking only 88 days to circle the sun.  I’m not much for astrology, and I could go further than you’d want me to, discussing the theories associated with the end of the Age of Pisces, the dawning of the Age of Aquarius, how it ties into end times and the pouring out of the seven bowls containing God’s wrath, but I think I’ll stop there, and to that home on God’s celestial shore, I’ll fly away.

After three months of deliberation, President Barack Obama (The Decider, v2.0) is surging an additional 30,000 troops into Afghanistan.  This was an understandably difficult decision for the most left-wing anti-war President in recent history to make, so I commend him for having the political courage to do so, and I’ll even compliment his due diligence in deciding, because he’s right:  strategy comes first, and if we don’t have the right objectives, we shouldn’t be there at all.  For all of us, I hope he’s found the right strategy for success.

Shortly after his speech, the President will be whisked away to Copenhagen, Denmark, to champion our global war against global warming, a debate currently embroiled in the controversial deletion of emails.  The findings in said correspondence did not support the money-making conclusion that “climate change is real.”  I’ll leave the science to another post, but I’ll come back to the green scheme later in this post.

You see, everything at this point in our history comes down to the bottom line.  If it did not, then what is Peter Orszag, Director of the Office of Management and Budget, doing in the War Council photo above?  This post will address the multiple facets of our debt problem, and my next post will concentrate on more specific solutions to draw down the debt.

In my last post, where I wrote about the Tea Party movement, I quoted Ludwig von Mises, saying you can’t have both capitalism and socialism.  I used this premise to support the market over business.  Like Ayn Rand, though, I believe America is a mixed economy, and as such, is an ideological battlefield between capitalistic and socialistic policies.  Former Chairman of the DNC, Dr. Howard Dean, believes the debate between capitalism and socialism “is over,” and goes so far as to root for the other side while speaking in Paris, of all places.  Of all places…

Europeanization of America

So, where are we headed?  It seems like we are incrementally shifting towards something unforeseen since our founding.  While incrementalism was not a common term in the early 1800’s, it was certainly understood by President Thomas Jefferson, who said, “Experience hath shewn that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny.”

Dr. Dean and his leftist ilk are deliberately accelerating the Europeanization of our nation.  Europeans are quite comfortable with bits (and sometimes chunks) of socialism sprinkled hither and yon.   Their collective apathy is indeed the root cause of their lower levels of productivity and lower standards of living compared to the United States.  Jefferson also warned about this degraded state of existence, saying, “When we get piled upon one another in large cities, as in Europe, we shall become as corrupt as Europe.”

Consuming an elixir of corruption, apathy, and socialism will have long-term consequences.  At best, we are beginning a jobless recovery, due to our lack of Homeland Production.  We are still losing more than 100,000 jobs a month; we would have to create 100,000 jobs a month simply to keep up with new entries into the job market.  At worst, we are entering a double-dip recession caused by our over-spending, as our President recently warned us.  Funny he should bring it up, since he leads the biggest spending Administration in American history.  That’s like having your friendly neighborhood drug dealer warn you about your crippling addiction to crack cocaine.

We aren’t Europe, yet.  In Europe, locals sit at their coffee shop, in a state of beautiful ruin.  The buildings and streets were built centuries ago, and civilization lives on top of ancient achievements.  In the United States, so-called “business professionals” walk on fairly-new streets into fairly-new buildings constructed by the toil of workers who earn a fraction of what they do.  If the businessman errs, he moves to another management position; if the construction worker makes a mistake, he’s out of a job.  I see this disparity and understand how it fuels populist sentiment amongst the left.  Their solutions, like those in Europe, however, are government-based.  I believe only the private sector, through innovation and production, can save us, and they can only do that if government gets out of the way.  Therein lies the rub.

Facing Down the Debt

Our enormous debt is a product of our varying degrees of taxing and spending.  Today’s tax-and-spend levels are not equivalent to our new reality.  Accounting systems such as mark-to-market, or its zombie equivalent, mark-to-model, created an illusion of vast wealth for the better part of a decade, with deregulation of the Security and Exchange Commission’s (SEC) Generally Accepted Accounting Principles (GAAP) supported by both parties.  When the financial sector collapsed last year, exposing our frayed economy for what it is, America faced some harsh choices, and decided to launch a $700 billion Bank Bailout. 

This $700-to-800 billion range is a reoccurring dollar amount in current history: The recent Stimulus Package was $787 billion (of additional debt).  The amount of American currency in circulation is roughly $800 billion, and according to the Congressional Budget Office (CBO), the Health Care Bill currently up for debate will cost $829 billion over ten years; we’ll see what happens to the final amount after it’s merged in Committee for final scoring.

Two $800 billion figures scare me more than any, though.  The CBO states that in ten years, the cost of servicing our debt – that is, the interest on our debt – will be $800 billion a year.  Also, as of September 2009, we owe China $798 billion in debt.  These two numbers thrust us into insolvency faster than any others.  There are only two ways to draw our numbers down:  tax more and spend less.  Neither of these options are particulary palatable, but our current solution – printing more money – carries it own consequences.

Interest-on-Debt: Entitlement spending drives our debt, plain and simple, and puts American sovereignty at risk; the Social Security and Medicare Trustee Reports show the combined unfunded liabilities of these entitlements has reached $53 trillion, and account for about 5% of GDP and roughly 40% of the Federal Budget.  Outyear projections for these programs are frightening.

As the federal government spent $3.5 trillion this year, but only collected $2.1 trillion in revenues, our deficit reached an all-time record of $1.4 trillion, at 11.2% of GDP in 2009.  As Niall Ferguson points out, the CBO projects this deficit percentage will decrease to 9.6% in 2010, 6.1% in 2011, 3.7% in 2012, and steady out above 3% for the foreseeable future.  But these are just deficit percentages, pushing the total debt amount to unsustainable levels: in dollar terms, the total debt held by the public (which includes foreigners) rises from $5.8 trillion in 2008 to $14.3 trillion in 2019 – that is, from 41 percent of GDP to 68 percent.

These increases put us in a precarious situation, and threatens our AAA Bond rating, which we’ve held since our first scoring in 1917.  If Moody’s were to degrade our Bond Rating to AA – which it threatened to do last year – it would cause a devastating run on the market.  But some are still buying our debt on the promise we’re good for it…

Our Mandarin Problem: As China holds roughly 6% of our debt (or one-quarter of all foreign owned debt), it’s feared they own us, but there’s an old saying: If you owe the bank $100 thousand, the bank owns you; if you owe the bank $100 million, you own the bank.  Ask yourself: why would China buy up so many of our Treasury bonds during an economic crisis?  One reason is they seek to dominate us in the long term, but the more likely reason is that we are codependent on each other, as they depend on American businesses for Chinese employment.  Also, China accrues roughly $50 billion a year in interest from the United States, according to the Council of Foreign Relations.

Only time will tell what will become of Sino-American relations.  It’s interesting, though, to look at history to see that civilizations approaching insolvency usually cut their military budget first, weakening themselves, and eventually allowing themselves to be conquered.  The Pentagon’s present Budget slashes defense spending from its current 4.8% of GDP to 3.2% in 2015, and 2.6% by 2028, aligning us more with… Europe, of course.  Is America incrementally going the way of the dodo?

Why We Waste

As the Berlin Wall fell in 1989, $22 billion worth of American money for foreign aid flowed freely into Russia, to assist in building the new democracy.  A curious thing happened, though:  it all disappeared.  We knew that a lot of that money went straight into the bank accounts of the oligarchs, and not into its intended institutions, but we turned the other way, assessing it another unforeseen cost of democracy.

How could public officials casually waste so much money?  More broadly, why is the public sector so much more inefficient than private industry?  The answer is simple:  It’s not their money. President Ronald Reagan had a sign on his desk that read:  “There is no limit to what a man can do if he doesn’t mind who gets the credit.”  Similarly, there is no limit to how much we can collectively waste if we don’t mind which individuals get the bill.

This is how our financial sector bailouts were handled.  This is how the Stimulus Bill has been managed, and how the aforementioned global warming scheme was operated.  If there is a perceived crisis, our government is willing and able to leverage taxpayer funds in its general direction.  Humans, being what they are, see free flowing cash and stand ready to siphon some off the top.

Government interaction will not save us, but their inaction – that is, getting out of the way – could assist recovery by giving the private sector a shot at their goals.  As legendary UCLA basketball coach John Wooden once said, ”Never mistake activity for achievement.”  Doing more in terms of taxation, legislation, and regulation is not worth the time or the money if it doesn’t actually achieve anything.  I’ll offer some real solutions in my next post.

Music? Quickly assessing current events, I see an Alinsky-like effort by the Obama Administration to marginalize and eventually end the war in Afghanistan, while not upsetting either their left-wing constituency, or the right-of-center America.  In fact, I see the Administration presenting a quick and easy three-step process on how to end a war, without actually ending a war, regardless of important decisions on troop strength.

1 – Dither.  No matter what your decision may be, the later, the better.  Tardiness distracts, and over time, desensitizes your detractors.  Specifically, have your hand-selected General present four plans for combat forces, and ostentatiously reject them all.  Go abroad (ie, to Asia) to forget about your troubles.  Demand health care and energy reform upon return.  Announce a troop strategy, and scurry to Copenhagen to talk about windmills before the White House Press Corps can catch you.

2 – Make history by having your Attorney General try the world’s worst war criminals, like Khalid Sheikh Mohammed, in a civilian court, preferably in traumatized New York City.  Doing so will effectively criminalize the war and confuse troops on which course of action to take with enemy combatants.  Are our troops at war, or are they a glorified police force, arresting and reading Miranda rights to the enemy?  Who cares?  Let them figure it out.  Most importantly, have the court proceedings put the previous Administration and the CIA on trial.  Blaming others will deflect attention from your own shortcomings while troops are quagmired.

3 – Capitalize on an event like the Fort Hood Massacre by ignoring facts, and instead ask questions like why Major Nidal Hasan would do such a thing.  Imply psychosis and “Second-Hand PTSD,” a term that does not exist, but hey, you’re the President, so feel free to make it up as you go.  By turning the former watchdog media into your lapdog, you can further support the terrorist by implicating soldiers on the ground of war crimes (see last night’s CNN Report, “Killings at the Canal.”)  This will most certainly kneecap the warfighting efforts, frightening troops from (gasp!) hurting the poor little terrorists in their sad little caves.

By these means, Mr. President, surging troops into Afghanistan won’t really matter at all.  40,000 troops?  Why not surge 200,000 troops?  You could even try out the draft to send every 18 to 25 year old male to war.  It won’t matter, after all; if the approach is incoherent, we will never win.  Your left-wing base will be content that our enemies aren’t getting hurt, and the center-right majority will be under the impression that “you’re doing all you can” to bring the enemy to justice, in New York City, or Chicago, or Houston, or Arlington, or anywhere.  Anywhere but GTMO, of course.

The judgment to bring KSM and Friends to a civilian court in New York City is a particularly peculiar case, transcending reason, as there is no judicial precedence for doing so.  If you missed Senator Lindsey Graham stumping our fearless Attorney General over this decision in a Senate Judiciary Committee meeting, see video.  He speaks for me.

What I’m saying is this:  There are long-lasting effects of seemingly simple political decisions that troops on the ground will be forced to deal with.  If you think the message sent to the world to be bad - that we will treat attacks on civilian targets as criminal acts, and not acts of war – if you consider that bad posturing, what do you think the effects of our President kowtowing to every foreign dignitary he comes across might be?  What message does this send to other nations?

The President has no reason to apologize, bend, bow, or “recant American hegemony,” a position thrusted upon us, as the world’s only unilateral power that never strived to be a unilateral power.  The world has continually placed its bets on the United States of America, relying on us to bail them out over and over again.   Consequently, we dip our flag to nobody.  We’re not the Beta Dog here, rolling over to expose our throats to the Alpha Male, much less to the emperor of a country who’s Constitution we wrote, the first-born son of the man who engineered Pearl Harbor.  And if that’s right-wing hubris, so be it.

Stand upright, speak thy thoughts, declare

The truth thou hast, that all may share;

Be bold, proclaim it everywhere:

They only live who dare.

~ Voltaire