December 21, 2009

A RUDE AWAKENING FOR THE HOLIDAYS

by Harold Gershowitz

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What the government is delivering to everyone’s stocking: brand new regulations, tax bills, insurance premiums, penalties, higher federal budgets and deficits. Something for everyone for the holidays from your friendly elected officials in Washington who are steering the country into uncharted statist territory and spending trillions along the way. The extreme left is, for the time being, pushing for everything it can get as so many Barbarians at the Gates.

The Administration and the Congress have, indeed, given us a stark glimpse into the future. It’s not a pretty picture.

Congress has raised the national debt limit by a “mere” few hundred billion dollars above the $12.1 trillion current limit to tide the nation over for a few months so it has time to go through the political theatre of raising the debt limit again in 2010 by another trillion dollars or so. Let’s rephrase that. Our Congress is in the process of raising the burden on all Americans and our children by nearly $2.0 trillion (pardon the rounding, but what’s another $200 billion here or there).

This is the same Congress that has blamed the financial meltdown on easy credit. Of course, when they borrow, they justify it as being to the nation’s benefit. Does Congress even consider our ability to repay this mountain of debt? Actually, no. They cover their tracks by sending the legislation to the Congressional Budget Office to be scored (beltway talk for determining the cost) along with ridiculous assumptions which the CBO must use in analyzing anticipated cost. Compare this to the analysis a prudent lender would make when an average citizen applied for an increase in his or her credit card borrowing limit. In that case, the folks at MasterCard or Visa, or wherever, might approve the request if our income had gone up and our ratio of debt to income had gone down during the past year. However, if our income had gone down and our borrowing had gone up they would say “Sorry, no way.”

Members of Congress, Republicans and Democrats alike, not unlike irresponsible credit-card abusers we have all met from time to time, give us the same excuse to explain why we need to borrow more. “The money has been spent and the bills are due,” they tell us. But they are the irresponsible stewards of the national fisc who overspent in the first place. Moreover, the increase in the borrowing limit is not only to pay the bills that are due, but also because they continue to spend far more than this nation can afford. A startling fact none of the people we have sent to Washington talk about, because they don’t want their constituents talking about it either, is that our nation’s unfunded liabilities (read commitments for which no funding has been provided) now exceeds $100 trillion. Is anyone listening? If this were a family member in this kind of financial shape, we would have what is called a family intervention. Fortunately, democratic republics have family interventions too. They are called elections, like the one we will have in less than a year.

Sadly, tremendous damage will have been done by then. Absent a rip-roaring, soaring, economy over a sustained period and unprecedented spending discipline by our national leaders, the only way our collective family will be able to pay this ever-mounting debt will be to have our own, and our children’s, individual and family income drained through higher taxes to bail out the profligacy of our big-spending, fiscally irresponsible Congress. Of course, government has an alternative. It can print money to send to our creditors, thereby decreasing the value of the money we work thousands of hours each year to accumulate. Happy holidays from your friendly lawmakers. Frankly, we would have preferred a lump of coal.

There are, of course, other unwelcome, gifts that Congress is planning to “buy” and add to the holiday gift pile. They want to give us a whole new health-care system. Never mind that according to the various national polls only 31% to 38% percent of the people favor the impending congressional health-care proposals. In fact, 80% of the people have health insurance, the majority of whom seem to like their policies just fine, thank you very much. Notwithstanding the lack of support by their constituents, this Congress seems determined to force this very expensive and very bitter pill down the throats of the people…like it or not. Where is the wisdom of moderate GOP Senator Olympia Snowe who has stated that major shifts in public policy should only be enacted when there is something close to a national consensus. Let us hope she practices what she preaches.

The something-for-nothing theme being hawked by the party in power hasn’t sold well. The people are much smarter than Harry Reid, Nancy Pelosi or the White House figured they would be or would like them to be. Notwithstanding the politicians’ twisted and tortured rhetoric about not adding a dime to the deficit, no rationing of health care and no Medicare reduction in benefits for seniors, the people know better. Moreover the provincialism inherent in how Senators have come around to announce support for Sen. Reid’s legislative monstrosity is nothing short of staggering in its short-sightedness. A week ago, Senator Nelson of Nebraska, donning the garb of statesman, talked of his fears about the fiscal impact of this legislation upon the entirety of the nation. That “fear,” however, didn’t stop him from forcing, in return for his support, a 100% exemption in the bill for Nebraska’s share of the state’s Medicade expense. Then, in return for some tighter anti-abortion language his higher minded principles collapsed like a house of cards. It is the equivalent of (figuratively speaking) Senator Faust saying to Majority-Leader Mephistopheles; “eliminate coverage for abortion and I’ll give you the whole damned bill”

Then we have the so-called cap-and-trade gift to America, which also garners little support among the electorate. This, too, is about to be rammed into law one way or another. Fearing Congress might buckle to the wishes of the people, the White House has turned the Environmental Protection Agency into its attack dog to bludgeon into submission the Congress or any public opposition to this poorly conceived, burdensome, financially crippling, job-killing legislative boondoggle.

The Supreme Court decided, back in 2007, that EPA had the authority to regulate carbon dioxide as a pollutant, if it made “a finding” that CO2 was dangerous to human health. EPA, however, wisely deferred to Congress given the enormous implications of such public policy. Now, with some in Congress having second thoughts about encumbering the country with the unprecedented financial burden of Cap-and-Trade, EPA says it will issue rules regulating carbon dioxide “emissions.” True, EPA’s legislative authority was designed to regulate any emission it “found” was a danger to human health, and having now “found” that carbon dioxide is such a pollutant the agency has, in effect told Congress, “you legislate Cap-and-Trade or we will ‘enact’ it for you.” This is a breathtaking maneuver by the Administration’s bureaucrats, but, come to think of it, breathtaking is also one way to reduce carbon dioxide.

And, failing to get agreement at the so-called climate summit in Copenhagen on such essential elements as verification controls,the conference broke up and the president flew back to Washington so he could land before Andrews AFB was closed by an early Washington blizzard , no doubt attributable to global warming. Meanwhile, our president was pledging to give away tens of billions of dollars in aid to underdeveloped countries to assist them in ameliorating the ravages that Western global warming has caused them. That many of these countries have dissipated countless billions of our past aid through incompetence, graft, theft and corruption seems to go unnoticed.

What we are witnessing is perhaps the most massive shift of wealth from developed to underdeveloped countries in history and it is unfolding before our eyes without the support of the American people who will foot the bill.

And now, just as money loaned to the banks under “TARP ONE” begins to flow back to the government so that the additional deficit these loans caused can be paid down as was promised by the government when the loans were made, we learn that the money isn’t going to be used to pay down the deficit after all. No, the money will be used to fund yet another stimulus program. If at first you don’t succeed (which the first two stimulus bills failed to do) try, try again. Einstein said that the definition of insanity is to do the same thing over and over again but expect a different result.

Interestingly, the first two stimulus packages required new Congressional appropriations. But the Administration thinks it has found a way to have a third stimulus program without the need to appropriate “new” money. They’ll just take the TARP ONE money the banks have paid back and do with it as they please. Can the government get away with such heavy-handed management of the people’s money? Frankly, we don’t know, but we’ll bet that public-interest suits will be filed to find out. After all, we prosecute white-collar miscreants for such misappropriation of funds, no matter how well intentioned the offenders may be.

We won’t belabor the arrogance of these beltway maneuvers. Arguably, every Administration and most Congresses (controlled by both Democrats and Republicans) have flexed their muscles from time to time to demonstrate just how powerful they are…but then, again, so have the people, as in 1994 when the Republicans gained 54 House seats and 34 Democratic Congressmen were given the boot.

We should pause a moment to ponder why in the world a sitting Congress would engage in such farce as is currently underway in Washington. Nearly seven out of ten Americans polled don’t particularly like what Congress seems determined to do. Not very many people seem impressed with the plans to cover the uninsured by reducing benefits to those who are insured, or the plans to levy new taxes on employer-provided, high-quality, health insurance programs simply because they are, well, high quality, and some people, especially young healthy people, who wish to allocate their income to needs other than health insurance don’t particularly like being fined (that is, after all, what is proposed) for their decision not to buy expensive health insurance.

Similarly, polls also tell us that the American public is not only unconvinced about the reality of man-caused global warming but that a significant majority do not favor additional taxes or other levies to limit carbon emissions. Wait until they really learn the true facts. As reported in the December 12 Wall Street Journal, every ten percent cut in U.S. emissions will be offset by one year of China’s growth. “In the proposed Copenhagen dream scenario, by 2025 China’s emissions will actually surpass those of the U.S. on a per capita basis,” and they have a population approximately three times ours. The eighty-three percent cut in U.S. emissions President Obama is promising will bring our carbon output by 2050 to levels not seen since the 1870’s; which, to quote columnist Brit Stephens, is “a virtual industrial revolution in reverse.” Even though China has the fastest growing economy in the world, we are promising to greatly encumber our economy and subsidize theirs.

Congress was, until last week, also in the process of buying a brand-new holiday present for the family. They wanted to open up Medicare to people who have reached age fifty-five. They still plan to increase the eligibility for Medicaid by redefining upwards the definition of the poverty line. Never mind that the current Medicare program is rushing toward insolvency in just a few years, and Medicaid, a federal mandate that is only partially funded, is already breaking just about every state’s budget. But, then again, what are credit cards for? This holiday present (reducing the age of Medicare eligibility) was simply to pacify so-called progressives in the family, who were, and are, upset over the elimination of a public option for insurance coverage and could have very well been a more direct path to a single payer system than the public option itself.

The Senate is about to pass the Reid monstrosity and move it to a Conference Committee with the already House-passed (and worse) Pelosi version for reconciliation. The cynic in us fears a pre-arranged “fix” is about to be unveiled. Senator Reid could cave in to most of the House version, whereupon the Conference will send that version to both Chambers and a simple majority-vote rule (rather than a 60-vote rule) will be used to complete the process of jamming this sweeping change in American health care down our collective throats.

The out-of-control spender in our hypothetical national family will argue that when the bill comes due, for all this profligacy, we can just send it to our higher earning relatives. Many of our countrymen think Congress’s plans to raise taxes on those who the politicians define as “the wealthy” will not affect them. Rather they see this as taking money from people who have enough and reallocating it to people who don’t. But, wealth transfers by government do not expand our national wealth. Instead, they transfer it from the most to the less productive among us.

This, however, is a very slippery slope. Whet the appetite of government bureaucrats by acquiescing to their schemes to pick the pockets of those who are deemed to be well off and, sooner rather than later, those same bureaucrats may come after you. Just ask those middle income Americans who have been snared by the Alternative Minimum Tax, which also was originally enacted as a tax on the very rich. More and more people will soon be reaching into their own pocket only to shake hands with their Uncle Sam.

All comments regarding these essays, whether they express agreement, disagreement, or an alternate view, are appreciated and welcome. Comments that do not pertain to the subject of the essay or which are ad hominem references to other commenters are not acceptable and will be deleted.

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2 responses to “A RUDE AWAKENING FOR THE HOLIDAYS”

  1. Bill_H says:

    The only way this concerned citizen can see how this country can even begin climbing out of this Federal debt quagmire (while also repelling the advance of Federal Statism) is for the States to reassert their rights under the US constitution.

    Since the Federal Government gives no indication of ever reigning in spending or ending its misuse of foreign credit, the states must band together and begin throttling back taxes sent directly to the US treasury by each and every US citizen to “get the attention of the USG”. How, by directing ALL tax payments normally sent to the US treasury by state employers to their state capitols instead, with dispensation of Federal tax monies to the Federal Government under national “stipulations”.

    Such national stipulations should include: The Federal debt ceiling can only be changed by a constitutional amendment, borrowing of money from foreign sources shall be restricted, a term limit and/or congressman recall amendment. The adoption of any new law affecting all Americans must be by national referendum. Please feel free to add here….

  2. WP Themes says:

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