“Mumbo Jumbo:” Revisiting a Broadway Tune

Inside the beltway it would appear that “Mumbo Jumbo,” Anthony Newley’s extremely amusing song about political blather and doublespeak from the 1961 smash musical “Stop the World, I Want To Get Off,” was introduced nearly fifty years too soon.

In the political environment prevailing early in the 21st century, “Mumbo Jumbo” should be the theme song for governmental political discourse. From President Bush’s “Mission Accomplished” fly-in (could that have really been six years ago) to Speaker Pelosi’s teaspoon-of-sugar suggestion that we rename the “Public Option” the “Consumer Option” in an effort to get America to swallow a very bitter pill (one that comes with over 1900 pages of technical legal blather…lawyers call it boilerplate…which we would make book that not one member of Congress has read), we have been treated to almost non stop rhetorical nonsense from the wise men and women we elect to lead our country. However, the Washington style mumbo-jumbo we are getting today is no laughing matter. Consider these examples:

• 97% of the people are going to get cradle-to-grave healthcare coverage with no increase in their taxes or the costs of their medical care;

• the country can add trillions of dollars of bailouts and new federal programs to the budget and reduce the deficit at the same time;

• we can prosper by growing our debt and our expenses faster than we grow our economy;

• we can save the planet by taxing industries that produce carbon dioxide (now officially declared a pollutant) even though the world’s fastest growing economies impose no such restrictions on their industries;

• we can stimulate economic growth, entrepreneurship, and critically needed, creative and constructive capital formation while imposing new regulations on our most efficient industries (think internet);

• we can have the government run the automotive, insurance and financial industries even though it couldn’t manage the SEC, the Fed or the House or Senate Banking or Financial Oversight Committees;

• The US dollar will always be the financial world’s safest harbor and retain its position as the world’s reserve currency even though the world’s fastest growing economies, our largest trading partners and the largest holders of our debt are actively seeking ways to abandon dollar supremacy.

No one knows for sure how many people find all of this fanciful rhetoric too compelling to resist. The mumbo jumbo from the ruling elite is delivered with great certainty and authority and certainly with more polish than, say, Chico Marx’s gem in the early 20th century farce, Duck Soup, when he demanded to know, “Who you gonna believe me, or your own eyes?”

As comedienne Joan Rivers used to famously ask, “Can we talk?”

We, and the rest of the world, have moved to fiat currencies, paper money that is backed by absolutely nothing more than the confidence we, and others, have in the value of the paper we exchange for goods and services. Neither U.S. dollars nor the paper currency of any nation is worth what its government says it is worth although some regimes try and set a peg for it. Rather, it is worth what millions of people, comprising the free market, decide to be its worth. Every monetary and fiscal policy we promulgate should be made with that understanding and with deep respect for the confidence that holders of dollars and dollar-denominated instruments have in the judgment of policy makers. Recklessly abuse that confidence, as we have, and as we are doing, and it can, and will, eventually evaporate.

History tells us that when any society debases its currency, the value of that currency can spiral irretrievably downward, and, especially in today’s global economy, the confidence other sovereign nations have in our currency is vitally important. We are deeply in debt to other countries that must first look out for their own national interests rather than ours. If and when our creditors refuse to roll over the loans they make to us, (primarily through the purchase of U.S. Treasury Bonds) or buy new issuances of our bonds and notes, the consequences would be incalculable.

The Bush years were not confidence builders for the dollar. Excessive spending, protective trade dalliances such as the Bush tariff on steel, the prolonged availability of very cheap money and the initiation of previously unheard of federal bailouts of financial institutions and then other too-big-to-fail auto and insurance companies which the Treasury believed represented systemic threats to the nation’s financial underpinnings, were all body blows to the esteem in which the dollar is held. The dollar lost an estimated forty-one percent of its value against the Euro during the tenure of the Bush Administration.

Now we have a new Administration that came to office with the mantra of “change we can believe in.” Sadly, however, those now at the helm of our ship-of- state seem to be doubling down on some of the worst policies that characterized the last Administration. We are currently spending at twice the rate of the prior Bush government, protectionism seems to be on the rise once again, and new federal bailouts of major failing institutions exceed those of the prior Administration with more ineffective largesse from the taxpayers most certainly coming. To make matters worse we are now suffering through a panoply of new and old regulatory agencies, economic and social overlords (those ubiquitous czars) and new expensive and unproved programs to tame man made climate change (the cause of which, if it exists, is still unproven), remake health care as we know it, buy junk automobiles in order to subsidize purchasers of new automobiles, provide short term assistance to failing industries in return for long term government control and ownership of those industries, adjust mortgages for homeowners who knowingly bit off more than they could chew, and to protect Americans from all manner of threats to their well being except that of an ever expanding government with an insatiable appetite for tax revenues.

Many within the beltway assume these initiatives will, ultimately, shore up long-term confidence in the American economy and the nation’s currency as well. Short term…maybe. Long term, we doubt it unless the law of gravity has been repealed.

According to Dallas Federal Reserve Bank President, Richard Fisher, the sum total of America’s unfunded liabilities (financial commitments for which we have made no provisions for funding) are estimated to have now reached $99 trillion, much of which will begin to become payable during the next ten years as an estimated seventy million baby boomers begin to retire and start receiving their Social Security and Medicare benefits. The terrifying danger, of course, is that the government will monetize these liabilities as they become due by running the mint’s printing presses overtime. If that happens, the value of the dollar will plummet as inflation sucks the purchasing power out of the pockets and bank accounts of just about everyone.

The federal balance sheet is loaded with far more esoteric legerdemain than anything World Com or Enron executives could ever have contemplated. Talk about unabashed hypocrisy. Our lawmakers enact the Sarbanes Oxley law requiring transparency from the leaders of private enterprise, but camouflage the alarming fiscal state of our nation from their own mismanagement. Sooner or later, this will come back to haunt us, and sooner is a better bet than later.

Taxpayers are informed that their Social Security and Medicare tax payments and premiums go into trust funds, suggesting that the money they pay in will be there for them when they need it during their retirement years. This simply isn’t true. With respect to Social Security, no actual money goes into the so-called trust fund. Current social security benefits are paid out of current social security tax receipts and any remaining social security tax balances are shifted into general revenues to pay for, well, anything from Gulfstream jets to fly Congressmen and Senators around, to paying for the $300,000 photo-op of an Air Force One lookalike flying over Manhattan. In other words, as soon as each month’s current social security benefits are paid, any remaining social security tax receipts are spirited out as fast as they come in. What goes into the so-called Social Security Trust Fund are markers or IOU’s, special treasury obligations that are backed by the very taxpayers who think they are protected by the trust fund. When Social Security’s current tax receipts are insufficient to pay current benefits, which is now projected to happen in about six years, taxes will be increased or the government will borrow more money (for which taxpayers will ultimately be responsible) thereby increasing our ever-swelling deficit.

The Medicare trust fund is only in slightly better shape but at least there is a real trust fund into which premiums are paid. Medicare attempts to control costs by mandating what doctors and hospitals can receive in payment for their services. Because Medicare costs are artificially suppressed this way, Medicare can claim it provides health care more efficiently than private providers. Medicare mandates, by formula, annual reductions in what physicians are to be paid for the medical services they provide to their patients as a way of controlling costs. Physicians routinely and understandably complain about these reductions and Congress routinely waives the reductions. The simple fact is that medical costs are rising faster than taxpayers’ incomes and so the Medicare Trust Fund is projected to run short about the same time the non-existent Social Security Trust fund is depleted.

Then, there are the complications of the current deep recession, which has slashed tax receipts for both programs, even though the demands made of those programs are increasing. Not a pretty picture. One of three things has to happen: taxes (or premiums in the case of Medicare) WILL increase to cover these shortfalls, OR our deficit will increase as we borrow more to cover these shortfalls, OR benefits will be slashed. The best bet is probably a combination of the first two alternatives since Congress doesn’t ever seem to have the courage to reduce so called entitlement benefits for fear that their lifetime sinecures might end.

So what is the country to do? The myopic, political short-term answer is to keep increasing taxes and borrowing money. The only sensible solution is, of course, to encourage economic growth by dramatically reducing spending and by lowering, not raising, marginal tax rates. In the short term that would balance the budget and stabilize our debt level. Over the longer term sustained economic growth, not the false dream of revenue from increased tax rates, are what produces the means for reducing the nation’s debt load and liabilities. That is reality…but it is a reality that conflicts with the objectives of lawmakers who promote ever-increasing government encroachment into more and more aspects of our economy and our lives. So long as Washington mumbo jumbo is the language of both Congress and the Executive branch, the American taxpayer will be the loser.

Although the show “Stop The World,” like candor in Washington, has become a fading memory, its signature song lives on, and, we think, poses an appropriate question to all who still believe politicians in our nation’s capital are dispensing free lunches. For those who don’t remember, or who were not around in 1961, it was aptly titled “What Kind Of Fool Am I?”

Crossing the Rubicon:

The Major Push Toward American Statism

The historically famous crossing of the River Rubicon, just north of San Marino in Northern Italy, is not much remembered as the flashpoint where Caesar touched off civil war in 49 B.C. Instead, it is thought of by most people as a point in a course of action from which there is simply no return. We think it is time for America to recognize that such a pivotal point in our American democracy may well be at hand.

President Obama, Speaker Pelosi and Senate Majority Leader Reid apparently believe the time is ripe to deliver to the political left the full-blown statist society that has been the centerpiece of the far left’s agenda for a hundred years. And make no mistake about it, once we arrive at that degree of statist reliance on government, there will be no turning back. We will not be able to escape the trillions of dollars of debt and the many tens of trillions in unfunded liabilities that will be left to posterity and will hobble generations to come. We cannot escape that reality.

Statism is generally defined as reliance on a central government for all, or nearly all, social and economic planning, control and funding. It is the very antithesis of personal freedom and entrepreneurship on which our nation’s economic strength has been built. Extensive interference with individual decision making as well as individual property and contractual rights inexorably sublimates the role of the individual and the family to the role of government. Nothing could be more contrary to the America envisioned by the founding fathers. Such thinking has brought, and is bringing, ruin to many other nations, but never mind that. The simultaneous excesses within the financial industry and the vacant oversight by various federal agencies and, especially the Congress, which brought about the burst bubble of the last decade has given the political left its long awaited opportunity to take unprecedented steps to control vast swaths of the American economy. In the 2008 campaign Democratic candidates talked about sensible regulatory reforms to maximize fair competition. Once elected, however, governing philosophy as enunciated by Rahm Emanuel morphed into the phrase “never waste a crisis.” And they haven’t.

Certainly we have had occasional bouts of statism before. As government continued its relentless and compulsive 20th century expansion to advance this or that program that the left deemed essential to the well being of the people, statism took hold in certain segments of our national life. However, with the exception of some of FDR’s New Deal programs or LBJ’s creation of Medicare, statist encroachments have been narrowly directed (through lavishly funded) toward specific programmatic objectives such as President Johnson’s War on Poverty, or the assortment of President George W. Bush’s initiatives such as No Child Left Behind or Medicare Part D.

While we are no fans of hyperactive government, we acknowledge that to achieve the American objective of opportunity for all, on which a free enterprise system must be based, government has a role in preventing individuals, businesses and industries from gaming the system. However, we have now witnessed in the early months of the Obama Administration, the appointment of three dozen new so called czars, none of whom have been confirmed by the Senate, but who have been given unprecedented powers over vast swaths of the economy. Many of these appointees seem to have no particular expertise or experience with the mandates they have been assigned. Predictably, people throughout the country are beginning to react to the emergence of unchecked and rampant government controls or takeovers that seem to be mushrooming only nine months into this Administration’s tenure. It isn’t a pretty picture. And with the enormous projected costs, now running into the trillions of dollars, many Americans are becoming uneasy and seem to be asking, is this really what we bargained for?

Instead of simply sounding alarms which the political left will scoff at for fear it might impede their march toward socialism, we should examine the statist experiences of other countries. Obviously, the most extreme example is that of the Soviet Union and, for over 40 post-war years, its Eastern European satellites. The premise of so called true socialism was that the state would own the means of production, and everyone would equally share the bounty. In reality there was no such sharing because there was no bounty. Moreover state ownership of vast sectors of the economy often takes repressive regimes to enforce its control (think Cuba, Peron’s Argentina, Putin’s Russia, Chavez’s Venezuela, Iran, Burma, and most of the Arab world).

And of course there’s modern-day Europe and the statist European Union to which each member state surrenders more and more of its sovereignty with each passing year. This is the liberal statist’s model. Over and over again, we hear an assortment of universal healthcare proponents chide the American public that we are the only major industrial country that does not provide national or universal healthcare to its citizens. Never mind that 85% of Americans are covered by health insurance and the vast majority of these families are satisfied with their healthcare plans. We have Medicaid for poorer families and a requirement that every hospital emergency room provide care to anyone seeking it whether they can pay for it or not. Everyone concurs that there is room for substantial improvement in our healthcare delivery system, but to use the European statist model as the blueprint for healthcare in America will create an entitlement that we cannot ever hope to afford. What the left wants us eventually to emulate is, of course, the national healthcare programs first inaugurated by Great Britain and now widely in place throughout Europe and Canada. But when has Europe ever been the model we have chosen to follow?

True, in the European model, everyone has a place to go if they are in need of medical care and no one gets much of a bill, at least not from the clinic or hospital that eventually provides assistance. The bill, however, does come. It arrives everyday through the taxation required to keep these economies afloat. The aura of free medical service creates a significant increase in the demand for medical service without a commensurate increase in supply and, as a result, waiting time for service extends far beyond what we would consider acceptable in America. According to a recent study by the Fraser Institute, as reported on CBS News, wait time in Canada is 18.3 weeks for surgical or therapeutic treatment. Wait time is even longer throughout much of the EU. The quality of care doesn’t stack up well either, at least not for major illness. According to the National Center for Policy Analysis, breast cancer mortality is 52% higher in Germany than in the United States and 88% higher in the UK than in America. Prostate cancer mortality is 604% higher in the UK and 457% higher in Norway than it is here. And 70% of German, Canadian, Australian, New Zealand and British adults say their health system “needs fundamental change or complete rebuilding.”

The problems with statist controlled societies aren’t limited to healthcare issues. Sooner or later, trade, manufacturing standards, how many hours a man or woman can choose to work, vacation time, sick time, compensatory time, termination rules, hiring rules and every other aspect of commerce and daily life can, and sooner or later will, become the focus of statist scrutiny and control.

Camouflaging state control with soothing sounding programs doesn’t make it any better. To paraphrase a song from the Broadway musical “Mary Poppins,” “a spoonful of sugar” doesn’t make the medicine go down. And yet without any real understanding by the American people that this kind of overreaching would occur, the state is now exercising ownership and control over the banking system, the auto industry and, very possibly, it is about to have enormous control over the healthcare system, and the energy industry (through a preposterous cap and tax system). And the Federal Communications Commission is preparing to encroach into the internet through the cleverly named net-neutrality regulations. Other intrusions are hidden in the nooks and crannies of the ever-expanding regulatory morass. Even light bulbs and toilet paper haven’t escaped the government’s regulatory watch list.

When statist laws take effect, decline might be averted for a short time. But by destroying the free market place, the piper will soon enough be paid. Argentina’s economy collapsed more than once and Brazil also lost its credit standing in the world and created poverty rather than wealth when it flirted with statism. And we need look no further than Mexico to see how statist policies have stifled that country from widespread wealth creation and kept it from reaching the economic potential that its natural resources alone would permit.

The magic of America, since the nation’s inception, has been the internal gyroscopes of the people, free to gravitate toward each individual’s true north. That, to a great extent, is what American Exceptionalism is and has always been. And it is the Administration’s failure to understand this aspect of the American psyche that is perilous to all of us. In its quest to control healthcare, anything that can remotely be packaged as “protecting the environment” (or, with even more grandiosity, “saving the planet”), executive compensation and nearly every other aspect of our national life, we now have all-powerful bureaucracies answerable to no one but the President and his acolytes in the White House.

Faoud Ajami, Professor at the Paul H. Nitze School of Advanced International Studies at Johns Hopkins University, predicted in the Wall Street Journal, several months before the election that Barack Obama, if elected, would not merely change the direction of America, but the very fabric of America. Five days before the election, candidate Obama pretty much confirmed Ajami’s assessment when he proclaimed in a stump speech in Ohio, “we are five days away from fundamentally changing America.” Sadly, most Americans didn’t know what “changing America” meant. They were disgusted with the Bush Administration and simply voted to change parties without seriously drilling down on what candidate Obama meant by change. And that, in a nutshell, is why Congressional Democrats are likely to face trouble in next November’s elections. The people may like and admire President Obama but do not want him, the Congress or anyone else, to “fundamentally change America.”

We know two things for sure about statism; (i) It is a seductive but poor form of governance, invariably leading to stagnation, socialism, crushing costs and, ultimately, to economic decline; and (ii) it is the very antithesis of what our founding fathers envisioned as liberty and freedom for the new nation they brought forth.

The founders envisioned a limited role for the national government. They assigned to the federal government those powers that were necessary to secure an orderly and safe society. That is why they moved, very early on, to establish a standing army and navy, to take on the debt of the several states and to issue debt on behalf of the nation. They established a system of tariffs (largely to raise revenue), minted our own coinage and acquired enormous swaths of land consistent with the manifest destiny they believed we were morally obligated to pursue.

One thing, however, the founding fathers were careful to avoid and, in fact, went to great lengths to proscribe was interfering in the lives and the legitimate pursuits of the people. They, to a man, understood that the old model of governance whereby a sovereign would dispense rights to the people, distribute or redistribute wealth by government fiat and impose government directives or enforce papal bulls by which the people would be allowed to organize their lives, enjoy liberty or pursue happiness was not the principle for which they had fought.

Instead in a remarkably new experiment they created a form of government, previously unknown or untried, whereby the people were largely free to pursue their dreams without government direction or interference. Those early decisions unleashed a spirit of industriousness and productivity never before experienced in the history of mankind, and created widespread societal wealth at a level which was unprecedented.

We couldn’t say it better than Francis Cianfrocca did in the June, 2009 online edition of Commentary Magazine:

“The United States is organized on the principle of the consent of the governed. Power and legitimacy do not flow from the state to the people, but the other way around. In this respect, what individuals do is entirely their own business, just so long as they do not violate the law or the sovereignty of other citizens. Generating wealth is therefore no different from any other private human activity; it is and should remain private, outside the reach of government, until the point at which it impinges on others.”

Today, a new paradigm for America is being imposed upon us. New for America, but old, tattered and largely discarded where it has been imposed by repressive regimes elsewhere. Its basic premise is that everyone will produce and contribute to society to their full ability and will accept as the fruit of their labor only the earnings the government allows them to retain. It is, essentially, a redistributive philosophy of governance, whereby the government decides what you can keep of what you earn. Of course, one could argue, correctly, that a progressive income tax, which Americans have long accepted, does exactly that. But in America, when citizens acquiesce to such progressive forms of taxation they do so with the unwritten understanding that government will be responsible in limiting its appetite for funding, and will observe the powers reserved to the states and the people under the Constitution.

When government overreaches and establishes programs that require a modern form of tax farming that makes an art of taxing everything that national, state and local governments think they can get away with in order to impose state mandates to replace the free choice of its citizens, the people get restive and angry. And that state of mind leads them inevitably to use the one weapon that has always been available to them to curb government gluttony…the ballot box. Sadly, by that time, any damage done by this Congress will already be the law of the land.

Federal Intimidation of Opposing Voices

It Has Happened Before.
It Is Happening Again.

Free speech, many would say, is the most precious of all our rights. It is embodied in the very first of the Bill of Rights, the First Amendment to the Constitution. Generally, it has been the most widely quoted and understood of all of our rights….generally, but not always. Periodically, when the level of dissent threatens to become too widespread and the stakes are very high, Senators and Congressmen, with the tacit approval of Presidents… and sometimes Presidents acting with the tacit approval of no one, have taken steps to quash dissent as though there were no First Amendment. It is an abuse with a long pedigree.

Recently, Henry Waxman, D-Ca., Chairman of the House, Energy and Commerce Committee, Senator Patrick J. Leahy, D-Vt., and Rep. John Conyers Jr., D-Mich., Chairmen of the Senate and House Judiciary Committees respectively, have tried to intimidate opponents of their party’s major legislative initiative through thinly disguised, heavy-handed threats to silence the nation’s health insurance industry. While their recent tactics to intimidate opponents of Democratic plans to overhaul our health care system (or, as the spinmeisters say, “reform health insurance”) pale compared to the even more heavy-handed and dangerous attempts at stifling dissent practiced by the Nixon White House during the Viet Nam War, (the Nixon Administration being the modern index for measuring presidential abuse of power) or for that matter by Woodrow Wilson during WWI or even John Adams who simply didn’t suffer dissent lightly, their actions are nothing short of outrageous.

When there is enough political currency at stake, or when perceived threats to our security are great enough, the stench of intimidation rises out of Washington like so much marsh gas from the Okefenokie swamp.

During the Adams Administration (and under cover of the then newly passed and odious Sedition Act) well-respected, but highly critical newspaper editors, were arrested like pickpockets at Mardi Gras. Eleven in all were indicted, including Benjamin Franklin’s grandson, Benjamin Franklin Bache, for simply being critical. Thomas Jefferson, who arguably championed free speech above all else, pardoned them all as soon as he was elected President.

The often venerated Woodrow Wilson was not against throwing dissenters in jail whether they were opposed to the country’s entry into World War One or the manner in which the Wilson administration was handling the influenza epidemic of 1918.

Nixon’s coterie of hatchet men (think Colson and Dean) constructed a list of twenty “enemies” of the Nixon Administration which quickly grew to a list of thirty thousand. Their version of “you’re either with us or against us” identified more Americans to be silenced than there are people in Lubbock Texas.

But we digress. Today, we want to comment on the machinations of Congressmen Waxman and Conyers, Senator Leahy and some senior members of the White House staff. Mr. Waxman’s recent epistle fired off to the top fifty two insurance companies demanded an accounting of: all meetings held outside of their corporate headquarters; where employees were lodged; what employees attending these meetings ate and drank; as well as a breakdown of compensation paid to their key management people. This was the Congressman’s way of firing a shot across their bow to discourage those opposed to him from getting out their side of the story.

The recent announcement by Congressman Conyers and Senator Leahy that they were taking steps to repeal the half-century-old McCarran-Ferguson Act, which exempted insurance companies from federal anti-trust laws wherever the industry was (and is) subject to state regulation is nothing more than bald retribution for the recent release of a report by PricewaterhouseCoopers which presents a pretty strong analysis of the projected costs of the government health-care programs currently under consideration by the House and Senate. The PricewaterhouseCoopers analysis presents a far more troubling, and perhaps more realistic, assessment of the costs inherent in the legislation than have the White House or the Democrats in Congress.

Now, our purpose isn’t to defend the long-standing anti-trust exemption. There were, and are, certainly sound reasons for the exemption. Likewise, there may be sound reasons for taking another look at the exemption as Senator Leahy has, indeed, proposed in the past. After all, a half century is a long time. Nevertheless, simple research makes clear that the original purpose of the Act was to allow the states instead of the federal government to regulate the insurance industry and to allow companies to share risk data among themselves so that risk could be managed utilizing the best available information. There have been no charges, of which we are aware, of price fixing or territory allocation among insurance companies, so the motivation to end McCarran-Ferguson certainly appears, to say the least, suspect.

There is nothing ambiguous, however, regarding the attack the gentlemen from Michigan and Vermont are mounting. It is sheer federal retribution against an industry exercising its right to make its case during a very public debate about legislation which aims to reform or, may we say, control, every company that provides health insurance in the United States.

And then there is the case of the infamous gag order by Medicare administrators to force Humana to cease advising its Medicare Advantage enrollees that the Administration’s planned spending cuts would result in reduced coverage and, in some cases, the loss of coverage for some participants. This was no secret as the Congressional Budget Office had drawn the same conclusions. It seems, however, that Humana and other insurers were being more transparent than the health-care overhaul proponents were willing to tolerate.

So what exactly caused the congressional assault on the insurance industry? It seems the analysis performed by PricewaterhouseCoopers determined that family health-care premiums would be increased by $1,700 a year in 2013 and another $4,000 a year by 2019 under the recent Senate committee-approved Baucus Bill. This has the government health-care proponents caught on the proverbial horns of a dilemma. Congress can either stay the course by broadly applying the penalty (read tax) for those who choose not to buy health insurance, or, as the Senate Committee has done, greatly scale back the penalty provision. The dilemma, of course, is that compliance (that is, the purchase of health insurance) will be diminished as the penalty for non-compliance is scaled back.

But what excuse could the White House give for its unprecedented assault on the Fox Network? No one denies that its talk show hosts present conservative viewpoints. However, the comments by Anita Dunn, the White House Communications Director, declaring Fox News persona non grata, and parroted thereafter by Chief of Staff, Rahm Emanuel and Senior Advisor, David Axelrod on Sunday talk shows a week ago that Fox is no longer considered a news network would be laughable if it weren’t so ominous. That these high officials, in concert, have taken such a stand makes clear that they are authorized to do so by the President of the United States

We eschew much of the hysteria some right wing commentators aim at President Obama, but one has to wonder just how dedicated our president is to his soothing talk about “crossing the aisle” and being inclusive if his staff is so totally contemptuous of speech and press freedom. Their actions regarding Fox are more akin to the actions one would expect from the lieutenants of leaders like Putin, Chavez or Ahmadinijad.

What Americans are discovering, hopefully not too late, is that, in a sense, Congress and the Administration are being hoisted on their own petard. They have proposed a health-care plan that represents the largest expansion of government since Lyndon Johnson’s Great Society and the War on Poverty, yet have been loath to present much in the way of detail regarding how it will work, what it will cost and how it will be paid for. The answers that have been given to the questions being raised do not seem to bear much scrutiny, even by the impartial Congressional Budget Office. To make matters worse, any consternation evidenced by the public is chalked up by them to misinformation campaigns, misunderstandings and manipulation of public meetings by opponents of the proposed program. Rather than answer opponents on the merits, they prefer to focus on intimidation.

What we do know about the Baucus Bill, which we assume mirrors the Administration’s wishes, does raise very reasonable questions. Unfortunately, there is more that we don’t know than we do know because the Bill is conceptual, that is, deliberately short on detail. We do know, however, that the Bill imposes a forty percent penalty (actually, an excise tax) on those company-provided policies with premiums valued in excess of $21,000 for families. Fair enough, given that the estimated average premium cost per family is around $19,000. But (and here comes a big “but”) if implementation is deferred, as planned, for three years, won’t premium inflation drive the average cost over $21,000 by the time the program is effective and snag most families into the newly taxed category…sort of like the unindexed AMT (Alternative Minimum Tax) snags millions of taxpayers for whom the AMT was never intended? And, on the other hand, if insurance companies price their policies, by whatever means they can, to keep the annual premium under the $21,000 threshold, won’t the government then be denied a huge chunk of the revenue it requires (about 50% of the revenue), to keep the program “deficit neutral” as promised (one of the more astounding promises ever made, even for politicians)?

Then there is the issue of the up to $400 billion that is to be squeezed out of Medicare during the first ten years of the program. According to the Administration, none of this squeezing will involve cuts in benefits, only cuts in fraud and waste (but do we need any legislation to cut out fraud and waste?). There are currently about forty million people enrolled in Medicare which suggests that the government believes it can, on average, squeeze out about $1,000 of waste and fraud per year per Medicare enrollee. Moreover, what is to prevent Congress every year from cancelling any Medicare reductions then planned? That kind of legislative action happens routinely every year and there is no reason to believe Congress will change its habits. And, just last week the White House, Sen. Reid and Speaker Pelosi used a time-worn legislative procedure which shows they know perfectly well that Congress cancels Medicare cuts every year like clockwork. Accordingly, they tried, unsuccessfully, to redesign the health care bill by jettisoning the provision cutting Medicare reimbursements (scheduled to be a 21.5% reduction January 1, 2010) referring to it, instead, as a budgetary issue and not part of the health-care reform package. Voila, any future deficits inevitably arising from this action could not, in the future, be blamed on the health care bill. Small wonder tens of millions of citizens, not to mention the health-insurance industry, don’t exactly identify Congress with candor. It seems the chief tactic Congress has come to rely upon to avoid discussion of their sleight of hand tricks is to silence their critics. Imagine the justifiable outrage if a Republican Congress or Administration had engaged in such legerdemain.

As the industry that is going to be most affected by the so-called reform measures being advanced offers its own estimates of costs to the public, the reaction of the powerful Committee chairmen has been, in the House, to demand company records pertaining to meetings and compensation of executives and, in the Senate (and House) hastily drawn legislation to end the sixty-five-year-old anti-trust exemption accorded the insurance industry by the McCarran Ferguson Act.

What is sadly but abundantly clear is that (i) our lawmakers, by trying to silence their critics, are behaving more like members of a totalitarian government than American lawmakers who operate under a Constitution that incorporates a sacred right to free speech and (ii) the Obama Administration is making early strides up the Nixon index..

Administration about to double down on failed Stimulus Strategies

Last April we predicted in an article published in the “Washington Business Journal” and later republished by the American Enterprise Institute’s on-line journal, “The American,” that the Obama administration’s stimulus bill then about to be passed by Congress, would fail. It has. We argued at that time that there were relatively few so-called shovel-ready projects and that the federal largess would be a long time coming to local communities. And it has been. Most of the funds authorized by the stimulus bill that had to be passed “without a moment to spare,” are still tied up in the federal bureaucracy. It is probably just as well, as this exercise in federal allocation of resources is a clumsy and ineffective way to stimulate the economy. We also wrote that the expensive rebate program first initiated by President Bush and repeated by President Obama would do very little to stimulate the economy because it would be seen as a temporary band aid that would either be largely socked away or used to pay down some consumer debt. Its impact at retail turned out, as predicted, to be negligible.

Then, of course, there was the ridiculous August Cash for Clunkers program whereby over a billion taxpayer dollars were essentially wasted enticing likely September automobile purchasers to buy in August. The historic and highly predictable sharp year-to-year auto sales decline for September 2009 compared to September 2008 illustrates just how lame this congressionally inspired stimulus plan was. Now, with mixed signals about whether the economy might recover, albeit very slowly, without further Congressional action some politicians in Washington are talking about either a new or extended stimulus plan. We believe that with the accumulated deficit and total US debt as another looming crisis it would be better not to double down on a further stimulus plan.

The fact is that the economy can best be stimulated by simply encouraging its various facets to function normally. The marketplace will allocate resources far better than the government. However, if Congress, in an election year, is going to opt for more stimulus we believe our original plan has far more merit.

We proposed last April, and re-propose now, a three year tax credit for consumer spending on durable goods such as furniture, fixtures, and automobiles, the kind of big ticket items that would not only help the nation’s retailers but would pass through to our factories as well.

The happy talk coming out of Washington that the recession ended way back last summer, which may be technically true, does not reflect any improvement in the lives of everyday Americans. It simply tells us that inventories have been slowly whittled down. Production has increased, not to meet surging sales, but to replace inventories that have, over the last year-and-a-half, been slowly depleted. Inventory depletion is a normal phase of every recessionary cycle. That inventories are dropping while the ranks of the unemployed are rising is of little comfort on the streets of America. Furthermore, these inventories would have diminished during the past year with little or no stimulus spending.

Meanwhile, the effect on the economy of continued layoffs month after month depresses both the economy and the American psyche. Last month’s sharp jump in lost jobs to 253,000 was startling. No one, it seems, informed all of the businesses that cut those jobs that things were improving and that the recession was over. It also illustrates that there are limits to how much the economy can be “jawboned” back into robust activity. Real economic growth occurs only when millions of men and women collectively make millions of market-based decisions to engage in economic activity; to assess their needs and desires, to make purchasing decisions and to go into the market place and acquire what they need or desire. That is why we need to create real demand at the consumer level to turn loose a sustainable economic recovery and we believe now, as we believed last Spring, that we can accomplish this quickly and efficiently. Now is the time to encourage the ninety percent of workers who are employed to energize the economy by providing an inducement for them to buy whatever they need wherever they choose. Give Americans the latitude to allocate their purchasing power in the marketplace as their needs dictate.

There is a simple and efficient way to reenergize the consumer. Provide a consumer tax credit for spending on durable goods such as furniture, fixtures, automobiles and other consumer products; the kind of big ticket items that will not only help the nation’s retailers but will pass through to our factories as well.

Here’s how it might work. Retail purchasers would get a dollar-for-dollar matching tax credit on each purchase he or she makes up to a permitted maximum for each taxpayer which, for joint return filers, might be $7,500 in year one, $5,000 in year two, and $2,500 in year three, and half that for individual filers. Upon the purchase of qualifying durable goods the Seller would provide the Purchaser with a special form of receipt which would be submitted to the Internal Revenue Service for an immediate tax rebate for fifty percent of the purchase amount up to the taxpayer’s individual or joint limit for that year. This approach could also be applied to down payments on new home purchases, automobiles, dishwashers or anything for which there is real pent-up demand. Those filers whose taxes due are insufficient to utilize the entire credit in any year of the program would have the credit carried forward in each successive year until the entire tax credit is realized by the taxpayer The rebates and credits would be accounted for on each taxpayer’s annual Form 1040.

We estimate that such a tax rebate or credit would amount to far less, spread over three years, than we’ve spent and are about to spend on stimulus packages even if every taxpayer was able to make full use of the credit, which of course would not be the case. However, this theoretical outflow would be substantially, perhaps totally, offset by the almost immediate influx of business tax payments which would result from the increased commerce and business investment as demand surged, as well as the substantial jump in personal income tax receipts to both the federal and state governments from taxpayers who transfer from the unemployment line to the recruitment line. State and local sales tax revenues would also surge.

We have seen that the current economic crisis which resulted in gigantic federal appropriations gave legislators from both parties a type of cover to quietly enact a grab-bag of their favorite programs and to earmark a substantial portion of the money on the equivalent in their districts of the legendary bridge to nowhere without publicly debating the merits which budgetary restraint and legislative compromise would otherwise require. The beltway speak that a crisis should never be wasted should be seen for what it is…an opportunity to impose new federal programs on a frightened and unsuspecting public. We must guard against such further partisan opportunism. Stimulus programs should be about economic stimulus and nothing else.

A consumer tax credit as we have proposed would have one very strong advantage over government attempts to allocate resources in an effort to stimulate the economy. Every dollar of a consumer tax credit would, by definition, be the result of a one hundred percent, dollar-for-dollar, consumer-driven investment into the economy as taxpayers buy goods to qualify for the credit. Legislative logrolling or earmarks would not be possible if we stick to this simple approach. It is efficient, uncomplicated and relies totally on the people to make decisions about how and where they allocate their economic resources. We realize that efficient and uncomplicated solutions to problems are not de rigueur in Washington, but isn’t this time supposed to be all about change –change we can believe in?

The 2009 Nobel Prize: Even Alfred Nobel Would Have Gasped

We had teed up a different essay for this week. The surprise announcement, however, that the Nobel Peace Prize had been awarded to President Obama trumps other subjects, given its potential effect on major American security issues.

At the outset, we could stipulate that Americans can take pride that our president, a good, decent, likeable and well-intentioned man, has received this once-prestigious recognition. But, should we? We think one would have to be able to look into the hearts and minds of the members of the Awards Committee before we take pride in the honor bestowed upon our President. Was the Nobel Prize awarded because of what President Obama accomplished in the twelve days he was President before his nomination was submitted, or was the Prize awarded because of what the Committee hoped he would do during the remaining years of his Presidency? The question answers itself.

We need not look too far back into history to ponder the aspirations of recent honorees. Generally, the prize has been given to people who represent the European appeasement view of the world. Such awardees as Jimmy Carter, Kofi Annan, Mohamed ElBaradei, and Yasser Arafat could only receive a peace prize from a group of people who seem serially to avert their eyes from danger. This peace-through-appeasement thread runs deep in Europe. How else could we explain a Daladier or a Chamberlain giving away at Munich the European continent to Hitler? And how else could we explain the absence of a Nobel Laureate among the opposition leaders in Germany or Italy in the 1920s or 1930s who risked their lives to preserve freedom and liberty in their countries or of an opposition leader from any of the thugocracies that imprison their own people to this day.

America has, when deemed necessary, and often with the tacit approval of these same allies, pursued the needed and often controversial muscularity in foreign policy from which the Europeans continually shrink. Presidents and other world leaders have to deal with crises that, from time to time, demand firm, dangerous and, sometimes, controversial action. That’s the nature of leadership in a cruel and often brutal world. However, the judicious use of force is typically far more essential to the maintenance of peace and freedom than the conferring of a Nobel Peace Price. We, of course, recognize that firmness against aggressors and usurpers is not the stuff of Nobel Prize ceremonies.

Those who the Nobel Prize Committee saw fit to ignore during the last century might be instructive in divining what motivates these wise men from Oslo. Churchill and Roosevelt (it would, perhaps, be unseemly to include Josef Stalin here) were passed over after, quite literally, rescuing the Norwegians along with the rest of humanity from the certain enslavement of the Nazis and their fascist allies. Truman didn’t make the grade either after inaugurating the Berlin Airlift to keep West Berliners from starving following the infamous Russian blockade. President Kennedy didn’t seem to capture their attention during the Berlin Crisis of 1961 or the Cuban Missile Crisis the following year. President George H.W.Bush’s intervention to stop Saddam Hussein’s clear aggression into Kuwait wasn’t deemed to be Prize material. Nor did the Nobel Committee notice Bill Clinton’s intervention in saving the ethnic Albanians in Kosovo by leading 78 days of intensive NATO air strikes to stop the murderous ethnic cleansing of Slobodan Milosevic and the Serbian army.

We can assume that all of these men acted in accordance with their sober understanding that the country they led was the only one willing and able to prevent the further advancement of some form of totalitarianism, whether of the left or right. None of them would have chosen a less forceful course of action had they been prior recipients of the Nobel Peace Prize, and we should, likewise, assume that being the recipient of the Prize would have little affect on President Obama’s judgment when he is next called upon to make a hard decision between endless diplomatic dithering and the use of force.

So then, just what were the members of the Awards Committee thinking? Do they really believe that with the Nobel Peace Prize on his mantel, the President would steer the American ship of state on a different course of action when danger threatens. We give the President far more credit than that. We’re not so sure, however, that other presidents in other places such as North Korea, Iran, Russia or Venezuela won’t be tempted to see whether this new Nobel Prize recipient will be loath to disappoint those pacifists who bestowed this honor upon him in anticipation of the change they seek to encourage. Although the Nobel Prize Committee members insist that they made their decision based on what President Obama has done and not what they anticipate he will do, the claim, if they are to be believed, is an incredible slap in the face to those who have put their safety, freedom and lives on the line over and over again in some very nasty places in the cause of justice and peace.

And while we are commenting on the Nobel Committee’s objectives, allow us to digress to the decision, last year, to award a Peace Prize to Al Gore? We have no axe to grind with the former Vice President, but just what do his views and Cassandra like warnings about global warming have to do with world peace? Even Democrats have to acknowledge (as many do in private conversation) that Mr. Gore was awarded the prize simply because he wasn’t George W. Bush. One suspects that the Nobel Committee in 2009 would have given the award to any of the Democratic Party’s 2008 primary election candidates who won the presidency. It would have been their way of giving us a gold star for voting the way they wanted us to. While President Obama’s intentions may be noble (no pun intended), they certainly represent no real achievement yet. How could they; he was nominated only twelve days following his inauguration.

And that brings us back, once again, to the inherent danger of this particular award when it is used for partisan political purposes. The Nobel Prize is now a way for the Norwegian panel to interfere in American elections where elected European leaders cannot, for diplomatic reasons, comment on elections in another sovereign nation. Just what is the agenda and expectation of these European pseudo-progressives who are shielded behind an aura of false non-partisanship? Could it be to push American policy toward the concept of complete equality among nations . . . sort of a one nation one vote mantra of how global influence should be shared? Somalia, Sudan, Syria, Libya, North Korea, Venezuela, as sovereign nations, all should have an equal voice with America in making decisions on the various danger points facing the world even if they themselves represent the real danger. This is the same recipe for doing nothing to confront evil that almost put the European continent into slavery and which, once again, keeps the United Nations from seriously addressing aggression by Iran, Hamas, Hezbollah, and their like. Short term commercial interests trump the need to prevent current problems from ballooning into existential threats.

Let us recognize this year’s award for what it is. The Nobel Peace Prize, at least in 2009, was the Committee’s way of complimenting Americans for electing a president who finds it useful to apologize repeatedly for our past actions (saving Europe from Nazis and other fascists and our role in bringing about the collapse of the Soviet Union aside), emphasizing dialogue with Iran, North Korea, Cuba and Venezuela and stiffing our friends (think Columbia, Honduras, Israel, Poland and Czechoslovakia). If the American people are ushered into that way of thinking, we will be following a path that can only lead to the end of American leadership, greatness and exceptionalism as defined over two hundred years ago by the great French historian Alexis de Tocqueville. We believe the consequences for the world would be disastrous.

If the members of the Nobel Peace Prize Committee believe that President Obama’s conciliatory demeanor might transform the world’s tyrants into men (and women) of peace and goodwill we might sympathize with their thinking, no matter how wishful, but the next time tyrants confront us we urge the President to take his lessons from Munich rather than Oslo.

Twenty “Yes” or “No” Questions for President Obama, Speaker Pelosi or Senate Majority-Leader Reid regarding the Proposed Government Health-Care Plans

In our youth many of us learned orderly reasoning skills through a little game called 20 questions.  One person would think of a person or an object and the others could ask twenty “yes” or “no” questions in order to identify something, perhaps a place or an object or a person, living or dead, anywhere in the world.  This technique taught reasoning skills by going from general to specific, in order to synthesize information, eliminate alternatives and come up with the right answer.

We think the American public could essentially apply the same process to help thoughtful, but perhaps currently confused, citizens determine how they feel about the emerging health-care plans wending through Congress.

The recent spectacle of so-called town-hall meetings does not seem to have produced a better informed electorate. The raucous gatherings and the often vacuous answers that were elicited from the hapless Congressmen or Senators being grilled or shouted at have not been helpful.

Thus, we have prepared 20 simple yes or no questions citizens should ask in reaching their own conclusions; (we couldn’t resist the temptation of drawing our own conclusions following each of the questions.)

1. Will all participants in the new health care program be required to pay, through added taxes or premiums, the cost of covering those who join the plan with pre-existing conditions, many of whom will increase the cost to insurance carriers from the day they enroll in the plan?  (If answered “yes,” the added cost to everyone covered under the proposed plan for these pre-existing conditions  should be disclosed to the public.)

2.  If there is to be no cap or limit on what insurers pay for catastrophic illness, will those costs be covered by taxes or premiums that everyone pays? (If answered “yes,” everyone is entitled to know what these added taxes or premiums are estimated to be.)

3.  Will the number of years of life expectancy anticipated subsequent to a prescribed procedure be a factor in the approval or rejection of that procedure under the national health-care plan? (If answered “yes,” the age  (or the formula) for determining whether or not a procedure will be approved or denied and the identity of the decision-making panel should be specified.)

4.  If, as the Congressional Budget Office (CBO) has determined, the government plan costs more than the Administration and Congress have projected, will the additional cost be borne by the participants in the plan through across- the- board tax or premium increases? (If answered “yes,” the amount of estimated increased premiums or taxes that would be required to cover the CBO projections should be revealed.)

5. Will there be any limit to the litigation awards that will be allowed in cases where a patient or a patient’s family believes a doctor or hospital to be responsible for an outcome they consider to be unsatisfactory or suggestive of malpractice? (If answered “no,” the Administration should be asked how that is compatible with efforts to eliminate defensive medicine.)

6. Will additional taxes or premiums be charged to participants in the program to pay for the additional doctors, nurses and hospitals that will be required to provide service to the estimated millions who are currently uninsured in the United States? (If answered “yes,” this anticipated added cost and who will pay this added cost should be revealed.)

7. Will an individual who is in the United States illegally and who has paid nothing into the plan be entitled to the same benefits to which American citizens who pay into the plan are entitled?  (If answered “no,” the lawmakers should reveal  what provisions are in the bill that provide for the enforcement of this prohibition.)

8. Will an individual’s or a family’s income be a determining factor in assessing that individual’s or family’s premium or tax for participating in the plan? (If answered “yes,” the formula for that calculation should be determined and made public.)

9. Will costs be controlled by periodically reducing what doctors or hospitals are paid for providing service? (If answered “yes,” doesn’t that mean that doctors and hospitals will be required to subsidize these costs?)

10. Will costs be controlled by limiting payments to pharmaceutical manufacturers for new drugs they bring to market?  (If answered “yes,” won’t this mean that less money will go into the R&D programs which are responsible for finding new cures?)

11. Will fees be capped so that a hospital receives a flat fee for hospitalization for a given illness or procedure regardless of the time a given patient needs to be hospitalized to sufficiently recover?  (If answered “yes,” what protections will there be to assure the public that hospitals aren’t incentivized to discharge patients who may not be ready or healthy enough to be released?)

12. If an individual or family decides to change insurers will they be required to select only from insurers approved by the government or that are part of a government determined insurance exchange? (If answered “yes,” won’t an individual’s or a family’s freedom to choose its own health-care provider be diminished.)

13. Will malpractice insurance be provided by the government to physicians and hospitals should the fees they are allowed to charge be insufficient to cover the cost of private malpractice insurance? (If answered “no,” how will physicians or hospitals cover these premium costs and remain in the practice of medicine?)

14. Will there be a mechanism in the plan to enable hospitals or physicians to obtain fee adjustments if they can demonstrate they are losing money adhering to the plan’s fee schedule?  (If answered “no” won’t many physicians and hospitals be forced to exit the field?)

15. Will a doctor or hospital with extensive experience and success in treating any given illness be limited to the same compensation for treating that illness as a doctor or hospital with less experience or success in treating that same illness? (If answered “yes,” won’t the level of medical expertise available to the public diminish over time?)

16. Will Medicare Advantage programs be eliminated in favor of a government substitute?  (If answered “yes,” won’t the legislation eliminate the most successful and popular Medicare program?)

17. Will individuals who do not wish to participate in the national plan have the right to “opt out” by paying their own medical expenses under an arrangement they negotiate with a doctor (or hospital) of their choice and at no expense to the government? (If answered “no,” doesn’t this amount to the loss of a very basic freedom many families currently enjoy?)

18. Are any plans under consideration that confine coverage to the approximately 15% who are uninsured in the United States? (If answered no, such an insurer or subsidizer of last resort should be considered as an alternative to “shoe-horning” everyone else into a so-called comprehensive national health-care plan.)

19. Will non-US citizens who travel to the United States for treatment, tests or other diagnostic procedures be charged the same fees as US citizens who are covered under the national plan?  (If answered “yes,” won’t American taxpayers be subsidizing the cost of providing these services to non-American individuals?)

20.  Will participants in the national plan who have exemplary health experience, causing little or no expense to the plan, receive any good-health benefit in the form of reduced premiums or tax credits for a portion of the premiums they pay? (If answered “no,” won’t those participants in the plan who maintain healthy life-styles be paying more in order to subsidize those participants whose life styles (eating, drinking, smoking, etc.) are deleterious to their health?

We appreciate that the answers to some of these questions open a proverbial Pandora’s Box of unintended consequences and unpredictable ramifications. Nonetheless, we hope these questions help focus our readers’ attention on some of the important issues that must be considered in the enactment of a national health-care plan.  More to the point, the answers the Administration or the Congress provides to these questions should help all of us decide how we feel about a government controlled and administered health-care plan.

The New Ruling Class

Over 230 years ago our Founding Fathers created a concept of freedom and individual liberty unique in recorded history.  At its core was a concept of multiple centers of authority, notably a federal system with certain enumerated powers with the national government divided into three separate branches and the remaining power left to the individual states.

Whether the drafters of our Constitution were Federalists or Jeffersonian Republicans, the compromise framework that emerged from their deliberations had at its center the preservation of individual liberty from rulers whose claim to power was based on royalty, nobility, or birthright.

From our origins as a fledgling state set in a substantially undeveloped continent with a tiny population, the engine that has been responsible for our growth into the greatest wealth producer in history which has lifted millions of people the world over out of poverty, and our emergence by the early 20th century into the world’s preeminent economic and military power has been individual opportunity to pursue our best interests and to make our own decisions, and to invest and build with a minimum of government interference.

Preserving this liberty and keeping the nation free from foreign enemies and remaining an indivisible whole has come at enormous cost in both human and material treasure.  Over 1,300,000 of our citizens have given their lives in military action not only to preserve our freedom but to defeat tyrants and oppressors who have emerged to enslave people in the four corners of the globe.

Given the enormity of our success and the checks and balances our founding fathers created to prevent excessive interference with our liberty and the price we have paid to defend it, it is ironic that we now face from within a new insidious threat to our individual freedoms proceeding step by step on an incremental basis, and unwittingly with the presumed “consent of the governed” who seem not to have noticed the erosion of the historic right of Americans to make daily decisions for themselves.

Until very recently, with the exception of the terrible stain on our nation of slavery and its racist aftermath and the exclusion from political participation, until less than a century ago, of women, our elected representatives have reflected the makeup of the population itself.

For most of our history, those people who were elected to political leadership positions in Washington or state governments were drawn from our ranks of farmers, lawyers, businessmen, laborers, and entrepreneurs.  They did not come directly from academia or, fresh from higher education programs and degrees in political science or public policy into government internships, aides to elected officials, or stints in the vast bureaucracy we have erected to write rules, regulations and standards that take on the force of statutory law.

In recent years, the trend has been increasingly to bestow leadership positions to what we refer to as a new ruling class, comprised of people who have never held a private sector job, have never personally invested in job creating activities, who know nothing of risk-taking, who are largely ignorant of the daily challenges that businesses small and large have to face and who, in fact, see private for-profit business as evil and profits as ill gotten gains.  It is difficult not to see their resemblance to the old Soviet nomenclatura whose bureaucratic power and patronage placed them in the upper echelons of society.

Consider these facts!

The federal government now owns or is heavily regulating, to one degree or another, the banking industry, the auto industry, Fannie Mae, Freddie Mac, the energy industry, and the health-care system (with more of that just ahead).  At last count President Obama has appointed over thirty czars to manage various sections of the economy, none of who are subject to Congressional confirmation or oversight and whose expertise is in many cases suspect.  We even have a compensation czar.

Let us “stipulate,” as lawyers say, that these are all smart people.  But being smart is not the only, or even the leading, attribute to achieving successful outcomes or even mere effectiveness.  Common sense and experience invariably count far more.

This ruling class of appointed czars and bureaucrats and officials (both elected and unelected) who are bereft of any private sector experience or who disdain it are increasingly making what were once our own individual decisions and divesting us of our own individual, family and societal responsibilities.

From the President (whose only non-government experience is as a community organizer) through the ever present Henry Waxman, the omnipresent Barney Frank, the Senate Majority Leader, Harry Reid, the Speaker of the House, Nancy Pelosi, we are increasingly being led by people whose view of the private sector is almost entirely negative (except, of course, when seeking campaign contributions) and who have never contributed productively to our economy (“productivity” being defined as one whose labors add to the nation’s gross national product and collective wealth).

What these government officials do offer us is the empty promise that the government can provide for all our basic needs and that the costs can and should be borne by the “rich” who, under the definition of our lawmakers, are those who make more money than a Senator or Congressman.  Can this lead anywhere but total cradle to grave dependence on a government that cannot possibly finance all the obligations it seeks to assume.  Who will pay this tab?

Everyone agrees that the accumulated national debt is unsustainable.  Will “the rich” simply be expected to fork over an ever-increasing share of the tax load?  As it is, by 2006 over forty percent of Americans paid no income tax.  What happens when that percentages reaches fifty and above.  Will anyone ever vote against further free lunches? Remarkably, the share of the tax burden borne by the top 1 percent now exceeds the share paid by the bottom 95 percent of taxpayers combined.  Will the economically productive job creators continue to invest?

State and local government officials have the same philosophy as their federal counterparts and, since, unlike the federal government, they cannot print money and monetize their debt, the economic distress they face is more acute.

For a current snapshot of where this leads, we need look no further than California, our most populous state, where 144,000 taxpayers in a state with a population of 36 million people pay over 50% of the state’s income tax.  Year after year those citizens paying the tab are voting with their feet and leaving the Golden State, once the nation’s fastest growing.  Rather than rein in costs, elected officials protect bloated bureaucracies, spend inefficiently for services that private industry can better provide and continue to search like oil prospectors for new sources of revenue.  Taxes on paper bags, soft drinks, transfats or anything considered sinful are the current rage.  Internet transactions are being jealously eyed.

This new ruling class has come to power by peddling the promise of being our protector, our 24 hour a day nanny, and slice by slice they are accumulating the powers over us that would make our Founders spin in their graves. They bear very close resemblance to what Milovan Djilas, the former Vice President of Yugoslavia under Tito, referred to as the “new class” who saw property not as material goods or private ownership but as political control. Similarly, new deal economist John Kenneth Galbraith also posited a technocratic “New Class” which was necessary because modern society was too complex and required guidance by well educated elite.

This generation’s well educated elite are even less well prepared to lead than their predecessors in Galbraith’s day.  Today they graduate with what Emeritus Professor Victor Davis Hanson of California State University calls a “Studies” curriculum.“ Fill in the blanks, Women’s Studies, Gay Studies, Environmental Studies, Peace Studies, Chicano Studies, Film Studies, and so on.  These courses aim to indoctrinate students about perceived pathologies in contemporary American culture–specifically, race, class, gender, and environmental oppression.”  As he puts it, this therapeutic curriculum holds “no eternal truths, but only passing assertions that gain credence through power and authority.”

This new class, which, in their higher education eschewed history and economics in favor of a curriculum which posits American wealth as oppressing various victim groups, sees no real differences between our American democracy or a Venezuelan thugocracy, is now turned loose on us to make what was individual daily decisions and to run our economy.

Now they are bidding to control, or intrude into, our private and precious individual health care decisions. This is a path to a very slippery slope. Under the guise of a “crisis” (the most overused word of an overreaching government) they are preparing to manage our health care decisions or alternatives, through rationing, which sooner or later, and, more invidiously, will involve government bureaucrats ultimately determining who among us should be given treatment, or, less delicately, the right to decide who lives and who dies as is the case in Oregon for those relying on state financial assistance for their health care.

Rationing of health care does, of course, take place every day throughout America. But it is individuals and families who make those choices for loved ones who often can only be kept alive by heroic but futile means. And, yes, insurance companies manage risk by precluding or limiting (rationing) coverage for pre-existing or other specified conditions. However, most families and most employers that provide health insurance can change, or seek to change, their insurance company if they are not satisfied with the coverage offered. That won’t be an option under a government provided health plan.

Some health official (drawn from the same group of 30ish policy wonks) will decide who gets dialysis or a heart bypass operation and make the decision whether someone is too far gone, too old, or too disabled, to merit treatment.  In one of the versions Congress is considering, the elderly were to be offered “end-of-life” counseling, a provision that, we are told, has been dropped given the public’s very negative and very vocal reaction.  Are we going to someday be a society in which, through bureaucratic decisions, the government is making very personal medical decisions for the nation’s families?

For all these years we saw the biggest threat to liberty as coming from foreign enemies.  We have spent untold trillions and spilled the blood of the best of our young of every generation on military defense to preserve our unique American form of liberty.  And now, almost like a cat that quietly crept into a room, our freedom to make our own legal choices, to live our lives free from interference so long as we aren’t injuring others, to support our fellow citizens with our own charity and generosity, is being taken, slice by slice, away from us by this self-appointed ruling class.

We are, increasingly, being governed by bureaucrats and autocrats who actually believe the country can grow its debt and its expenditures faster than it grows its economy and still survive.  The fact is, such a society cannot survive except by pillaging the wealth of its own citizens wherever it can find it.  The taxpaying classes, upper and middle, should thus be forewarned.  The taxman cometh.

To paraphrase T.S. Eliot “this is the way freedom ends, not with a bang but a whimper.”

Of Thee I Sing essays may, with attribution, be reproduced, quoted or excerpted.

A Stimulus That Would Work

The first stimulus failed. Here is a plan to encourage the 90 percent of taxpayers who are still employed to re-energize the economy by putting their purchasing power to work.

In April of this year, we predicted in an article that the administration’s recently passed, Keynesian-spending stimulus plan would fail to motivate the financially wounded and traumatized American consumer back into the marketplace. Today, payrolls are in their worst slump in 50 years, monthly job losses remain staggeringly high, the unemployment rate is pushing double digits and rising with little sign of improvement anytime soon, retail space is going begging, housing foreclosures continue to push to alarmingly low levels the home values that are the mainstay of the average American’s net worth, commercial office space vacancy rates are climbing, and a trillion dollars has been added to the money supply and national debt since last summer with no discernible improvement in the economy. To make matters worse, billions of dollars of stimulus money that has flowed into state, county, and local coffers is being used to maintain a wide range of existing programs that these jurisdictions cannot otherwise afford, delaying their day of reckoning. In other words, stimulus money is, at least in some cases, being used to plug bloated budgets at the state and local levels.

Notwithstanding the claim by Director of the National Economic Council Lawrence Summers that the administration’s stimulus plan is on track to meet its two-year recovery goals, the current strategy has not worked and leaves the country vulnerable to growing unemployment that could overwhelm any glimmers of confidence which might otherwise spark a recovery. So far, this “hail Mary” budget-busting strategy has produced no real increase in lending, no new job creation, no improvement in the housing market and no discernable increase in investment by industry. And to make matters worse, the administration and Congress are planning massive tax increases to pay for healthcare reform and a cap-and-trade program to reduce (although without proof it will have the desired effect) global warming by the year 2050. This is a clear prescription for economic disaster.

There Is a Better Way

It seemed clear to us last spring, and it seems clearer now, that the losses in wealth sustained by the American consumer require strong and direct stimulus rather than the very costly, inefficient and indirect stimulus path the administration and the Congress have prescribed.

So far, this ‘hail Mary’ budget-busting strategy has produced no real increase in lending, no new job creation, no improvement in the housing market, and no discernible increase in investment by industry.

Specifically, our proposal is to provide a three-year declining tax credit to all taxpayers. With the tax credit, the Treasury would match 50 percent of the cost of any non-disposable, durable goods purchased in the United States up to $5,000 in year one, $2,500 in year two, and $1,500 in year three, at which point the proposed tax credit would expire. Under our plan, retailers would receive from the Internal Revenue Service a special form on which they would enter the dollar amount of qualifying purchases made by their customers. These forms would then be affixed to the taxpayer’s tax return, qualifying the taxpayer for the proposed tax credit. The program could also be designed to avail the taxpayer of an immediate tax rebate for 50 percent of the purchase amount up to the taxpayer’s individual or joint limit. This plan would attract millions of consumers back into the marketplace to make needed purchases that are now being deferred, such as home purchases, appliances, furniture, clothing, and cars. The likelihood that retailers would compete for these stimulus dollars as well as the temporary nature of the proposed consumer tax credit should keep inflationary pressures in check and, most important, every dollar of cost to the Treasury would, by definition, have been previously plowed back into the economy.

The losses in wealth sustained by the American consumer require strong and direct stimulus rather than the very costly, inefficient, and indirect stimulus path the administration and the Congress have prescribed.

Consumers would be induced to re-enter the marketplace and businesses would begin investing in whatever additional capacity or manpower would be needed to meet the new demand for goods stimulated by the consumer tax credit.

We recognize that not every taxpayer incurs enough tax liability during any tax year to take full advantage of the proposed tax credit, but every taxpayer would be eager to participate to the extent of whatever they anticipate will be their tax liability (including payroll taxes). Unused credit could also be rolled over into the next year until the proposed credit expires in year three. Rebates and credits would be accounted for on each taxpayer’s annual Form 1040. In effect, our proposed consumer tax credit would tend to encourage the 90 percent of taxpayers who are still employed to re-energize the economy by putting their purchasing power to work.

We believe our proposal is a more efficient way to stimulate the economy than the budget-busting stimulus plan put into place last spring. Under our plan, no dollar is credited to the taxpayer unless the taxpayer has first put that dollar to work in the economy. Finally, our proposed consumer tax credit is about economic stimulus and only economic stimulus. It is not camouflage for pork, earmarks, or highly speculative new programs that may wind up costing the economy more than they contribute.

Stephen Porter is senior counsel at the Washington, D.C., law firm of Arnold & Porter, past chairman of the District of Columbia Chamber of Commerce, and a member of the National Council on the Arts.

Harold Gershowitz is the founder and CEO of New Century Information Services, which provides operations software for leading apparel retailers, and the award-winning author of Remember This Dream.

Stephen Fuller, Ph.D., is the Dwight Schar Faculty Chair at George Mason University and is director of the GMU Center for Regional Analysis.

Ideas and commentary with allegiance to neither the left nor the right, but only to this sweet land of liberty.