Memo to Republican Leadership – Shut It Down

Mr. Obama publicly and accurately defined the essence of our entitlement/fiscal problems in his speech of April 12, 2011. It is clear that he fully understands the issues. In this speech Mr. Obama demagogues the Ryan entitlement reform plan, while claiming the power of government will squeeze suppliers to reduce health care spending, proposing to reduce military spending, and insisting on increased tax rates on high incomes while reducing tax deductions, all resulting in what he claimed then would result in a $4 trillion reduction in the national debt over 12 years. This assertion is a semantic convenience, or lie, as Mr. Obama’s own 2013 budget projects the national debt rising from over $16 trillion in 2013 to over $25 trillion in 2022. (See page 64 here.) Mr. Obama never offers specifics on spending reductions. Mr. Obama never once mentions the fiscal benefits of economic growth in this speech, while he repeatedly associates only government spending with the term “investment.”

Now that he has his tax increase and reduction in tax deductions in hand, the only way to force Mr. Obama to engage in entitlement reform is for the House of Representatives to refuse an increase in the debt ceiling and be prepared to shut down the government until Mr. Obama and the Senate agree to specific entitlement changes that will, at a minimum, eliminate unfunded entitlement liabilities over time, and preferably, result in immediate and long lasting reductions in such spending.

The only way to support such a course of action with the American people is on moral grounds, superior in substance to the righteous unsupported morality and lack of specifics continuously offered by Mr. Obama.

That superior moral substance lies in the reality that Mr. Obama’s words are inconsistent with the fact that his only tangible achievements in office to date are limited to giving away free stuff paid for with trillions of dollars in debt that our children will have to repay.

Republicans need to make a broad public effort beginning now stating clearly why Mr. Obama has been wrong on the moral arguments and needs to agree to structural entitlement reforms to secure a future of opportunity and not debt for our children and our nation.

Republican leaders need to get their bull dogs in front the network cameras, editors, and political blogs now and keep them there until Mr. Obama accepts a meaningful compromise that leads us to fiscal sanity.

If Republicans cannot effectively make the superior moral argument to put public pressure on Mr. Obama they deserve what they get in return, which will be both nothing now and lost elections in 2014.

Regards, Pete Weldon
americanstance.org

The Fiscal Farce: Intermission

When discussing Mr. Obama with a friend I found myself summarizing his Progressive agenda in what I now realize is the essential reality, “He diminishes us all.”

Private individuals and businesses are now making investment decisions based on the reality of government control of education, banking, health care, power generation, energy, and transportation. You can argue about the relative extent of control by industry but the reality is that investors require a risk premium based on the regulatory and tax regime that burdens each industry, and these risk premiums continue to rise given political and policy reality. The important conclusion is that we should all now expect lower growth, lower economic returns for risk taking, and bigger government for the long term. All of this means less value in both an economic and social sense.

Today’s “agreement” on the “fiscal farce” simply confirms that we are now permanently burdened with a political class, regardless of party, that is lost in centralized power and self-aggrandizement at the expense of individual liberty, economic freedom, opportunity, and prosperity.

Mr. Obama has achieved his life’s ambition of diminishing us all and we will shortly get an answer to the question, as I believe Peggy Lee sang, “Is that all there is?” I’m betting the answer is, “yes.”

Regards, Pete Weldon
americanstance.org

Learn More About the Club for Growth

Alexander Burns wrote an article about The Club for Growth for politico.com on December 22, 2012. I have supported The Club for Growth in the recent past and want to share my perspective on the reality compared to some of Mr. Burns’s reporting.

The Club for Growth focuses on candidates and policies at the Federal level. Those candidates and policies must promote economic freedom and all that goes with it. Club for Growth philosophy is well documented.

Here are a couple of excerpts from Mr. Burns’ article along with my commentary.

“The conservative outside group amassed a decidedly mixed record in 2012, spending millions to support hardline candidates in primaries and general elections.” – The record was indeed mixed but what does “hardline candidates” mean? Should a candidate be characterized as “hardline” because they promote economic freedom, responsible Federal spending, and limited government? I thought those were core principles of our nation’s founding and success. So, to Mr. Burns a candidate that promotes government control of the means of production and limitless Federal spending must be “mainstream?” Mr. Burns fails to explain what he means but is happy to leave his reader with the “hardline” characterization.

“…the Club is utterly unapologetic for its slash-and-burn approach to intra-party politics.” – The Club for Growth in my experience does not slash and burn anything, and has no reason to react to someone else’s expectation for an apology. The Club is against candidates that do not support its principles and philosophy and it is for candidates who do. That’s it. Mr. Burns again leaves the reader with an unexplained and unsupported characterization.

“…the Club’s leadership called for the defeat of House Speaker John Boehner’s “Plan B” proposal to resolve the fiscal cliff, calling it an unacceptable combination of tax increases and phony spending cuts.” – Well, does Mr. Burns support tax increases and phony spending cuts? Does any American? Mr. Burns also incorrectly connects John Boehner’s “Plan B” proposal with resolution of the fiscal cliff. There was never any possibility “Plan B” would have resolved anything.

“…there’s no organization that provokes more frustration among GOP elites than the Club, and no electoral force with the same potential to wreak havoc on establishment-backed candidates.” – Mr. Burns loses a opportunity to educate his readers here by failing to note that “GOP elites” and “Democrat elites” are the same thing. They both believe in bigger government and in their own prescient policy making righteousness, to the detriment of economic freedom. Both, therefore, are unlikely to be supported by the Club for Growth as a matter of fact, not emotive fervor.

“And while it has helped produce national GOP stars like Cruz and Rubio, the Club has also ushered into office far more marginal members, such as the trio of congressman – Tim Huelskamp of Kansas, David Schweikert of Arizona and Justin Amash of Michigan…” – Perhaps Mr. Burns would do his readers a favor by defining what is meant by the characterization “marginal members.” Does he imply that Cruz, and Rubio are not “marginal” but the others are? What kind of reporting is this? Can’t politico.com find reporters who can write accurately and fully explain themselves?

To his credit, Mr. Burns ends with a quote from the President of the Club for Growth, “Plan B was never going to be the law. It was never going to be the final deal. And we were never smart enough to see how it got you to a good deal,” he said. “We don’t think it’s a good week. We think it’s a bad week. No one’s offering a pro-growth solution to the fiscal cliff issue.”

Click here to find accurate information about the Club for Growth.

Regards, Pete Weldon
americanstance.org

Cliff Notes on a Farce

I laughed out loud yesterday when I saw the flashing banner on CNBC: “Countdown to the Fiscal Cliff: 11 days.”

Even the financial media is more interested in selling advertising than in informing the public.

The “fiscal cliff” is a fake construct created by Mr. Obama and the US Congress as a result of prior failed budget “negotiations.”

Mr. Obama provides his routine righteous pronouncements about someone else being responsible for increasing taxes on the middle class while he promotes more spending, deficits, and debt.

The Democratic leadership demagogues the Republican leadership and visa-verse, neither offering anything approaching a constructive solution to our spending addictions or promoting economic growth and opportunity.

This is nothing more or less than a farce. Both sides think they need to sway public opinion with their posturing and the media laps it up, doing daily polls on how many people think the failure to achieve any constructive change rests with one party or the other.

Mr. Obama is a failed leader at the end of his rhetorical rope. Someone needs to speak the truth to the American people and act to reduce both spending and taxes.

Regards, Pete Weldon
americanstance.org

The Feds’ Fake Tan

Grant Williams, chief investment strategist for Mauldin Economics, offers this piece about the Fed’s money printing.

The Fed has officially tied continual money printing to the unemployment rate on the presumption that the two are things are related. That is, they believe that if you make the money appear inexpensive enough people will borrow it and deploy it productively in the economy.

From the Fed statement on the issue:

“…this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.”

Obviously, these people have never run a business.

Is it no wonder that the WSJ on the same day notes that US public companies have taken Two Hundred and Seventy Four Billion Dollars ($274,000,000,000) off the investment table to buy back their own stock, instead of using that cash to reinvest in new products and services? (Note also that US public companies still have One Trillion Seven Hundred Billion Dollars [$1,700,000,000,000] in cash.) In many cases these companies are borrowing long at the Fed’s artificially contrived rates to buy their stock back (which in many cases has a dividend rate higher than the cost of borrowing).

The Fed is applying fake tanning solution as Grant Williams notes, simply prolonging the fantasy.

Why then does the stock market remain positive? Perhaps because the Fed assures us of the continual prospect of more money chasing fewer goods, making companies that can pass on inflation in their future prices more attractive than a 1.78% ten year US bond yield. But note, there is no economic growth being generated.

The Fed’s bond buying has clearly become counter productive but they double down on the same policy. Hello? Anyone home? Unfortunately not.

Regards, Pete Weldon
americanstance.org