Balance the Budget: Now is the Time


ARRA News Service - Tina Korbe, Hot Air said: When “Cut, Cap and Balance” failed the Senate and both chambers of Congress regrouped around new plans, the first to go of the three crucial elements in the House’s original plan was a balanced budget amendment. Neither of the deficit reduction plans presently on the table provides for the passage of a BBA. It’s also the element of CCB most frequently decried as unrealistic. But political lights from Thomas Jefferson to Ronald Reagan have called for such an amendment, as this video from GOP Labs illustrates. Let President Obama say, “We don’t need more studies; we don’t need a balanced budget amendment.” If ever any unfolding drama proved the need for such an amendment, the drama of the past week has been it. Leave cuts to Congress and what do you get? CBO-certified gimmicks on both sides — even on the side of one sincerely trying to garner savings, one who says he also “wanted more.”


President Reagan Said in a Speech to the Nation on Federal Budget, 4/29/1982: As former President Ronald Reagan says in this video, “Most Americans understand the need for a balanced budget and most have seen how difficult it is for the Congress to withstand the pressures to spend more. … We tried the carrot and it failed. With the stick of a balanced budget amendment, we can stop government’s squandering and overtaxing ways and save our economy.”

Tags: balanced budget amendment, President, Barack Obama, Ronald Reagan, video, economic recovery, conservative, the Economy, taxes, bankrupt, Balance the Budget, Thomas Jefferson, American people

Joe Wilson Gives Voice to Frustration

joe shouldn't apologize

It's Time for a Complete Reboot

One of my lesser known traits is that I’m a huge Trekkie (and I don’t say “huge” lightly). However, the Star Trek universe had recently been undergoing a pretty substantial collapse, culminating in the closing of Star Trek: The Experience in Las Vegas. Desperately trying to revive the franchise, Paramount Pictures contacted J.J. Abrams, Roberto Orci, and Alex Kurtzman to create a film that would appeal to a wider audience than the typical Star Trek movie — in essence, entirely rebooting the franchise. One of my concerns as a fanboy was that doing this would substantially change the franchise from Gene Roddenberry’s original vision. Judging by the success of Star Trek so far and the overwhelmingly positive reviews the movie has received from both critics and viewers (it is now #62 on IMDB’s top 250 movie list), the reboot has successfully achieved its goal of widespread appeal. And although there were a number of deviations from the days of Roddenberry in the new film, I was able to reconcile these deviations with the fact that the franchise was in dire need of change to regain the widespread appeal that was necessary to keep it alive.

Now how does all of this relate to politics?  Well, after the devastating 2008 elections, many of those on the right (myself included) believed that things couldn’t get much worse. After all, President-elect Obama had just won in a decisive landslide, and Republicans lost 8 seats in the Senate and 21 in the House. The Democrats outpaced Republicans in virtually every area, and the only glimmer of hope Republicans could hold onto for the next two years was the knowledge that Republicans would be able to filibuster Obama’s most radical plans in the Senate. Today, even this looks incredibly unlikely with Senator Specter switching sides and the reality setting in that comedian-turned-politician Al Franken will likely be the next Senator from Minnesota. For a while I felt cautiously optimistic about the 2010 elections — the energy of Rebuild the Party and similar movements to rebuild the GOP was profound, conservatives seemed to be on the brink of a rightroots movement, Michael Steele took over the reigns at the RNC, and Joseph Cao achieved enormous electoral victory while Jim Tedisco seemed poised to win in NY’s 20th. However, much has changed since those developments, and it seems that Republicans are not on the best track to turn the tide in 2010, let alone in 2012 or beyond. Indeed, although a turnaround is possible, the clock is ticking, and like the Star Trek franchise, the only way that the GOP can turn things around is with a complete reboot.

Over at Time magazine, Michael Grunwald raises some important points about this matter. He writes:

The party’s ideas — about economic issues, social issues and just about everything else — are not popular ideas. They are extremely conservative ideas tarred by association with the extremely unpopular George W. Bush, who helped downsize the party to its extremely conservative base. A hard-right agenda of slashing taxes for the investor class, protecting marriage from gays, blocking universal health insurance and extolling the glories of waterboarding produces terrific ratings for Rush Limbaugh, but it’s not a majority agenda.

While I find much of the content of his argument biased and inaccurate, the overarching point he raises is that the issues Republicans are pursuing are not those of “a majority agenda.” Regardless of whether conservative positions on these issues are popular or unpopular, they aren’t the kind of issues that build a majority and win elections — particularly during trying economic times. This is an important point that Republicans must somehow reconcile if they wish to return to majority status. Jon Henke points out (emphasis added):

The Republican brand does not merely need a little tinkering. The Republican brand is not the victim of Democratic rhetoric and framing. The Republican brand is so bad because people accurately perceive the state of the Republican Party.

And although it is sometimes well deserved (see Arlen Specter’s vote on Obama’s stimulus package), lambasting all of our moderate Senators and Congressmen doesn’t help. One of the things I used to celebrate about the Republican Party was its diversity in ideology — something that continues to diminish with the loss of Specter, giving the Democrats the opportunity to be the ideologically ‘diverse’ party. In a two party system, you cannot build a winning coalition that encompasses only the far side of the political spectrum. The bottom line is that Republicans will likely never see another day in the majority if its electorate only supports candidates with impeccable conservative credentials, outcasting any elected officials or candidates who are near the political middle. In states such as my own (Pennsylvania) and many others in the region, a Republican candidate can only win the general election if he or she is moderate. For just one example of the impact of accepting moderates, look to the U.S. Senate — would you rather have 11 moderate Republicans in the Senate in addition to our current Senators and hold a majority, or only allow full-on conservatives and sit comfortably in the filibuster-proof minority?

The fact is that it is time for a reboot, or as Henke says, “actual, painful, reform.” The Republican Party needs to find new issues around which to coalesce, issues that appeal to mainstream Americans and are not knee-jerk reactions against the Obama administration’s plans. One thing that Republicans cannot wait for is the Democrats to fail. Meanwhile, GOP voters need to realize that moderates — who may not always be perfectly conservative — have their place in a nationally viable party. Only with these recognitions and a total overhaul of the GOP can Republicans move maximum warp speed ahead into the future.

Crossposted at NextGenGOP.

Obama Stimulus Will Fall Flat; GOP Must Stand Up and Fight

President-elect Barack Obama has laid out a plan to “create or save” three million jobs during his first two years in office. His plan is to increase government spending, deficit be damned, by at least $775 billion dollars over that same period. While the projects he plans to invest in are things that we Americans can all use, the stimulus plan will be a flop. Here’s how I got here:

Let’s start with the money. Obama plans to increase government spending without any increases in taxes, so that negates his use of PAYGO budgeting. At the same time, the total amount of money per job that he creates or saves will come out to more than $258,333 per job. There are business executives who don’t even make this money for their job, yet Obama, who has never held a private sector job in his lifetime figures the cost of a job to “create or save” at more than one quarter of a million dollars.

Any reasonable businessperson, like myself, will tell you that if it cost that much money to save a job, we would rather sooner terminate the job immediately. The problem here is that Obama and the other people in government have no real concept of what it costs to run a business, generally speaking. The purpose of a business is not to make customers happy or to employ as many people as possible. The end goal of a business is maximizing their profits and making their shareholders money. Those who do not live by that mantra of making money for the company and stockholders quickly go out of business.

The two things that the average person on the street does not realize are how much one billion is and how much one trillion is.  For the concept of one billion dollars, imagine that on the day of the birth of Jesus Christ you were given one billion dollars and had to spend $1,000 each day onward while gaining no interest, you would be still be spending money for at least the next 700 years.  By comparison, one trillion dollars is one thousand times one billion.

Second, according to the CIA Factbook, the current Gross Domestic Product (GDP, or the total value of all goods and services produced inside the borders of the United States) currently sits at $14.334 trillion. In other words the stimulus is only 5.4 percent of GDP. From here, that percentage goes down fast.

In the Highway Spending Bill that Congress recently passed, less than 26 percent of that money was spent within the first fiscal year. If this holds true, it then means that a value of less than one-and-a-half percent of the nation’s GDP will be infused in to the economy within the first fiscal year of the stimulus bill’s existence. For an economy that will be going in to a deep recession throughout 2009, this does not bode well for Obama.

The end result is an increase in inflation thanks to the increase of the deficit to a level that will approach or exceed two trillion dollars this fiscal year and a slow-to-respond stimulus bill that will actually, when implemented, cause the death of many jobs.

However, that is only half the story about Obama’s economic plans for America. House Speaker Nancy Pelosi wants to get Obama to sign the Employee Free Choice Act (EFCA) which is Orwellian by name, but will cause considerable damage when implemented and enforced. Barring a miraculous filibuster by the Republicans in the Senate, America’s workforce will become unionized and small businesses will close their doors.

What’s more is that the unions will get the ultimate payback from the Democrats they helped get elected. Their membership and union dues received will increase which will give the unions considerable influence in American politics and with their membership. Also, the union bosses will be able to oversee how each of its members votes in a union election, bringing to an end the secret ballot. If the Senate Republicans cannot stop this bill, small businesses in the United States will either have to shell out more of their money to meet the demands of the unions or they will close their doors, or both.

If this comes in to play, the projections for an unemployment rate of nine percent will look good to Americans because the unemployment rate in the USA will be higher than at any time since Ronald Reagan’s first term following the horrific economic policies of Jimmy Carter. The only difference is that Reagan was able to lower the unemployment rate from its peak in December 1982 of 10.8 percent to 8.3 percent in December 1983 and ultimately to 7.2 percent the very month he won a 49-state landslide win against Walter Mondale. By contrast, Obama won his election with an inflation rate of 1.07 percent and an unemployment rate of 6.7 percent in November 2008.

Finally, research from economists at UCLA determined that the Great Depression lasted seven years longer because of the New Deal. Obama wants to implement the New New Deal almost from the moment he takes office. Considering that the double-digit unemployment rates did not end until 1943, this means that had the New Deal not been implemented by President Franklin Roosevelt, the Great Depression would have ended in 1936 leading to an easy reelection.

The reality is that Obama doesn’t have the luxuries that FDR had when he was President, yet he wants to take us back to the past with an economic policy that exacerbated and extended this long economic slump. If this plan flops (and it will), just like FDR, Obama will come back with a sequel of New New Deal II which will be used as a means to “save” his job during a time of economic distress.

If the Republicans are able to do anything, it will be to vote against the stimulus package and to attempt to block the EFCA. Should this happen, they will have the ability to say that these things are prolonging the economic crisis and that they fought it all the way. If not, they will be on the same side of the line as Obama and the Democrats in 2010 and again in 2012 which could pave the way for two terms of economic agony.

It’s almost crunch time and the Republicans need to fight the expansion of big government early and often, then turn around and use it as a means to defeat Obama and Obamaism when given the opportunities to do so in 2010 and 2012. If not, they will become a permanent minority party with previous successful Presidents like Abraham Lincoln, Teddy Roosevelt, Dwight Eisenhower, and Ronald Reagan as distant memories of what was once great about America, but never will be again.

It’s time for the GOP to be ready to fight Barack Obama when he’s wrong (like on these matters) and Obamaism. 

Foreign Policy: What Obama Must Do

One of the biggest items of “change” that President-elect Barack Obama ran on was in the department of foreign policy. It was one of the major reasons that he was able to engineer an upset of Senator Hillary Clinton in the Democrat primaries and clinch the nomination. However, when faced with the realities of a dangerous world, one that was dangerous before George W. Bush took office, “change” may seemingly have to take a back seat in order to defeat Islamofacist terrorism.

First, Obama must make the commitment to winning in Iraq. During the campaign, Obama ran on a promise to end the war in Iraq. However, his plan for a 16-month troop withdrawal may hit a snag: How history will remember him in regards to winning an important theater in the first war for America’s existence since the Revolution.

If Obama commits to winning the war before pulling all of the troops (he can still hold his pledge on not having permanent bases despite the desires of the Iraqi government), history will think of John McCain as the whistleblower, George W. Bush as the implementer, and Barack Obama as the closer and victor. It’s a political win-win-win all around the board. It would also have historians forget that Obama was willing to concede defeat in the middle of the success of the surge.

Also, the American public is hearing little about what’s going on in Iraq today. Since the start of October, there have been a total of 17 U.S. troops killed over a 40 day period for an average of just under 0.43 troops per day dead. To top this off, there has only been one month this year (June) where the body count was greater than the number of days in the month. Prior to that stretch, the only months that had a monthly body count less than the number of days in the same respective month were in February 2004 and December 2007.

The other is for Obama to fulfill his complete campaign promise to pull all the troops within 16 months, or by the end of May 2010. This could be risky for his majorities in Congress should Iraq descend in to chaos. Already, Israel is about set to elect Benjamin Netanyahu as Prime Minister of Israel thanks to the election of Obama on Tuesday. Netanyahu will likely have to take over as the leading head of state in the war on terror if Obama decides to withdraw any troops that are necessary for victory and appease rogue dictators who are supporting Islamofacist terrorists.

A withdrawal also empowers Iran and Syria who would align with the Shiite majority in Iraq and fight the Sunnis who will be backed by Jordan and Saudi Arabia. This would be problematic and a catastrophic failure of the Obama administration because Syria and Iran have been building up their military for an invasion of Israel, but would get the parting gift of Iraq. Jordan and Saudi Arabia will be unable to fight because Jordan has made peace with Israel and Saudi Arabia depends on the United States to protect them as it has since just before Desert Storm.

Pulling out of Iraq sends the mixed signal to forces fighting the United States in Afghanistan by saying “We don’t believe that this ‘surge’ worked in Iraq, but we’re going to implement it here against you anyway.” There would be an emboldening of the terrorists in Afghanistan and Pakistan if the United States doesn’t commit to winning in Iraq alongside that of a troop surge in Afghanistan to root out insurgent forces once and for all.

Second, Obama must decommit himself from meeting with rogue dictators ranging from Venezuela’s Hugo Chavez, North Korea’s Kim Jong Il (it is still up in the air as to whether or not he’s alive), Iran’s Mahmoud Ahmadinejad, Syria’s Bashar Assad, and Cuba’s Raul Castro. It cannot happen because it would set up a disaster akin to what John F. Kennedy had after he met with Nikita Khrushchev.

The meeting resulted with the Soviet construction of the Berlin Wall and the Cuban Missile Crisis. Neither of these were successfully concluded by the Kennedy White House. In the case of the Berlin Wall, it stood until 1989 when it was torn down as both Berlin and Germany were reunited. As for the Cuban Missile Crisis, Fidel Castro feared an invasion by American military forces that would oust him from power if the missiles were not taken back. Khrushchev acquiesced on the Cuban missiles.

Third, President-elect Obama must not condemn any actions taken by Israel in defense of their country. This was a problem of his that emerged when the Russians invaded Georgia this past summer. In his first response, Obama called on Georgia to “exercise restraint” in the defense of their country. This was absolutely laughable and showed his ignorance and naivety on foreign policy matters.

If Iran is accelerating towards a nuclear bomb and the Israelis have credible intelligence that indicates this, it would be wise to let Israel deal with the problem and take out Iran’s nuclear program with air strikes of their own. Should Netanyahu decide as Prime Minister (and he will win election in February) to bomb Iran, Obama would be wise to not condemn the actions of an ally against a mutual enemy. It is neither politically wise for him to do so nor would it be strategically wise in a worldwide war against Islamofacist terrorism.

Finally, Obama needs to come to the realization (and the intelligence briefings better do the trick) to make Obama realize that the enemy of Islamofacist terrorism is an even graver enemy than that what the Soviet Union could have ever been. That realization has to come about from the methods, tactics, and aspirations of Islamofacist terrorists versus that of the former Soviet Union.

The Soviet proliferation and expansion was initially as a result of their territorial gains and reconstruction of Eastern Europe from World War II. From 1945 to 1989, the Soviets had puppet Communist governments in Czechoslovakia, Poland, Rumania, Hungary, and Bulgaria as well as recapturing Estonia, Latvia, and Lithuania and absorbing them into the Soviet Union itself.

One of the greatest methods that the Soviets used was spreading military technology and money around to nations, especially Arab ones, in order to gain influence and to back them against Israel who was being backed by the United States and Western Europe. They also sought to further influence nationals from other nations by spreading Communist teachings and ideology.

Meanwhile, the Islamofacist approaches of countries like Syria and Iran as well as terrorist groups like Hamas, Islamic Jihad, Hezbollah, and al-Qaeda results in a goal of complete subjugation to strict Islamic teachings and law. Their means are the use of intimidation by killing civilians with bombs and to pursue greater and more deadlier attacks throughout countries that don’t subscribe to or support their ideology.

If Obama decides that he is going to scale back the War on Terror and attempt to use a type of détente with terrorism like that of what Nixon, Ford, and Carter did with the Soviet Union, there will be many more major losses coming over the next four years. The end result of détente with the Soviets was their invasion of Afghanistan which was responded to with the Moscow Olympics boycott, the dumbest of all foreign policy decisions made since in the last 30 years.

There can never be coexistence with terrorism and President-elect Obama must come in to office on day one with that realization. Either we stop it and destroy its capabilities or we allow them to intimidate and dictate the future of freedom and liberty with subjugation under what many in the post-modernity West would consider barbaric.

Should Obama push for a kind of coexistence with those who have a goal to kill or subjugate us to their radical and barbaric philosophies of hate, he will be even more naïve than what America’s enemies are being led to believe.


Chicken Little or Nostradamus

Saturday morning, I turned on “Bulls and Bears” on the Fox News Channel and I heard one of the strangest stock investments to make for the next four years. Believe it or not, this guy said that the economy was going to be so bad that the best investment he could come up with was Molson Coors Brewing Company. In other words, his message was to keep plenty of booze handy because this is going to be an economy that will drive even the most ardent teetotalers to drinking.

Now, I will admit that like a lot of others, I do see a light at the end of the economic tunnel with Barack Obama being elected. However, I also hear the sounds of a locomotive coming from that general direction. For Obama’s sake and for our country’s sake, I would prefer that the economy be in a boom. Sadly, I don’t see it happening.

Last night, I was reading on the causes of the Great Depression and there is a real possibility that we could get a miniature version of a depression. In looking at the signs and the symptoms of the Great Depression, I couldn’t help but notice how each of the signs and symptoms are going to create an even worse economic crisis. All four of them adversely affected the business community and ultimately affected the American public. Consider them the four horsemen of the economic apocalypse: Tight credit (pestilence), stock market dives (war), price destabilization (famine), and tax increases (death).

The first thing that happened was a tightening in the credit market. Back in the 1920’s, lending was such a fast and loose practice that there was speculation on the part of investors to make money off of debt. The end result was a deflation in debt caused by liquidation that ultimately tightened the credit market.

Compared to today, we are now in a state where the economy is seeing a tightening credit market. It’s harder to get loans because the banks are trying to get their balance sheets in order after the collapse of the subprime loan market.

The second thing that happened was the fall of the stock market. In 1929, the Dow Jones Industrial Average dropped 68.90 points, or a drop of 23 percent. It wouldn’t be until 1954 until the full drop was recovered. This was the kind of equity crunch that firms had difficulties with for years.

Back on May 19 of this year, the market closed for the last time over 13,000. Since then, the market has dropped from 13,028.16 to 8,943.81 for a total percentage drop of 31.4 percent. Granted it was over a period of almost six months, but it’s been enough to drive down stock prices and create tightening of equity.

The reason that these first two items, debt and the stock market, is because of the importance the two of them have in the life of a business. In order for firms to expand, they need to have cash. To generate cash, aside from sales and profits, they need to be able to acquire loans or to generate a higher stock price. As this environment is now and may be for the next four years, it will be harder for firms to generate more money.

The first is the possible increased tightening of the credit market. President-elect Obama has proposed loan forgiveness and a freeze on foreclosures. This will create an environment where a loan officer may as well take his paid vacation time because the banks won’t lend unless under threat of the government to commit financial suicide.

The second is that the Democrats want to take over 401(k) funds from individuals who have them. By the government taking over the 401(k)’s, it will create less incentive to buy stock. Instead of allowing for your retirement to be the result of successful investing yielding in high rates of return, the rate of return is a fixed four percent per year before inflation. If inflation above four percent, you actually lose the inflation-adjusted value necessary to retire more comfortably.

By comparison, if someone had opened a 401(k) fund and invested in the Dow Jones Industrials Index Fund on October 20, 1987, your value would have increased by 314.3 percent. In other words, that would be an average gain of almost 15 percent per year or 3.75 times the rate of return of the government’s 401(k) rate of return. Sadly, the government is the only entity that can make bad business decisions and still stay in business all these years later.

The third of these problems was price destabilization. Because of the deflation of debt and the stock market crash, prices wildly deflated as a result of the United States loaning gold to Germany to industrialize in order to pay France who needed the money to pay debt to the United Kingdom and the United States. This was in response to the early 1920’s hyperinflation in the Weimar Republic.

However, the current situation could be increased inflation due to higher energy prices from the proposals of Obama, a contraction of oil supply by OPEC, and the desire to implement cap-and-trade programs that have the goal of reducing global warming, but will have the effect of reducing industry.

Inflation will be further fueled by record-high deficit spending by the next Congress when it convenes in January. With the bailouts being proposed, a second stimulus package in the works, increases in government spending for programs, fighting two wars, and an economy that is providing less tax revenue, a deficit of $1 trillion will probably become a reality before the mid-term elections if not by this year.

The increases in regulations and the increases in wages that will result from the increase in the minimum wage from $7.25 to $9.50 (the inflation-adjusted figure of the original minimum wage is less than $4) that Obama and the Democrats want will result in increased job losses and reduced production. When you have fewer goods in the marketplace, the price has nowhere to go but up.

Finally, there is the last of these: increased taxes. Following the prior three things happening to the economy, Herbert Hoover and the Republican Congress in 1930 enacted the Smoot-Hawley Tariff Act that raised taxes on imported goods (tariffs) to record levels despite the pleas and protests of over 1,000 economists and a number of business executives including Henry Ford who called it “economic stupidity”.

Despite these pleas and protests, Hoover signed Smoot-Hawley in to law and the goods imported from Europe alone decreased by half of what they were before the act. Also, there was a backlash where a number of other nations increased their tariffs on American goods.

The other tax increase was in 1932 with a Democrat-led Congress and Hoover. This time, it raised the top marginal tax rate was raised from 25 percent on those making $100,000 or more to a top rate of 63 percent on those making $1,000,000 or more (by comparison, the rate on $100,000 to $149,999 was raised to 56 percent). On top of that, the corporate tax rate was increased from 12 to 13.75 percent (an increase of almost 15 percent).

The end result was a jump in the unemployment rate from 7.8 percent in 1930 to 25.1 percent in 1933. It would not be until 1943 when the unemployment rate dropped below 10 percent.

By comparison, President-elect Barack Obama is proposing an increase in the capital gains tax from 15 percent now to anywhere from 20-28 percent (which would make buying in to the stock market a less desirable proposition), closing corporate tax loopholes that will ultimately increase the tax burden on corporate America (a tax rate that is already the second highest in the world), and raising the top effective income tax rates from 33 and 35 percent now back to the Clinton-era levels of 36 and 39.6.

What makes matters worse is that high taxes at the state level have devastated the state of Michigan perhaps more so than any other economy. Along with Oregon, the state has one of the two highest unemployment rates of any state in the country because of high tax burdens.

I bring up Michigan because of the incompetence of Governor Jennifer “Jenny No Jobs” Granholm who was right behind Obama during his Friday press conference. Granholm has done more to drive jobs away from her home state as governor. It was because of a bad Republican year in 2006 that she was able to get reelected, but her political career will officially end when she leaves office because of how damaged she has left Michigan with tax increase after tax increase.

As it stands now, the unemployment rate under “Jenny No Jobs” rose to 8.7 percent in September, more than two full percentage points higher than the unemployment rate above the national unemployment rate for October. Overall, the Granholm administration in Michigan has cost the state 143,000 jobs since she took the helm in 2003 (an average of more than 21,000 jobs a year).

What’s scary is that Obama is embracing Granholm’s high tax, no jobs approach to economics. This is why Obama’s economic policies will fail Americans. It will not provide jobs, sustainable growth, or stable prices. Instead, it will provide unemployment, higher taxes, more regulations, and more big government.

I may be Chicken Little or Nostradamus depending on the outcome. For the time being, I will be monitoring not whether or not those who voted for Obama will have buyer’s remorse, but when.


Obama Swallows Poison Pill, Spares GOP from Pyrrhic Victory

The outcome of the election, as reported by the media, was one of a historic victory by Barack Obama and the Democrat Party. However, I want to put a look on this going forward as opposed to going backwards. My take on it is that Obama and the Democrats have swallowed the poison pill of a bad economy and John McCain and the Republicans were spared from a Pyrrhic victory.

Defined, a poison pill is that of a strategic move in politics or business designed to increase the likelihood of negative results as opposed to positive ones during a takeover. By winning the 2008 Presidential and Congressional elections, President-elect Barack Obama and the Democrats have willfully swallowed a big poison pill left behind by George W. Bush.

Meanwhile, a Pyrrhic victory comes from King Pyrrhus, the ruler of Eprius, who won a series of battles that his army won in 280 and 279 BC against the Romans but the casualties they took on were devastating. Had John McCain been elected President, it would have been one such victory that would have been enough to strengthen Democrat majorities in the House and Senate while setting up the Democrats for a landslide win in 2012. For that, McCain and the Republicans spared themselves what would have been a costly victory.

The good news for the Republicans is that there are a number of ways that Obama can consume poison pills and do so happily while fooling himself by proclaiming it as an “engine of change”. Believe me, that the Republicans will be more than happy to keep supplying the poison pills. All of this with the GOP’s rise back to the top by 2012.

Had the roles been reversed with McCain winning and a Democrat-led Congress to work with, the Democrats would have blocked many of McCain’s economic policies and would force him to cross the aisle for the policies they wanted, which would have made McCain the second-comings of Herbert Hoover and Jimmy Carter.

In the end, it would have made John McCain’s Presidential win that very Pyrrhic victory that would have lengthened the minority of the Republicans in government and turned John McCain’s legacy from that of “Maverick” John McCain the war hero to John S. McCain the failed President. Instead, Obama and the Democrats took a tighter grip on power that could ultimately give the public one reason to vote Republican.

What Obama and the Democrats are proposing could be a prescription for an unmitigated economic disaster that could lead to GOP victories in 2010 and 2012. Those victories also assume that the Republican leadership in Congress and party back in working order.

If nothing else, it would be highly unlikely that Obama governs from the political center. Back in 1992, then-President-elect Bill Clinton was told by House Democrats that they would pull support for centrist positions of his if he tried to get Republicans to vote for his proposals. They told Clinton that if he stayed within the confines of the Democrat Congressional and Senatorial Caucuses, they would deliver other policy proposals. That ended in 1994 with a Republican landslide in the House and Senate elections.

Before that, Jimmy Carter decided that he was not going to govern from the left in the early stages of his presidency. The end result was a clear alienation of his own party that led to Carter vetoing in four years more than double the bills that George W. Bush did in eight years. By the time Carter tried to woo the liberal base of his party, it was too late. Thanks to not governing from the left and his ineptitude, Ronald Reagan defeated him in a 44-state landslide in 1980 in an election that was over one hour before the polls closed on the west coast.

President-elect Obama is now in a bad spot electorally. If the economy goes from bad to worse post-2009, Obama and the Democrats will not have Bush to blame. Instead, they will have to answer the question “What have you done for me lately?” If they’re not careful, the Republicans will start by making significant electoral gains in 2010 and could regain power back from the Democrats in 2012. That would be the final, fatal poison pill.

There was no secret by the Obama campaign about their desires to raise the capital gains tax from 15 percent to anywhere between 20 to 28 percent. The last time an increase in the capital gains tax was implemented was back in 1986 when the tax code was reformed under Ronald Reagan to make the capital gains rate the same as the top rate of 28 percent. When implemented, capital gains tax revenues dropped 44 percent because selling stock became less desirable.

What could make matters worse is the desire of Obama and the Democrats to raise the top marginal income tax rate from the current 35 percent rate to that of the 39.6 percent it was back in 2000. There are a number of serious consequences that would arise from a tax increase in an economic slowdown or an economic recovery. According to Obama’s proposals to repeal the Bush tax cuts for the top five percent of wage earners ($153,542 in adjusted gross income or more) and Obama’s proposed removal the income cap on FICA taxes could impose a federal tax rate of 54.9 percent.

As for the rest of the Bush tax cuts, they will be set to expire on January 1, 2011. If there is now tax cut extension put in to place, an economy that could be poised for a recovery would instead suffer a contraction. George W. Bush will not anywhere close to the scene of the crime (he’ll probably be getting ready to go fishing in Texas by this time) to be blamed and Obama would take the hit. In other words, Obama will be the first President to run for reelection on the heels of a recession since George H.W. Bush lost to Bill Clinton in 1992.

Spending can also get out of hand with the Democrats wanting more money for more spending programs. John Kerry has called for a new New Deal and Barney Frank has called for more spending, deficit be damned. This, combined with Speaker Nancy Pelosi’s push for funding for embryonic stem cell research (which is more throwing good money after bad since embryonic stem cell research has produced no cures while over 80 cures have been found via adult stem cell research) and Ted Kennedy’s push for socialized health care will be enough to generate our first-ever trillion-dollar deficit.

Once the recession is over, the next monster the economy will become hyperinflation that has gone unseen since the 1970’s. The contributors will be record deficit spending, energy prices run amok, and artificially increasing wages.

Obama has proposed raising it from the $5.15 it was back in 2006 when the economy was actually good to the $7.25 per hour wage that it will be next summer to $9.50 by 2011. The dirty little secret about labor pricing in economics is that if you inflate wages against the will of employers, you actually create more unemployment—like what is happening right now.

If you look at the inflation-adjusted number of the original minimum wage when it was implemented in late 1938, today’s minimum wage would only be $3.64 an hour. The $9.50 an hour that Obama would attempt to implement would be the 1938 equivalent of 68 cents. In other words, when adjusted for inflation, non-skilled workers—mostly high school teenagers, people working for the first time, and those looking to start a business by learning a trade—are making more than 2.61 times more than what they were making 70 years ago.

In some ways, inflation was made worse by the Carter administration in the 1970’s by increasing the minimum wage every year he was in office. When Carter took office, the federal minimum wage was $2.30 an hour. That figure went up to $2.65 an hour in 1978, $2.90 an hour in 1979, $3.10 an hour in 1980 and to $3.35 an hour when he left office in January 1981. By comparison, the Reagan administration never passed a minimum wage increase and one would not take effect for more than nine years.

Why does the minimum wage matter? It is the only real way to create a trickle-up economic effect. It will increase wages across the board by an even bigger percentage than that of a minimum wage increase. Employers will respond to higher taxes and higher wages with higher job cuts. We will be longing for the days of a 6.5 percent unemployment rate.

Then there is the credit crisis as we are facing as banks are more reluctant to give loans for any reason. Obama wants to give selected homeowners the ability to refinance during a 90-day foreclosure freeze. That will lead to a freeze on lending for either the same length of time to one that’s even longer. That is, unless of course, Congress decides to force banks to lend (which is what got many of the banks in this mess in the first place).

With the shrinking equity from Wall Street and the reduced lending of the banks (barring mandatory lending against the better interests of the banks), businesses will be harder-pressed for cash which will lead to more layoffs and less production of goods. When inflation by contraction (stagflation) on this scale happens, more Congressional bailouts won’t be enough to save corporate and small-business America.

Speaking of bailouts, there will be a push to bailout the automotive industry to the tune of $250 billion. For once, I agree with Congressmen like Dennis Kucinich. It is only on the issue of equating this to corporate welfare. However, he and his fellow far-leftists in the Democrat Party will likely acquiesce thanks to all of the additional goodies thrown in the form of pork-barrel spending projects to win votes just like what Nancy Pelosi did with her first Iraq spending bill that George W. Bush promptly vetoed.

The end result is a Democrat Party and an Obama administration overwhelmed with political poison pills gladly accepted on their part from the Republicans. By 2012, Obama will likely go down as one of America’s worst presidents and could make Americans long for the days of—dare I say—George W. Bush. At that point, the American public will vote probably for Republicans…any Republican.


The Congressional Presidency

Historically, it is not very frequent that we see an incumbent United States Senator get elected President of the United States.  It is even rarer that we see a U.S. Senator elected to both the Presidency and the Vice Presidency.

Bucking this historic tradition, our President-elect and Vice President-elect are incumbent United States Senators.  And now, Illinois Representative Rahm Emanuel has been offered the Chief of Staff position in the Obama administration.

This development that we are witnessing is largely unprecedented: a Presidential administration filled with incumbents from Congress.

So why is this a big deal? Well, we all know from elementary school history that the founding fathers built this great nation with three separate branches built into our Constitution: the executive, the legislative, and the judicial.  This level of participation by legislators in the executive branch will serve to eliminate the barriers between the executive office and the Congress – already low due to the Democrats’ increased control of both Houses – threatening the entire premise of separation of powers that has helped make this country so great.

Thus, this begs the question, "How many more Congressional officials will we see in the Obama administration?"  Regardless of the answer, in seeing an Obama administration composed of Democratic officials from the previous Congress, we are witnessing President-elect Obama's mantra of change get thrown out the window.

This entry has been cross-posted at

Not One Day

Our job starts right now.  Barack Obama, the next President of the United States, does not, for one day, get the benefit of the doubt.  We know the true character of this man.  We know what he wants to do to our country.  

He will take steps to increase the power of labor unions.  

He will allow the Congress to reinstate the fairness doctrine, and destroy the only part of the media where conservatives have any sort of advantage.  

He will reverse the United States' support for globalization and free markets worldwide.

He will dangerously weaken the United States' power abroad, putting the corrupt interests of world organizations ahead of the interests of the United States.  

He will encourage the class warfare that is setting our country back economically, and put in place policies that will slow our recovery.  

This man gets no honeymoon.  We must fight him from day one.  Attack him on everything we disagree on.  Surrender on nothing.  This is what they did to us for the last eight years, and their strategy appears to have worked.  Now we lick our wounds.  But in January, from day one, we fight back.  

Start with 2010.  We must reverse this tide in 2010.  They have picked all their low-hanging fruit.  We can, and must make significant gains in 2010, and to do that we have to start NOW.  Momentum is everything.  Organization is everything.  The democrats learned that after 2004, we have to learn that now.  

Across this great country of ours, we fight starting now.  Barack Obama does not get a single day where he can destroy this country unopposed.  Not one day.

Not Even Close

Growing up, the last thing that any boy ever wanted to have happen is to compete head-to-head against a girl and lose. Despite the number of girls at my school that were exceptional athletes (one of whom was a Division I basketball player at Tulsa University), the taunts of “You got beat by a girl!” would mortify any boy on the playground. Tonight, the taunt is directed at Delaware Sen. Joe Biden.

Folks, we have a race again! It was a four-to-six point race entering tonight, but it’s going to get a little bit tighter before next debate between Arizona Sen. John McCain and Illinois Sen. Barack Obama on Tuesday night. Alaska Gov. Sarah Palin took it to Biden and it was not a good night for the Obama-Biden campaign as a result. John McCain’s gamble paid off for tonight.

The girl on the playground that went head-to-head with boy was better than the Biden. Sarah-Barracuda is back and Obama should be concerned about what the fallout of this is when polling comes out on Monday.

Tonight, Joe Biden looked his age and presented himself as a cantankerous, old man. Believe me when I say that some of these people can be funny (go watch a Jeff Dunham video with his doll Walter and you’ll see why). But, Biden looked downright mean.

At this time, Biden hasn’t been called on his gaffe-proneness, but he had a moment during tonight’s debate where it reared its ugly, hair-plugged head. Palin made it a point that the Obama-Biden ticket had done nothing more than chastising the last eight years as opposed to sharing their vision for the next four years. When Biden went back to “old reliable” and attempt to tie President George W. Bush to John McCain, Palin caught him and field-dressed him in front of millions of people watching at home.

Meanwhile, Gov. Sarah Palin looked fresh, energized, and was able to lace her beauty and wit when she was critical of both Barack Obama and Joe Biden. If there is nothing else, it appears to me that the American public wants something fresh. Democrats think that Barack Obama is that embodiment while Republicans see Sarah Palin in the same respect. On this night, Palin looked fresher than Obama and many times fresher than Biden.

However, despite all of the beauty and grace that was exemplified by Governor Palin, the most surreal moment for her came when she asked moderator Gwen Ifill, “Can we talk about Afghanistan for a minute?” This was a moment where Palin wanted to talk foreign policy in a debate against a foreign policy “genius” (really a doofus, but that’s neither here nor there). She then went after Obama on accusing troops of “air raiding villages and killing civilians”. That was the game-changer of the night.

While Biden’s approach plays in the Boston-New York-Philadelphia-Washington axis as well as the in-the-tank-for-Obama media, Palin appealed to just about everyone west of the Mississippi (save California), the Midwest, and the South. In using those totals with a calculator (minus Hawaii), McCain-Palin defeats Obama-Biden 341 to 197 in the Electoral College and that doesn’t even include the 21 electoral votes in Biden’s native Pennsylvania.

It was also an amazing and surprising job done by debate moderator Gwen Ifill of the PBS show “Washington Week”. Ifill was able to stay surprisingly unbiased despite the cloud hanging over her head with her Obama book that would be a six-figure windfall for her.

All in all, Palin just made this race tighter and gives McCain an opportunity to narrow the gap further, if not close it, Tuesday night against Barack Obama at the town-hall format debate at Belmont University in Tennessee.


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