Obama shows his economic ignorance on 60 Minutes By Ben
Cerruti on December 14, 2011
On last night’s edition of 60 Minutes, President Obama showed his
complete ignorance of basic economics. Evidently he has not been
exposed to the following simple economics equations that apply to
both businesses and government.
For Business: Capital X Turnover = Gross Income
For Government: Money Supply X Velocity (turnover) = Gross
Domestic Product (GDP)
Obama ignorantly intimated that the overall income tax revenue
collected was static so that for those Americans with lower incomes
to benefit from tax cuts, more taxes had to be collected from those
with higher incomes. Hence, he completely ignored the fact that the
increased turnover (velocity) of capital can increase income with
accordingly increased collected tax revenue. Thus by not raising
higher marginal income tax rates the capital allowed to remain in
the private sector can be utilized to expand businesses that will
create additional income and attendant increased tax revenue.
Relative to Government, the following charts vividly show that
GDP has only been able to show growth because the Federal Reserve
Bank pumped up the money supply. This was done in order to try to
offset the decline of velocity which is at its lowest level in
decades. Common sense should tell us that it is necessary to
increase the turnover (velocity) of capital in the private sector to
create desired prosperity. The only way this can be done is to
provide certainty to the business community that marginal tax rates
will at least stay where they are for the present and foreseeable
future. (charts follow)
Why Medicare and Medicaid are going
broke By Ben Cerruit on May 30, 2011
A recent government report
estimated that Medicare will run out of money in 2024. It should be
obvious that Medicare and Medicaid are going broke simply because
the prices for medical services are set artificially. It is an
established fact of economics that the only way to establish the
real price of any product or service is in the competitive market
place where consumers pay directly to a supplier. Please note the
following excerpt from Wikipedia (http://en.wikipedia.org/wiki/Health_care_prices)
which describes the present pricing method used.
“Medicare and Medicaid are
managed at the Federal level by the Centers for Medicare and
Medicaid Services (CMS). CMS sets fee schedules for medical services
through Prospective Payment Systems (PPS) for inpatient care,
outpatient care, and other services. [19] As the largest single
purchaser of medical services in the US, Medicare's fixed pricing
schedules have a significant impact on the market. These prices are
set based on CMS' analysis of labor and resource input costs for
different medical services.
There are those in the USA that are attracted to the
idea that government should be utilized to equalize the wealth and
income of a society. In their eyes the governing class could
altruistically act in determining that which should be taken from
those determined to be the haves and distributed to those determined
to be the have-nots. The governing class is evidently presumed to
have morals and ethics beyond reproach and not influenced by their
own parochial interests. Of course, such an Utopia would only be
possible if human beings were perfect and so similar as to be
robotic.
In actuality, we find when those human beings in
government are given the authority to redistribute wealth and income
they never neglect to serve their own parochial interests in the
process. They insure themselves a comfortable income and other
benefits including generous pensions, health care along with the
perks that go with their elected or appointed office. Given the
power to allocate tax revenue for purpose of redistribution they
routinely use it in a manner to gain from recipients something in
return.
For those who are considered the haves by virtue of
their wealth and income, depending on the degree, they look for ways
to protect the wealth that they hold and to limit the taxation on
their income. Income can be derived from invested wealth so
minimizing the tax levied on it would be a major consideration.
Using wealth to invest in businesses that create income that will be
confiscated by way of taxation deters from that utilization.
Accordingly, without that incentive wealth is left to derive income
from investments elsewhere such as from securities or from areas
provided by the imperfect utopian desired government to serve its
members interests and perpetual existence.
Winston Churchill's opinion of the Islamic
Religion in 1899!
The speech below was written in 1899! (check Wikipedia
- The River War) Winston Churchill delivered it in 1899 when he was
a young soldier and journalist. It probably sets out the current
views of many but expressed in the wonderful Churchillian turn of
phrase and use of the English language, of which he was a past
master. Sir Winston Churchill was, without doubt, one of the
greatest men of the late 19th and 20th centuries.He was a brave
young soldier, a brilliant journalist, an extraordinary politician
and statesman, a great war leader and Prime Minister, to whom the
Western world must be forever in his debt. He was a prophet in his
own time; He died on 24 January 1965, at the grand old age of 90
and, after a lifetime of service to his country, was accorded a
State funeral.
Here is the speech.
"How dreadful are the curses which Mohammedanism lays
on its votaries! Besides the fanatical frenzy, which is as dangerous
in a man as hydrophobia in a dog, there is this fearful fatalistic
apathy. The effects are apparent in many countries, improvident
habits, slovenly systems of agriculture, sluggish methods of
commerce, and insecurity of property exist wherever the followers of
the Prophet rule or live.
A degraded sensualism deprives this life of its grace
and refinement, the next of its dignity and sanctity. The fact that
in Mohammedan law every woman must belong to some man as his
absolute property, either as a child, a wife, or a concubine, must
delay the final extinction of slavery until the faith of Islam has
ceased to be a great power among men.Individual Muslims may show
splendid qualities, but the influence of the religion paralyses the
social development of those who follow it.
No stronger retrograde force exists in the world. Far
from being moribund, Mohammedanism is a militant and proselytizing
faith. It has already spread throughout Central Africa, raising
fearless warriors at every step; and were it not that Christianity
is sheltered in the strong arms of science, the science against
which it had vainly struggled, the civilization of modern Europe
might fall, as fell the civilization of ancient
Rome."
It was the only reasonable thing for the President to
do By Ben Cerruti
V.P. Joe Biden in
introducing President Obama, using obvious political rhetoric, told
service members at Fort Campbell, Ky. that the decision made by
Obama to raid the Bin Laden compound in Pakistan was a "gutsy" one.
This, of course, provided Obama the opportunity to bask in that
adulation in his following remarks. The fact that his decision was
the only reasonable decision to make seems to have been completely
ignored.
From what we know, the
only other choices he had was to monitor the compound and wait for
more intelligence essentially doing nothing - or - to bomb the
compound which would was not likely to provide proof Bin Laden was
killed. In addition, bombing would likely have caused collateral
death of civilians. It should be apparent that the only reasonable
choice was the one he selected.
Perhaps one might
consider from what we know about the long Marxist trail in Obama’s
past, and his far left policies which include appointments to match,
the importance to base any evaluation on the actions that he takes
as following the Marxist credo "the end justifies the means". It
follows that his objective is to transform our country into that
which is Marxist like. This means he must do everything possible to
stay in office another term. Hence this opportunity allowed him the
opportunity to be viewed as a competent ‘commander in chief’
providing impetus towards his reelection. This accomplishment would
allow him to continue the implementation of his ideology through
whatever means possible, including the bypassing of Congress by way
of executive orders and regulations, created out of agencies and
imposed as if they were enacted laws.
Just preceding his
recent visit with wealthy west coast executives of several high tech
firms and a venture capitalist, President Obama had elevated Jeffrey
Immelt, President of GE to Chairman of the President’s Council on
Jobs and Competitiveness. Subsequently, he appointed AFL-CIO
President Richard Trumka to the Council. These actions are
not a coincidence. Trumka has ties with Communist Party USA and
Immelt, prior to his previous appointment to be a member of the
Federal Reserve Bank of New York, wrote a letter to his shareholders
that provides us with an insight as to what is occurring.
In this letter
Immelt states "We are in a recession and, at times like these, it is
difficult to predict how bad and for how long. We are running GE to
'weather the cycle'. However, I believe we are going through more
than a cycle. The global economy, and capitalism, will be reset in
several important ways. The interaction between government and
business will change forever. In a reset economy, the government
will be a regulator; and also an industry policy champion, a
financier, and a key partner."
The last sentence
of this statement succinctly tells it all. Government as a
regulator, creator of industrial policy, financier and key partner
smells to high heaven of ‘State Capitalism’ or as less fashionably
said, a form of Socialism.
As has been
pointed out previously, being wealthy and having a high annual
income is not necessarily the same. Most executives of high tech and
venture capital firms hold much of their wealth in ownership of the
firms with which they are affiliated. It may be that their annual
income is relatively high but it generally is a small fraction of
their overall wealth. It stands to reason that they would have great
interest in protecting the wealth they have accumulated. It is
exactly that motivation in which those wishing to impose Socialism
on our society use to achieve their ends.
What affect will
this movement towards State Capitalism have on the individual in our
society? If the government finances, creates and regulates industry
it is more than a partner, it becomes the de-facto owner of it. It
does this by controlling the banking system, regulating industry and
awarding government controlled business to favored Corporations if
not, in essence, owning them. The path of least resistance for
private industry is to succumb to the temptation of a secured
favored future. The incentive for entrepreneurs of new ventures to
bootstrap their enterprises to wealth becomes continuously
diminished and high productivity and efficiency cannot survive for
long in this environment.
It should be
apparent that when Government exerts its power in controlling any
aspect of our society it diminishes individual freedom. Encroachment
on freedom by the movement towards State Capitalism is already on
its way. Look at the Ethanol subsidy to corn grower and regulations
restricting drilling for oil and construction of new Nuclear power
plants that has caused an increase in food and energy costs. In
addition the subsidy for a supposedly environmental friendly
electric powered automobiles to create an artificial market for them
is a non-productive indirect tax. The power to charge the batteries
is derived mainly from coal and oil fired power plants.
By its nature
State Capitalism creates a two-class system. One class being the
government and its employees partnered with those who control large
corporations and people of great wealth. While the other class being
those in the private sector. In our traditional economic system the
private sector has been the source of funding for the public sector.
One must consider that increasing the size of the governing public
sector that will include large corporations will accordingly shrink
the size of the private sector and its ability to contribute to that
funding.
The revenue
derived from the inordinate taxation of the income of the highest
income earners over time has been shown to be unreliable. Hence it
becomes counter productive to business growth and maintenance of
high employment. Inevitably it will be taxes on whatever income is
left in the entire private sector that will be required, further
exacerbating a downturn in the economy.
It is unfortunate
to see an apparent public misconception that members of the Federal
Government are at odds with large corporations including banks and
Wall Street securities firms. The obvious truth is that they are not
unwilling bedfellow when their respective interests are
complementary.
So what must
happen to stop and reverse this movement to take away the freedom
our forefathers provided to us in our Constitution? Perhaps we
should look at the basic cause of that which we are now
experiencing.
In enacting the
16th Amendment in 1913, the federal government abrogated
the provisions of the 10th Amendment in usurping powers that should
have been "reserved to the States respectively, or to the people.
This was done by essentially removing these words in Section 9 of
the original Constitution "no Capitation, or other direct, tax shall
be laid, unless in proportion to the Census or Enumeration" meaning
taxes could not be taken from taxpayers of one State to be
distributed to other States. Happening concurrently was the passage
of the Federal Reserve Act that allowed the artificial creation of
money to supposedly deal with the vagaries of recessions but led to
disastrous effects with which we are now living.
Establishing a
plan to gradually shut down the Federal Reserve System along with
the repeal of the 16th Amendment would be in order. This
would take away the means which Congresses and Presidents have used
wantonly to serve their own and special interests. Later on, the
repeal of the 17th Amendment would allow the appointment
of Senators by the respective State legislators providing for
complete return of State’s rights as originally intended by our
nation’s founders. Hopefully, there still exist in our land and in
Congress those patriots who have the wherewithal to initiate the
process to effect this
happening.
Abortion, Euthanasia and the Hippocratic Oath By
Ben Cerruti
A few years ago a U.S. District Judge's ruled
constitutional a Oregon voter-approved law allowing doctors to
assist in the death of terminally ill patients. I wonder if this
Judge is aware of the contents of the Hippocratic Oath. The
Hippocratic Oath is what historically was taken by those entering
the medical profession upon graduation from medical school. At one
time all reputable medical men considered themselves bound by this
oath yet its use seems to have disappeared. In further thought I
realized that there could be a reason and it might be in the oath
itself. I believe I was right and it is in the following explicit
excerpt from that oath.
"I will give no deadly drug to any, though it be
asked of me, nor will I counsel such, and especially I will not aid
a woman to procure abortion."
This leads me to the following thoughts.
There is a commonality in the view of advocates for
both euthanasia and abortion. That is that it should be legal to
have either act be aided, abetted or performed by a Doctor. Both pro
and con arguments that have been broadly expressed have seemed to
disregard the fact that, in both cases, another person is involved
in an act that ends a life.
Suppose that there might exist on our planet elements
that wanted to establish a single world government. Such a single
centralized entity would obviously require individual countries to
relinquish their individual sovereignties. Americans would have to
accept a world constitution whose provisions would supercede those
existing in the constitution on which the country was founded. The
provisions of the world constitution would make the freedoms
provided in the Bill of Rights moot.
What better way to condition people to accept
diminution of their freedoms than to create a potential world
calamity that gives license for government to impose freedom
limiting regulations. Such has been done by the United Nations’s
Intergovernmental Panel On Climate Change (IPCC). Its 2001 report
stated "human activities have altered the Earth system" and
predicted potential catastrophic changes on our planet in years to
come.
The very fact that it was found necessary to study
‘climate change’ by the United Nations and attendant funding was
provided for the necessary research should make one suspect. It
smells to high heaven of an international conspiracy to create
dominance of the activities of the world’s people by a single
governing power.Thankfully the IPCC report was found to have
scientific data that was rigged. See http://assassinationscience.com/climategate/
We have
been witnesses to a continuing use of class warfare by those in
government, abetted by the media and an assortment of special
interest groups and individuals. In this essay we will consider the
methods they use to establish the terms relating to redistribution
of income.
Utilizing effective divisive tactics they initially
obfuscate their intentions by using the term "wealth" in place of
"income" when proposing material changes in the income tax code.
Taxing income derived from accumulated wealth does not alter that
wealth. They next establish three main category of classes; rich,
middle class and poor. If one were to pay close attention, he or she
would find that they rather conveniently alter the dividing lines to
suit the subject for which they are advocates.
It
should be apparent that attempting to establish classes by
simplistic definition is ludicrous. Is a person earning
$1,000,000 a year in his twenties as rich as one earning the same
amount in his or her sixties? The person in their sixties may
have had to spend many years working up from under six figure annual
income to reach this income level and the person in their twenties
may find that in later years his or her income may fall to sub six
figure level. A poor person at a young age may become affluent
with time and an affluent person may suffer financial reverses that
will throw him or her into what is presently considered the poor
class.
Unfortunately that which has actually caused our present
economic crisis is not even being given lip service by anyone. It is
hoped that which is contained herein will help fill that void for
the reader.
As every family
knows, when it spends more than it earns it can only make up the
difference by borrowing or increasing income. It is the same for the
government except they also have the power to essentially print
money. Let's look at how government appears to get away with running
continuing deficits while any of us who did the same thing would
eventually be forced into bankruptcy.
Hard for
Conservatives to be nominated under the present system By Ben
Cerruti
Rationality makes it difficult to believe
that the decisions made by the voters in just a few smaller States
can be justified in determining a nominee for President. Yet since
the evolution from political conventions we have seen this blatantly
unfair practice prevail.
It happens to be a fact that the
northeast coast of New England has been the center of Progressive
political persuasion for many decades. This has existed with both
political parties and is represented in the Republican party by
Senators Susan Collins, Olympia Snow, and Scott Brown who are
generally typed as moderates. In regard to Presidential candidates
we have had GHW Bush, GW Bush and John McCain who are not
conservatives although they claim to be. Why then must New Hampshire
be such a determining factor in the fate of a candidate?
It must be recognized that the total
number of delegates constituted by Iowa and New Hampshire are only
40 out of 2286 nationally. Yet every four years we find the media
and pollsters insidiously using the results of the Iowa and New
Hampshire primaries to catapult the winner to be the national party
candidate. How can the views of conservative voters throughout the
country be represented in such an obviously flawed system of
determining a candidate for the most important position of
President?
Unfortunately the Republican
establishment, although not as prone to centralized government as
their counter party, is still generally politically progressive in
nature. This position is not in line with the Conservative movement
which ultimately desires to dismantle the centralized power
structure and return it to the individual States by
eviscerating the federal income tax and diminishing the power of the
Federal Reserve System to essentially print money. Conservatives are
now hampered in their desire to nominate a suitable candidate
representing this position and this must be addressed.
There have been proposals made to change
the primary system to allow for a broader number of voters to be
involved in the determination of a candidate. One such proposal is a
rotating
regional primary system . It is time for a serious movement to
rid ourselves of an outdated and unfair system of nominee selection.
If a change is not made it is unlikely a true conservative will ever
be nominated. Unless this occurs it appears that our country will
continue down the road to become a socialistic one with dire
consequences.
Why European countries are going
bankrupt By Ben Cerruti
Whether it be countries or individuals, the same
economic principles apply.
When expenditures are expected to exceed income,
credit is sought to cover the difference. Creditors expect that
principal and interest payments on loans will be made in a manner
that will insure the ability to pay them off at an agreed upon time.
With governments of countries, this credit is provided
by the issuance of bonds that are secured by the full faith and
credit of the country’s taxpayers. These bonds are usually sold
auction style to investors that are predominantly banks, at a
predetermined interest bearing rate based on expected market demand.
Thus, the actual auctioned price may differ from the face amount of
the bond based on the actual demand. After being auctioned the bonds
are usually traded on bond markets where the traded price becomes
dependent on general market rates and the considered ability of the
country to pay off the bond when it matures.
Warren Buffet recently stated that the 'mega' rich
should pay higher taxes. He suggests raising progressive tax rates
for those earning annual incomes of over $1 Million and $10 Million
respectively. That this would show the shared sacrifice of the mega
rich. Evidently Buffet doesn't recognize the fact that such
additional tax revinue have never been applied to decrease the
budget deficit. It simply allows the government to spend more.
Hence, why should we believe that the extra tax revinue collected
would be applied to the deficit rather than to maintain the ever
increasing level of spending we have experienced in the past?
In addition, presently the top 1% of taxpayers pay 38%
and the top 5% pay 58% of federal income taxes. Reasonable people
could determine that there is already shared sacrifice and how has
that helped our economy? Taking revinue from the private sector
simply removes capital that can be utilized to create jobs through
both investment and consumption.
Tax high income wage earners and increase
unemployment
Our President is promoting the taxing of high income
wage earners as a necessary part of any plan to address the need to
increase the federal debt limit. A review of the facts make it
difficult to support any such approach. The following table from the
IRS shows that confiscating all the income from the
top 5% taxpayers would realize an amount less than the multi
trillion dollars being sought. Obviously, taking all the income
would eliminate any incentive for these people to continue to earn
income and result in no income to tax whatsoever. When profitability
is taken away from those who create businesses, the funds available
to employ people disappears. The ‘shared sacrifice’ socialism Obama
promotes negatively affects the lives of those he purportedly wants
to help.
Why do Billionaires support Obama? By Ben Cerruti
Barack Obama has kicked off his campaign for
re-election in 2012 looking to raise close to an estimated one
billion dollars towards that end. Now ask yourself, why would
extremely wealthy people want to contribute funds to someone who
wants to take more of their income by increasing taxes on it?
One could reasonably visualize the possibility that these
billionaires would consider their contributions, including the
increase in their taxes on income as an investment. The return on
this investment being what they would derive in an increase in their
overall wealth along with the benefits that would accrue with being
in a de-facto relationship with the government.
It must be understood that income and wealth are not the same.
Wealth can be created by accumulated income over time or by
increased value of assets such as security holdings and real estate.
Income, of course, can also be derived from wealth by way of its
investments. But Obama disingenuously says he desires to
redistribute wealth when he really means
income.
The Case Against Public Employee
Unions By Ben Cerruti
In Wisconsin the government has reacted to the adverse effect on
the finances of government by flagrant public employee benefits
derived from one-sided collective bargaining. Private sector unions
have two adversarial parties at the bargaining table to negotiate a
bipartisan agreement. Public sector unions are essentially
bargaining with their own ilk. The parties on the other side of the
table are derivatives of the political system. The taxpayer is left
out of the process.
In addition, agreements that include forced union membership fly
against the freedoms provided by the Constitution. It follows that
allowing employee union dues to be used for political purposes is a
blatant abuse of the system. Taxpayers do not have similar
organization funding representing their interests.
Despite the fact that their own pension benefits are far less
than most public sector employees they are left with the burden of
funding the public sector. Does that sound fair or even viable when
State budgets are growing and threatening the possibility of
insolvency?
Life expectancy has risen dramatically in our lifetime and
pensions based on a ‘defined benefit’ rather than ‘defined
contribution’ have resulted in huge unfunded benefits. Certainly
public sector employees who are retired or nearing retirement are
fearful of losing their benefits if and when reforms occur. It also
stands to reason that if they fairly look at the financial
predicament that exists in the State and a major effect that the
‘defined benefit’ pension plans have had in its making, they must
conclude that reform is necessary. It would seem that any reform
should include the elimination of ‘defined benefit’ leaving ‘defined
contribution’ as the means for funding. One would assume that the
benefits of the present and soon to be retirees would not be
affected in such a reform. However, it surely would need to happen
for younger employees.
Public sector employees generally enjoy comprehensive peripheral
benefits, with little or no cost to them. Such benefits including
coverage in the areas of health care, disability, sick leave, life
insurance and the like, that few private sector employees enjoy.
They are also not confronted with the type of competition for their
respective jobs that exist in the private sector.
Further, they can exert inordinate pressure, including the threat
of a strike, with little chance of being penalized or replaced. When
thrust on the electorate, the threat of closing down public schools,
ceasing to provide government services including garbage disposal
and the like, government officials have the tendency to cave in to
demands. After all the least path of resistance for them is to dip
into the public coffers to satisfy the claims and calm potential
public discontent with the results of a strike. Fairness alone
dictates that public sector workers should not have such an
advantage over private sector workers.
It should be apparent that the taxes from the private sector
provide the funding for the public sector. Any taxes that the public
sector pays are just recirculation of the taxes paid by the private
sector. Too long have taxpayers been unfairly saddled with the
payment for ‘defined benefit’ public sector employee pensions that
should have been funded over the years by means of ‘defined
contributions’. Allowing the pension plans to exist in their present
form will continue to perpetuate that which cannot financially
survive. The need for these unions is in question. Perhaps the
responsibility for the benefits of public sector employees should
return to solely the legislative and executive branches.
Wisconsin’s electorate evidently has provided its Governor and
Legislature with the mandate to effect beneficial changes in the
conditions of public employment. They should be supported by all
freedom loving Americans.
In order for socialism to function in a society its tenets
require the forcible redistribution of income and wealth. In
practice this has never been able to be accomplished since much of
wealth is the accumulation of income over time. Once established its
owners have always found ways to retain that wealth by way of the
power it wields. However, since income is derived in a current time
frame, governments have been able to succeed in taxing higher income
owners more than those earning lower incomes. This is not the same
as the taxing of wealth.
The fact that it takes the inordinate force of government to
effect the tenets of socialism is evidently not readily apparent to
those who seek fairness in the redistribution of income and wealth.
They seem to be unaware that the government bureaucracy does not
really redistribute the income taxes it collects but utilizes them
to further its own individual and collective interests.
Tax income is not redistributed but rather allocated. Special
interests and government employees hold special importance in this
allocation. Those that provide for the re-election of legislators
are well taken care of as are those that execute for them as
employees in the various branches and departments of government.
This is also absolutely necessary for a socialistic government to
do in order to insure that any chance for insurrection by the people
is minimized. Guaranteed lifetime employment for public sector
employees that provides for a high wage, health and retirement
benefits insures that the government over time will become an
ever-larger dominating force.
What is not understood by many is that the private sector
financially supports the public sector (government). Even though public employees pay taxes, the money they use to
pay them comes from the private sector wage earners.
In essence, the private sector is also paying their
income taxes. The more that the government sector collects from the
private sector the less the private sector has to grow the economy.
The very nature of socialism is based on government sector growth
in order to implement its tenets and that is in direct contradiction
to the growth of an economy that requires private capital and
investment better left in the hands of the private sector than that
of the government.
Those with great wealth always fare well in a socialistic system
for a very obvious reason. Those in government must have financial
support to attain their socialistic ends. Therefore, rather than a
truly sharing of wealth and income the country becomes a two class
system. One class being the government and those with
established wealth, while the other is the working class.
When the incentive for entrepreneurial endeavors begins to vanish
because of confiscatory taxation the government and established
wealth take over in an attempt to provide for the working class.
Lacking the private sector entrepreneurial ventures that create jobs
and new wealth, economic growth declines and eventually the country
loses its prosperity and economic position in the world
Socialism is evil because it gives government power to regulate
virtually every facet of the lives of people. It compounds its evil
because it uses force to achieve its objective and usurps from the
people the divine guidance endowed to them by their creator. The
inspiration to accomplish one’s purpose in life. Divine guidance
unshackles each person to follow their own free will and utilize
their unique talents towards their own desired ends without
infringing on the rights of others to do the same. Doesn’t this
follow a better path to the ultimate purpose of life than the
government determining what is uniformly best for a collective mass
of people?
Dear xxxxx: Relating to your recent comments
concerning the effect of government directed tax cuts vs. spending
on the economy. I have material to present to you in this regard but
I would like to preface that with the following.
As I mentioned yesterday my daughter has gone through her first
year pursuing her MBA. She just finished a course in Macroeconomics
and passed on to me her textbook by N. Gregory Mankiw, a Professor
of Economics at Harvard. I told her that this textbook would never
have been written if the Federal Reserve Act of 1913 had never been
passed since there would have been no basis or need for it. My point
being that government itself has created most of the economic
problems that it subsequently has attempted to correct. In fact,
most of the economists of the 20th Century would have had to turn to
other professions in order to survive.
I also believe that people are too ready to believe those
academic & government elitists just because they carry advanced
degrees and aura's of importance. In fact, economics in its essence
is a simple subject and can easily be related to ones own income and
expenditures. However, the reality is that the Federal Reserve
System and what has evolved from it is presently alive and kicking
albeit to its possible own demise. The following quotations from
noted economists clearly provide factual evidence that
lower taxes are more likely to promote increased GDP than
increased government spending.
Milron Friedman - Along with Anna Schwartz, extensive empirical
research was done covering many decades and presented in their book
"Theory of the Consumption Function". "The central theme of the book is
embarrassingly obvious. People do not decide how much to spend on
consumption each day or week or year by how much they receive in
income on that day or week or year but on some longer term
expectation of the amount that they will have available to spend.
Similarly, the flow of consumption services that people enjoy during
any day or week or year does not depend on how much they spend that
day or week or year but on the accumulated stock of goods providing
services (such as owned home, car, refrigerators, etc)."
Hence, the assumption is that
for income received, whatever form it takes, it cannot be effective
unless it is on a considered relatively permanent basis. This stands
to reason for businesses who are more likely to plan for growth of
their company by purchases of goods and hiring of people when they
know that they will be able to retain funds that they would
otherwise have to pay in taxes.
John Maynard Keynes - "Nor shall the argument seem strange,
that taxation would be so high as to defeat its object and that
given sufficient time to gather the fruits, a reduction of taxation
will run a better chance than an increase of balancing the budget.
To take the opposite view today is to resemble a manufacturer who,
running at a loss, decides to raise his price. And when his
declining sales increase the loss, wrapping himself in the rectitude
of plain arithmetic, decides that prudence requires him to raise the
price still more. And who, when at last his account is balanced when
naught on both sides is still found righteously declares that it
would have been the act of a gamble to reduce the price when you
were already making a loss."
Professor Mankiw - "When John F. Kennedy became
President.....in 1961, he brought to Washington some....bright young
economists...to work on his Council of Economic Advisors........One
of the council's first proposals to expand national income by
reducing taxes. This eventually led to a substantial cut in personal
and corporate income taxes in 1964....When a reporter asked Kennedy
why he advocated a tax cut, Kennedy replied, 'To stimulate the
economy. Don't you remember your Economics 101?' As...was predicted,
the passage of the tax cut was followed by an economic boom. Growth
in real GDP was 5.3% in 1964 and 6.0% in 1965. The unemployment rate
fell from 5.7% in 1964 to 4.5% in 1965."
I am certain that at your stage of education the foregoing will
simply act to stimulate your interest in learning more about the
subject matter. At my stage in life I feel that I have been
stimulated to learn so much that I find those who have provided me
the material from which to learn are not that much smarter than
I am - and - in some respects may be considered to have been
employed in a profession that has possibly created more harm than
good.
The United States
spends a mind-boggling percentage of its GDP on a health care system
that virtually everyone agrees is a disaster. Is there any way out
of this mess? There is-and Milton Friedman has found it.
Since the end of World War II, the provision of medical care in
the United States and other advanced countries has displayed three
major features: first, rapid advances in the science of medicine;
second, large increases in spending, both in terms of
inflation-adjusted dollars per person and the fraction of national
income spent on medical care; and third, rising dissatisfaction with
the delivery of medical care, on the part of both consumers of
medical care and physicians and other suppliers of medical care.
Rapid technological advances have occurred repeatedly since the
Industrial Revolution-in agriculture, steam engines, railroads,
telephones, electricity, automobiles, radio, television, and, most
recently, computers and telecommunication. The other two features
seem unique to medicine. It is true that spending initially
increased after nonmedical technical advances, but the fraction of
national income spent did not increase dramatically after the
initial phase of widespread acceptance. On the contrary,
technological development lowered cost, so that the fraction of
national income spent on food, transportation, communication, and
much more has gone down, releasing resources to produce new products
or services. Similarly, there seems no counterpart in these other
areas to the rising dissatisfaction with the delivery of medical
care.
These developments in medicine have been worldwide. By their very
nature, scientific advances know no geographic boundaries. Data on
spending are readily available for 29 Organization for Economic
Cooperation and Development (OECD) countries. In every one, medical
spending has gone up significantly both in inflation-adjusted
dollars per person and as a fraction of national income. In 1997,
the United States spent 14 percent of gross domestic product on
medical care, the highest of any OECD country. Germany was a distant
second at 11 percent; Turkey was the lowest at 4 percent.
A key difference between medical care and the other technological
revolutions is the role of government. In other technological
revolutions, the initiative, financing, production, and distribution
were primarily private, though government sometimes played a
supporting or regulatory role. In medical care, government has come
to play a leading role in financing, producing, and delivering
medical service. Direct government spending on health care exceeds
75 percent of total health spending for 15 OECD countries. The
United States is next to the lowest of the 29 countries, at 46
percent. In addition, some governments indirectly subsidize medical
care through favorable tax treatment. For the United States, such
subsidization raises the fraction of health spending financed
directly or indirectly by government to more than 50 percent.
What are countries getting for the money they are spending on
medical care? What is the relation between input and output?
Spending on medical care provides a reasonably good measure of
input, but, unfortunately, there is no remotely satisfactory
objective measure of output.
Ultimately, the purpose of this article is to examine the
situation in the United States. I have mentioned the data on the
OECD countries primarily to document the two (related?) respects in
which the United States is exceptional: we spend a higher percentage
of national income on medical care (and more per capita) than any
other OECD country, and our government finances a smaller fraction
of that spending than all countries except Korea.
Those of us who are
getting on in years can remember a time when most people had no
health insurance, when we simply paid the doctors or the pharmacies
and went on our way, without giving it a second thought. I have
especially painful memories of having a hospital bill of $50 for the
treatment of a baseball injury back in 1949. You have no idea how
big $50 was for me at that time. It was the most money that I had
ever paid for anything. But the bill got paid off, a few dollars at
a time, over a period of months. When and why did health insurance,
paid by third parties, become widespread in the American economy?
Like so many things that the government does, third-party health
insurance grew out of problems created by previous government
policies.....
Talk by Israeli scientist, Haim Harari (honoraria
and bio), at a meeting of the International Advisory Board of a
large multinational corporation, April, 2004.
As you know, I usually provide the scientific and
technological "entertainment" in our meetings, but, on this
occasion, our Chairman suggested that I present my own personal view
on events in the part of the world from which I come. I have never
been and I will never be a Government official and I have no
privileged information. My perspective is entirely based on what I
see, on what I read and on the fact that my family has lived in this
region for almost 200 years. You may regard my views as those of the
proverbial taxi driver, which you are supposed to question, when you
visit a country....
click titles to read complete
commentary
WORLD
ISSUES click
on titles to read complete essay
One would assume that the greater majority of Americans,
regardless of political persuasion, want as clean and environment as
is economically possible. There are those who sincerely believe what
has emanated from the Intergovernmental Panel On Climate Change, http://www.ipcc.ch/organization/organization.htm
, established by the United Nations and there are those who
sincerely believe that the IPCC has purposely falsified the
information provided in their report and have evidence to prove it,
see http://assassinationscience.com/climategate/
. It stands to reason that those on either side of the issue of
validity base their positions on what they understand the facts to
be in that regard.
This then poses the question, ‘why would the IPCC falsify
their report’? There are those who believe the motivation for
this falsification is much larger than the issue itself. It does
relate to verbiage in the Kyoto Protocol and Copenhagen Accord.
Written into both of them is the subjugation of sovereign
governments to "global governance", see http://cei.org/op-eds-and-articles/chirac-kyoto-first-step-toward-global-governance
and http://www.prisonplanet.com/copenhagen-accord-establishes-global-government-framework.html
. This would put us on the road to a single world government. This
would mean that our Constitution would be superceded by a World
Government Constitution. The cherished individual freedoms we have
had would become collective freedoms and no longer be guaranteed
under a socialistic form of government.
The present brouhaha over the proposed construction of a Mosque
near ground zero provides reason to view many of our leaders as
ignorant, especially those in New York and Washington. They
obviously are not knowledgeable with the tenets of the Quran that
comprise more of an ideology such as Marxism, Fascism or Capitalism,
than a religion. Cloaked in the cover of a religion, Islamism is
being treated as just another spiritual entity. In fact it is a
socio-political movement whose purpose is to convert society to its
conformed totalitarian way of life.
This website has had posted a poll question relating
to Islamic beliefs and recently also posted an essay by 'A Rational
Advocate' whose content was related to that subject matter. The
following is an email dialog that developed from the initial
comments made by a visitor whom shall be called Ms X. The
commentary provides an interesting insight to the rationale of some
non-Muslims relating to the subject matter....
Madrassas, Islamic Schools, and American Public
Schools do have a similarity. This similarity lies in the fact
that they both graduate students that have been indocrinated with a
unilateral social ideology. Some may argue that Madrassas deal
with religion but, in fact, the tenets of the Koran that are taught
include much involving the manner in which the society must
function....
Evidently there are some
in the Western World that think the answer to this question is
yes. In the U.S.A. we find among them many candidates vying to
be the Democratic candidate for President, acting as if we should
have continued passively after 9/11 and our military activity in
Afghanistan, waiting for the next attack by the terrorists on some
target within our 50 states. In Britain, where our President
has visited recently, they attack the actions of Tony Blair and the
Coalition of the Willing in their effort to bring democracy to
Iraq. Their actions convey the feeling that they seem to be on
the side of the terrorists and thus to support the longevity of
terrorism.....
Many pundits,
politicians, members of the press, and others in our society,
maintain the view that the armed conflicts existing around the globe
are not necessarily connected. However, this view does not hold up
when the obvious facts emerge to show that there is a common thread
that exists to tie them together. This thread is
terrorism.....
It is apparent
that there is confusion in the mind of many people. It lies in the
view that they think we have engaged in a war in Iraq that is
winding up with the U.S. as winners. The events that have transpired
involving mid-east terrorists over the last 20 plus years,
culminating with the events on 9/11/2001, can only lead any rational
person to the conclusion that our war is against terrorism and we
are far from winners of that war yet......
What with all the
hoopla over the North Koreans recent nuclear saber rattling one
would think that some mention would be made of what got us here. We
hear nothing about the Presidential decision that led to the
permanent separation of Korea into two states. Fifty two years ago a
confrontation between President Truman and General Douglas
MacArthur, over far east policy leading to this decision, dominated
the news. It resulted in the removal of MacArthur from his position
as Commander of the U.N. armed forces then fighting the North
Koreans.....
A view appears to
exist that America is more dependent on the receipt of mideast oil
than the supplier is dependent on the revenue from its sale. As a
result we find contentious argument both inside and outside of
government as to the need and methods for making our economy less
dependent on foreign oil....
The following burning question, I would think, should
rationally enter the minds of the greater majority of civilized
people in this country and world. Why would educated young Muslims
take the lives of innocent victims along with their own in the
conduct of suicidal missions in support of a cause? It would appear
contrary to any religious belief, including that of
Islam.....
This morning I
posed myself the following questions. (1) Why can’t the causes
behind the acts of terrorism on our country dating back a decade be
determined by a rational analysis? (2) Why can’t we wean ourselves
away from dependence on the resources of the region of the world
that threatens us?......
It would appear to be that the rational reason to seek high
public office is the desire for one to have a degree of influence in
enabling changes they desire in government? In order to gain this
position a person must do that which is necessary to gain the
attention of those who would make it possible. This may be
accomplished through obtaining favor from enablers by way of
voluntary personal contribution and support to them, or taking
employment offered from these entities, that implies quid pro quo
from them – or – by appealing to voters in running for lower level
public office along the way.
What may start out to be an idealistic endeavor usually results
in one where moral and ideological beliefs become compromised. Those
who help one to achieve higher public office usually are looking for
something in return. Whether it is an elected office holder or one
seeking office, they both require funds to support their respective
campaigns. The position on issues that the office seeker actually
takes in order to gain the approval of a majority of the voters may
not always conform to that which is personally desired or even that
desired by the financial supporter. Thus the pressures involved
cause the office seeker to often compromise the true positions
initially held.
Why isn’t there anyone in politics or the media that questions
the use of the term ‘middle class’ as it is being applied relating
to the expiration of the ‘Bush tax cuts"? It appears that the
‘middle class’ is being defined by the income people earn in any
given year. This doesn’t make sense.
Is a person earning $1,000,000 a year in his twenties as rich as
one earning the same amount in his/her sixties? The person in his
sixties may have had to spend many years working up from under six
figure annual income to reach this income level and the person in
his twenties may find that in later years income has fallen to a
considerably lower level. A poor person at a young age may become
affluent with time and an affluent one may suffer financial reverses
with age. There are many factors, such as age, education, marital
status, number of dependents, physical capability, race, national
prosperity, war or national emergency, that affects the financial
status of any person at any given time during a lifetime.
It should be apparent that because of these factors any fair and
effective redistribution of income is impossible. The common
practice by those in government to use class to define who receives
favors or penalties is divisive and counter productive. It pits
citizen against citizen and serves to only benefit those in
government utilizing these tactics for political advantage.
Why do so many seemingly
good people with a liberal bent become pent up with rage when they
read or hear the word "Christian" in a conservative context.
In their diatribe they invariably relate the word to their
villainous foe "the religious right", or as it is sometimes called,
"the Christian right". Regardless of the possible merits to be
found in the presented material, they lose rationality when they see
the word "Christian" even though it may only be referencing the most
positive moral virtues and perspective.....
The creator’s of
our Constitution were so concerned that the Federal Government would
usurp the powers of State Government that they included provisions
to lessen that possibility. However, time has taken its toll
on these provisions and the politics they had hoped to minimize has
reared its ugly head in the Supreme Court to further erode the
powers of State Government.....
In general
elections should a person vote for a candidate or his party
affiliation? There are various reasonable arguments that can be
proposed to justify voting in either manner. Perhaps it would be
well to look at the motivation for voting.......
President Bush had
threatened a veto if the Homeland Security Act did not include
provisions that would allow the new department flexibility in
dealing with employees. Such provisions to include the right
to waive collective bargaining rules and to eliminate the lengthy
and difficult procedures to move or terminate federal employees now
existing in federal law. With difficulty, and some compromise
with members of Congress, the Act was finally enacted with
provisions that somewhat minimzed the ability for public employee
unions to adversely affect homeland
security........
A visitor to this
web site recently had comments to make about the essay “Are You
Conservative or Liberal?” written by “A Rational Advocate“. As a
result, an interesting dialog developed that should be of possible
interest to other visitors and it follows.....
The answer to this
question, as used in political connotation, requires an
understanding of the respective terms. This process involves the
semantics of their use in discourse. It stands to reason that a
mutual understanding of the words and terms when utilized in
discussions is required for communication between the parties
involved to convey true meaning to the
discourse.......
We have been witness to a continuing use of class
warfare by those in government, abetted by the media and an
assortment of special interest groups and individuals. In this
essay we will consider the methods they use to establish definitions
as it relates to the redistribution of
income......
What are the reasons for contributors to provide money to
candidates for public office? Common sense tells us that they are as
follows: 1. Ideological, meaning to promote the
ideals in which the contributor
believes. 2. Self-seeking, meaning to gain from the
candidate commitment to actions that will be economically beneficial
to the contributor.....
There are those that claim that elections are the most
effective method of holding legislators accountable for their
actions. In a truly democratic system this might be possible
but unfortunately ours is not such a system as experience tells
us....
There is a great misuse of meanings of certain words and
phrases by many in our society, with the greatest abusers being many
media and political persona and social opportunists (self-serving
individuals and groups). It is especially disingenuous when
this practice takes place in the categorization of people for the
purpose of pitting one category against the other....
In terms
of objective consideration it surely can be agreed that secular
belief and religious belief are both beliefs. If this is the case it
would rationally follow that religious belief should be given an
accordant status as secular belief in the application of government
laws.
Relating
this to our public educations system, this would mean that educators
have no right to treat religious any different than non-religious
expression. As an example, in the recitation of the pledge of
allegiance students have the right to have the opportunity to speak
the words "under God" should they wish to do so. Of
course, other students not wishing to speak those wordsl have
that right as well. This of course also would apply to
graduation ceremonies where both secular and religious related
presentations should be allowed.
Rather
than divide our citizenry by pitting secular vs religious,
why not bring them together by allowing all to participate in
Government related activities regardless of their personal
beliefs. There is nothing in ou nation's Constitution that
prohibits this from happening. Let's get on with it.
BO's speech at
Notre Dame completely ignored the role of the Doctor in abortions,
as did Notre Dame's administration
BO's
speech to the 2009 Notre Dame graduating class amplified the sounds
of those on both the pro-life and pro-choice sides of the abortion
issue. No one seems to view this issue as having what can be viewed
as another position based on who are those who are committing the
abortions. The Doctor performing the act is getting away with what
some would call murder. If reason was used it could be held that the
expectant mother is asking someone to commit this act and the very
acceptance of a Doctor to do so could be considered an illegal act
under the Constitution. Hence if it is the Doctor who is
committing an illegal act that should be prosecutable.
The following article I wrote a few years
ago addresses the personal responsibility issue and the fact that
the expectant mother does have a choice but that it does not
include a third person to commit the act. It would not
mean that a Doctor should not be able to administer to her
after she has opted to find a way to induce the abortion herself,
including possibly taking a pill prescribed by a Doctor. The point
being morally and ethically shouldn't she be responsible for
performing the physical action of inducing the abortion?
Having to make such a decision in which she is physically initiating
the act makes it more likely that she would more seriously examine
her options. Those being to keep the child or to
offer it up for adoption. Being more personally
responsible could cause those thinking of practicing
unprotected sex to think twice about it and possibly consider a
degree of abstinence. Of greater possible importance would be
that a third person, the Doctor, would not be taking
a life and violating moral and ethical tenets..
In
regard to BO's position on stem cell research, he has authorized use
of our tax dollars similar to those provided for foreign abortion
clinics, to fund embryonic stem cell research. The government
should not be in the business of funding these programs on
which our society is divided. However, the private sector is
free to spend their research dollars as they wish. In fact, positive
results of adult stem cell research has recently shown that that
embryo's need not be used and thus destroyed.
A few years ago
a U.S. District Judge's ruled constitutional a Oregon
voter-approvedlaw allowing doctors to assist in the death of
terminally ill patients. I wonder if this Judge was aware of the
Hippocratic Oath. The Hippocratic Oath, of course, is what
historically was taken by those entering the medical profession upon
graduation from medical school........
A visitor to this
web site recently had comments to make about the essay "Homosexuality Is Not Normal" written
by “A Rational Advocate“. As a result, an interesting dialog
developed that should be of possible interest to other visitors and
it follows...
Why do homosexual couples who wish to establish a
union between themselves insist on having the government allow them
to be endowed with the same marriage title provided to heterosexual
couples? Why are they not satisfied with being provided the same
legal provisions in the form of a title called "civil union"? A
single answer to both questions is obvious. They want society to
consider their relationship normal. The reason the government should
not concede to their demands is also obvious. Their relationship is
not normal because man and woman were put on this earth with
complementary sex organs meant to procreate the
species....
Another visitor to this website recently had
comments to make about the essay "Homosexuality
Is Not Normal" written by “A Rational Advocate“. As a
result, the following dialog developed between the visitor, who is
given the name Mr. H, and A Rational Advocate
(ARA)....
The Space program
had become another humdrum government program to the average
American before the tragic loss of Columbia. It took that event to
awaken us to think about this program and the reason for its
existence at this point in time......
"The right of
the people to be secure in their persons, houses, papers, and
effects,against unreasonable searches and seizures, shall not be
violated, and no Warrants shall issue, but upon probable cause,
supported by Oath or affirmation, and particularly describing the
place to be searched, and the persons or things to be seized" -
Recently Representative Howard Berman, Democrat from California,
introduced HR5211,a bill to indemnify holders of copyrights on files
who use technological means to enter one's Computer and disable the
use of such files.......
Altruism is defined
as regard for and concern for the welfare of others. An Altruist is
defined as one who adheres to the practice of Altruism. A problem
exists in our society in the interpretation of actions versus
intentions. The premise I take here is that a person cannot
perform an altruistic act that does not fulfill a personal intent to
commit it. Thus the definition of Altruism contradicts
itself.
Published in 1932, a novel by Aldous Huxley, entitled “A
Brave New World”, described a fantasized society of the far future
which has, as time progresses, becomes less a fantasy and more a
possibility. This society controlled by an authoritarian centralized
government practices mass breeding of humans in laboratories, called
hatcheries, replacing normal maternal reproduction......
Love is a most misused word. Saying things like “I
Love Cookies” or “I Love It” or “I Love to Ski”, when the word
that should be used is “like”, is innocent enough....However, the
word love also has another common misuse, with which we are also all
familiar, but this misuse sometimes gives the user of the term a lot
of grief....
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