Monday, August 25, 2014

A Government That Is Not Spending Any Money On Government, Is Not A Government

When do you reach the point that government is no longer governing but it is doing nothing but redistributing?

Is it even a government at that point?

I have previously written about the gigantic increase in the amounts of payments for individuals in the federal budget over that last 70 years.

Less than 1/3 of the budget today is spent on what the Constitution established as the big priorities and what most people think of as the true functions of government---defense, justice, police, roads, parks, education, public health and the like.  In 1945, we spent 97.6% of the budget on these items. In 1960, we spent about 75% on these priorities. As late as 1990, we still spent the majority of the federal budget on these government roles.

Direct payments to individuals now account for 67.9% of all federal expenditures in the federal budget. In dollars, that is $2.57 trillion out of $3.77 trillion in total spending.

In other words, we are spending twice as much on these "special interest" payments as we do on defense, justice, prisons, roads, research, national parks and everything else that is for the overall "public interest"---combined!

If Defense spending is excluded (arguably the one function of the federal government that is probably most essential), direct payments to individuals account for 82% of all federal spending.

However, we have not seen anything yet. A recent Congressional Budget Office report shows that in only ten years payments for entitlements, mandatory spending and interest on the federal debt will consume 93% of projected federal revenues.

Put another way, there will only be enough tax revenues after paying for Social Security, Medicare, Medicaid, other mandatory federal spending programs (welfare etc) and interest that only 7% will be left for everything else.

I always find it interesting that in federal budget language, defense, roads, public health and running the government are discretionary but welfare, food stamps and unemployment compensation are mandatory.

The chart below provides a picture of how we are spending money today in the federal budget and what it will look like in 10 years based on the most recent Congressional Budget Office projections.

77% of federal revenues today are going to fund entitlements, mandatory spending and interest, leaving only 23% of federal revenues for traditional government functions like defense, roads, education, parks, public health, the post office and the like. By 2024, the CBO projects that 93% will be going to "mandatory" spending and only 7% will be left for everything else.

I dare say that when government is only spending 7% on government, you have no government left. It is scary to think that we will be at that point in a scant ten years.

Let's look at the numbers in a little more detail. The CBO has used % of Gross Domestic Product to reflect spending in each category and revenues so it is easy to compare the projections from year to year. To put this in context, U.S. GDP for 2014 is estimated at approximately $17.2 trillion. Therefore, 1% of GDP is equal to $172 billion in today's dollars.

Social Security spending is projected to increase from 4.9% of GDP to 5.6% in 2014.

Medicare spending is projected to go from 3.0% to 3.2%. This looks too low to me and obviously assumes that health care costs are going to be constrained more than they have been in the past.

Medicaid spending (including Obamacare exchange subsidies) is projected to increase from 1.9% to 2.7%. Note that in dollar terms this is larger than the increase in projected Social Security spending. It is also 4x the increase in the amount of projected Medicare spending.

Other mandatory spending (welfare, food stamps etc.) is actually projected to decrease from 2.5% to 2.2% of GDP. Good luck seeing that happen.

The biggest increase is going to involve paying interest on the federal debt. It is projected to increase from 1.3% of GDP in 2014 to 3.3% in 2024. That is $344 billion of additional costs in today's dollars.

How much is that? It would take a doubling of corporate income taxes across the board to just pay for that increase. Or a 25% across the board hike in individual income taxes. Or a 33% across the board increase in employer and employer FICA taxes. All of that to pay for something that provides no value whatsoever to those paying the taxes! The interest on the money that was borrowed to finance past spending will be a distant memory to those taxpayers when the bill comes due.

The overall annual deficit increases from 2.8% of GDP ($482 billion in 2014) to 3.6% of GDP in 2024 ( $619 billion in today's dollars) in the CBO projections. This is despite the fact that federal tax revenues are projected to increase from 17.6% of GDP today to 18.3% of GDP in 2024 based on current tax law.

The bottom line is that we are on a collision course with a catastrophe with our federal budget. Something is going to have to give over the next ten years. The government has nothing to give. They only have the power to redistribute.

Therefore, the American people are going to be the ones giving. Taxpayers will almost surely have to give more. Those with entitlements and those receiving mandatory spending amounts may also have to give something up. There is no other answer unless we are at the end of the federal government as we know it. I hope that is not the case but the numbers are leading us to some stark choices.

A government that is not spending any money on government, is not a government.

What choices are we willing to make to continue to have a government?

Wednesday, August 20, 2014

The Elephant In Ferguson

In light of what has been going on in Ferguson, Missouri I thought it might be appropriate to once again republish a blog post that I wrote last year right after the George Zimmerman trial.

In that case, there were conflicting accounts of what happened. The same appears to be the case with Michael Brown and Officer Darren Wilson. We do know that the 18 year old Brown died from at least six shots fired by Wilson even though he though the young man was unarmed.

Does that automatically mean that Wilson is guilty? It is not supposed to in our system of justice. That is why there are internal police investigations, grand juries and criminal trials to sort out the evidence. That is why someone is supposed to be presumed innocent until proven guilty.

The bigger question is why is this happening all over again? Why is there such a rush to judgment? Why can't people wait for the facts and trust the system?  Why is there bias?

I wrote about this right after the Zimmerman acquittal and I think it bears repeating again because nothing seems to change.  This post is as relevant today as it was last year.

The Elephant In The Room
(Originally published July 21, 2013)

In the aftermath of the George Zimmerman acquittal there is a lot of talk about racial bias in the judicial system.  I have heard many African-American commentators argue on cable tv that there is inherent bias throughout the police and justice system against African-Americans.  They cite the Zimmerman verdict as just one more example of that bias.

I agree with that general conclusion.  However, I think it is misplaced in trying to make that point in the Zimmerman case. I have no doubt there is bias at times if you want to use that word.  If you are black in America there is undoubtedly a greater chance that you will be pulled over in a car.  You will be looked at with greater suspicion in a convenience store.  You will find it harder to get a fair shake in a court room.

It is not right.  However, as I wrote recently, profiling and stereotyping are fundamental to the way the human brain operates.  It is not fair but that is the way the brain is wired.  We are too quick to jump to conclusions based on past experiences, emotions, events, associations and their consequences.

The elephant in the room that no one wants to talk about is why does that bias exist?  Why do we keep hearing about a police and a justice system that is unfair to African-Americans?

These statements are particularly interesting when you look at who is overseeing these systems today at the federal level.

The President of the United States is an African-American.

The Attorney General of the United States is an African-American.

They have both been in place for almost five years.  Why all this talk of institutional bias when you look who is on top of our governing and justice system today?

Here are the cities with the highest violent crime rates in the United States according to the FBI.  The majority of the cities are headed by an African-American.

1. Flint, Michigan (African-American Chief of Police, Alvern Lock)

2. Detroit, Michigan (African-American Chief of Police, James Craig)

3. Oakland, California (African-American Chief of Police, Howard Jordan stepped down in May and was replaced by an interim Chief who is white.)

4. St. Louis, MO ( White Chief of Police, Sam Dotson)

5. Memphis, TN (African American Chief of Police, Toney Armstrong)

Therefore, we hear about the bias of the "system" but that "system" is increasingly being overseen by African-Americans.  The old argument of institutional bias just does not add up as it might have at one time.  If the deck is stacked, who is stacking the deck?

We also hear outcries that Republicans are somehow responsible for bias in the system and they simply don't care about the plight of African-Americans.  However, if you look at the Mayors that oversee the 30 largest U.S. cities, only two are Republicans. (Gregory Ballard in Indianapolis and Betsy Price in Fort Worth.)

What is the real elephant in room?  Let's look at the crime statistics.  In order to do that I went to the most recent Statistical Abstract of the United States.  It helps you better understand the dimensions of the issue.

First, it should be recognized that crime rates have decreased substantially in the last 15 to 20 years as this first chart demonstrates.  This is a very positive development especially in light of the challenging economic environment.

Blacks are much more likely to be victims of crime than Whites or Hispanics.

This is particularly the case for murder.  In fact, the chances of being murdered are over 5 times greater if you are Black than if you are White.  Note that there is currently no data for Hispanics in the next few charts because the federal government right now consider Hispanics to be an ethnicity rather than a race. This will change next year in the collection of this data.

Who is committing these crimes?  Blacks commit almost 5 times as many violent crimes (murder, manslaughter, rape, robbery and aggravated assault) per 1,000 population as Whites according to FBI data based on arrests for violent crimes.

What about overall arrests that are made for both violent and property crimes?  The incidence of arrests for Blacks is over twice what it is for Whites on per capita basis.  In fact, this data suggests that, on average, there is one arrest each year for every 12 Blacks in the U.S.

What about hate crimes?  The Justice Department also tracks this data.  There are many more hate crime incidents perpetrated against Blacks than Whites.  However, these incidents pale in comparison to the hate that is spewed towards Jewish people.  How come we never hear about this?

In fact, Jewish people have almost six times the chance of being the victim of a hate crime as an African American and over four times the chances of a Muslim in this country!  For some reason these facts just never seem to make the evening news.

It is important to remember that the vast majority of crime is committed against people of the same race. Crime is a function of proximity and opportunity.  For example, from 1976 to 2005 according to this article in the Daily Beast, 94 percent of Black murder victims were killed by Black offenders.  At the same time, 86 percent of Whites were killed by other Whites.

However, what about interracial crime, white-on-black attacks and the reverse?

Patrick J.Buchanan wrote about this in a recent column.

After researching the FBI numbers for “Suicide of a Superpower,” this writer concluded: “An analysis of ‘single offender victimization figures’ from the FBI for 2007 finds blacks committed 433,934 crimes against whites, eight times the 55,685 whites committed against blacks.
Interracial rape is almost exclusively black on white – with 14,000 assaults on white women by African Americans in 2007. Not one case of a white sexual assault on a black female was found in the FBI study.”
Though blacks are outnumbered 5-to-1 in the population by whites, they commit eight times as many crimes against whites as the reverse. By those 2007 numbers, a black male was 40 times as likely to assault a white person as the reverse.
Today, 73 percent of all black kids are born out of wedlock. Growing up, these kids drop out, use drugs, are unemployed, commit crimes and are incarcerated at many times the rate of Asians and whites – or Hispanics, who are taking the jobs that used to go to young black Americans.
Buchanan points out the real elephant in the room.

As I stated above, discrimination and bias exists against Blacks in the criminal justice system and in their daily lives. It is disingenuous for anyone to deny this. However, all of the energy of the African American community about this problem seems to be only directed outwards.  I don't see much energy devoted to looking inward for solutions to the problem.

William Galston, who was an advisor to President Clinton, has spent a good part of his career studying the causes of poverty.  He concluded that in order to avoid being poor you just needed to do three things, (1) graduate from high school, (2) wait until getting married to have children, (3) wait until age 20 to have children.  His research indicated that only 8 percent of young people who followed these rules ended up poor.  However, breaking just one of these rules means a 79 percent chance of ending up below the poverty line.

Where are the voices talking about the nearly three out of four African American children born out of wedlock? Where are the voices decrying the culture among black youths that seems to glorify drugs and violence?  Where are the voices speaking out about the fact that only 54 percent of African Americans are graduating from high school?

Crime is largely a function of poverty and poor home environments.  The absence of a father in the home is a significant factor in this equation.  That is why I think it is especially ironic that there is so much energy being devoted to enabling gay marriages in this country but you hear almost nothing about encouraging African Americans to marry before having a child.

Failure to complete high school is almost a certain path to poverty in this day and age.  We are spending massive amounts of money on welfare and other programs to help the poor but you hear little about the massive failure of young African Americans to graduate from high school.  We are spending enormous sums of money on the symptoms but pay little attention to the underlying disease.

If we look at the data above, and you consider the way the human brain works and the role heuristics plays in our thinking, bias, racial profiling and stereotyping is going to occur.  It is not right and it is not fair but that is the way the human brain is wired.  It is always looking for shortcuts based on past experience and associations.  A lot of the time this is very helpful in assessing things.  However, it can also lead to generalizations, stereotypes and bias that lead us astray.

The only sure way to change that is from the inside-out in the African-American community. Discrimination, bias and stereotyping are not unique to Blacks. For example, prior to the 1950's, Asians who lived in the United States were stereotyped as cheap, poor, uneducated laborers.  Products from Asia were derided as nothing more than cheap junk.  That stereotype no longer exists.  It literally has been turned on its head.

Today, students in high school and college cringe when they see Asian-Americans entering their classrooms on the first day of class.  American businesses have learned some hard lessons from their Asian counterparts.  The old stereotype is gone.  That change did not occur because people just started to think differently one day.  It changed because they were forced to change their thinking because of what they experienced and the behaviors and results they saw from greater and greater numbers of Asians they came in contact with.

Someone needs to start talking about the elephant in the room in the African-American community. My hope would be that it would be the President of the United States. I think that was the hope of most Americans when he took office.  We were looking for a uniter and all we got was a divider.  I still have hope.  It just doesn't look like he is going to change.  That might end up being the biggest disappointment of the Obama Presidency when all is said and done (unfortunately, that would be saying a lot).

Monday, August 18, 2014

Starting and Finishing

I have been offline most of the last two weeks in Texas focused on the birth of my third grandchild.

Warren Buffett would say that little Tyler won the birth lottery. He was born in the United States of America (even better, in Texas). He has loving parents who are both college graduates. Two sets of supportive grandparents. He is white (although whites will be a minority among students in public schools in the United States this Fall).

He has some built-in advantages that many, many other children in this world do not have.

However, as I have written before here and here, success is ultimately more about attitude and application than aptitude and advantages. That is particularly true if you are one of the four out of hundred in the world that are born in the United States.

I am thankful for that advantage every day of my life. In particular, to my great-great grandfather who immigrated to this country in the mid-1800's.

I am also greatly in debt to my father who was the first in our family to go to college. Both his father and grandfather worked on the railroad. Both were killed on the job. My father, at age 5. was the oldest of three children when his father died. There were no social security survivor benefits and a pittance of life insurance. My father sold cottage cheese door to door when he was 6 years old to help support the family. He worked almost every day of his life from that point forward until he retired in his 60's.

He graduated from high school and was working in a washing machine factory at age 19. College was out of the question. There was simply no money. He used to joke that he was so poor growing up he did not know there was any more to a chicken dinner than the neck and wing until he was 20 years of age.

He made it through the Pacific Theatre in World War II and was able to attend college on the GI Bill and by working various odd jobs . He began a career as a corrugated box salesman and ultimately ran a company division with over 20 box plants across the country.

You can't ever say enough about that first person in a family who rises above their circumstances and allows you to stand on their shoulders.

I have a friend who did the same. He was the only one of fifteen cousins to graduate from college and reach a level not experienced by other family members. He broke out and broke the cycle. He not only helped himself but he also greatly increased the birth lottery odds for those that follow him.

This was further driven home to me over the last week or so as I read a biography of Dale Carnegie, Self-Help Messiah, by Steven Watts.

For those who are unfamiliar with Carnegie, he wrote one of the most widely-read and popular books of the 20th century, How To Win Friends and Influence People, in 1936.  He developed the Dale Carnegie course which is still teaching thousands of people each year all over the world how to improve their communication and human relations skills for success.

My maternal grandfather gave me a copy of the book when I was a teenager.

Carnegie grew up dirt poor in Missouri and only through the love and dedication of his parents (who relocated so that he could attend a free teacher's college in Missouri) was he able to escape the hardscrabble existence of his home. He was a traveling salesman and actor before he was able to settle into his first love--teaching people the art of public speaking and effective communication.

His lessons in self-help and his secrets to success had particular resonance with people in the Great Depression who had seen their self-worth eroded and their confidence shaken as well as the notion that hard work would produce success.  Carnegie offered a formula for getting ahead through better human relations skills.

What I found particularly interesting in the book was the stark difference in how people looked at their situations then as compared to today. The predominant feelings of most people who were out of work were of shame and guilt. They did not blame the government, Wall Street or the wealthy. They blamed themselves first and foremost.

Watts cites Studs Terkel who interviewed scores of Depression survivors including a psychiatrist who treated many patients who became unemployed who said this to Terkel.

In those days, everyone accepted his role, responsibility for his own fate. Everyone, more or less, blamed himself for his delinquency or lack of talent of bad luck. There was an acceptance that it was your own fault.

That is a long, long way from where we are today. It is particularly ironic considering the events that are occurring in Ferguson, Missouri in recent days, not too far from where Dale Carnegie grew up in poverty.

I understand the frustration of living in a nation of opportunity when one believes they have no opportunity. However, Dale Carnegie, my father and my friend could have felt the same thing. They did not let it stop them.

It is true that race adds an additional dimension but when we have an African-American in the White House and as head of the U.S. Justice Department (as well as on the Supreme Court) it does show that doors are not as closed as they may have been in the past and there are many more open minds than closed minds among us today.

Could it still be better? Absolutely. But we have come a long way in my lifetime. What is unfortunate is that there are too many who don't take any time to look inward for the solution to their problems.  It is always someone else who is keeping them down and out.

All of this reminded me of a study I cited last year on income mobility.  We often hear that it is no longer as easy to get ahead in America as it was for Dale Carnegie or my father.

However, this study showed that there is still quite a bit of income mobility taking place. For example, in Houston,Texas (where my grandson was just born), 42% of the children born to parents in the bottom quintile were in the top 3 quintiles (middle class or better) by the time they were age 30.

The average child in Houston who had parents in the 10th income percentile ended up in the 38th percentile. That is close to touching the lower reaches of what could be defined as the middle class.

On the other end of the scale, children with parents in the upper quintile do not automatically get a free pass to stay on top.  On average, only about 35% of children raised in households in the top quintile enjoy the same income lifestyle as their parents when they are on their own. This chart (published in a New York Times story on the study) shows the chances of someone raised in both the bottom fifth and top fifth ending up in the top fifth as an adult.

Source: New York Times

It is without question there is a real advantage to being born in the right place and to the right parents to increase the odds of one's success. It is always much easier to be able to climb on the shoulders of someone else starting out. However, merely sitting on someone's shoulders does not get you anywhere in the long run. At some point you have to walk on your own.

The point here is that we have no control over our birth.  Prince George was born last year and does not have any idea right now that he won the Super Bowl World Cup of birth lotteries.  DeShawn who was born in Grady Hospital in Atlanta on the same day is not so lucky.  Sumon in Bangladesh is unluckier still.

We also have little control over the behavior, bias and blather from other people.

What we can all do is take control of our place and position in life by doing all we can with what we have. That starts with looking inside ourselves first before looking outside.  Understanding that we have more control over our life than anyone else.  Understanding that life is often not fair but we are in the best position to change other people's minds by our attitudes, actions and willingness to take accountability when it is necessary.

I hope my grandson appreciates the shoulders upon which he has the benefit of climbing on. However, he also needs to understand his responsibilities and his role in maintaining the hard fought legacy entrusted to him by his forefathers to pay it forward.

It is what you do with your own walk in life that will ultimately define who you are, what you become and where you finish.

These are all lessons that I hope my new grandson understands well as he begin his life.

Tuesday, August 5, 2014

A 3-D View Of Debt

There are many things in this world that can be of great benefit but are also of great danger if they are not kept under control.

Fire used in a controlled manner can help cook our food and warm us. Fire that is out of control can wreak unspeakable damage.

We need water to nourish us and irrigate our fields of food. However, a flood of water can wipe away those fields in an instance.

The same can be said of debt. It can assist us in building a business, purchasing a home or completing our education. However, when debt is not quickly repaid it can destroy just as easily as any natural calamity. Compound interest crushes anyone who does not quickly get out of its path.

There are always two parties to any debt transaction. A lender and a borrower. However, many times there is a third party--the middleman or underwriter--who collects a fee for facilitating the transaction.

Many financial institutions have recognized that it is much better to be the middleman in a debt transaction than a lender. They take no credit risk and just take a fee for facilitating the loan or packaging a bunch of loans and finding willing lenders.

The 2008 credit crisis was really driven by this activity as packages of real estate loans were packaged together with little care about what went into the packages. After all, it was all about the fee income that went with putting the loan package together.

We have been living with the after effects of that debt debacle for six years. The economy is still sputtering, tens of millions are unemployed or underemployed and the Federal Reserve has pumped trillions of dollars into the money supply to prop up the economy, asset values and keep interest rates low.

How is all of this working out for the three parties involved with debt?

Let's take a deep 3-D perspective of some of the ramifications of the low interest rate environment that has been manipulated and sustained with the help of the Federal Reserve and other central banks around the world.

Borrowers are being paid less for the risk they take in loaning their money than just about any time in history. For perspective, look at this graph showing long-bond yields in the U.K. from 1750 to 2014. That provides a 250 year perspective on how low interest rates are.

This is also evident in junk bond yields, the riskiest form of corporate borrowing which have been trading near record lows the last two years. This is a graph of the Barclays U.S. Corporate High Yield Bond Index through June 30, 2014. As of today, the yield has increased to 5.87%

Here are 6-month Certificate of Deposit interest rates going back to 1964. The current average national rate is .01%.

It is pretty clear that lenders are not doing real well in the current environment.

What about borrowers? There clearly are winners here with the low interest rate environment helping businesses and home owners in particular. However, it is not as benefiting consumers as much as you would expect. The underperforming economy over the last few years and declining real incomes continues to squeeze household budgets and, after a small retracement in 2008-2009, consumer debt is once again on the rise. This is a graph of consumer loans at commercial banks. This debt is almost 50% higher than it was in 2011.

This is a broader view of household debt including mortgage, student loan, auto, credit card and home equity loans to the grand total of almost $11.7 trillion.

Source: Federal Reserve Bank of New York

You might have also seen or heard of this report by the Urban Institute last week on how well consumers are coping with this debt in their household budgets.

Roughly 77 million Americans, or 35 percent of adults with a credit file, have a report of debt in collections. These adults owe an average of $5,178 (median $1,349). Debt in collections involves a nonmortgage bill—such as a credit card balance, medical or utility bill—that is more than 180 days past due and has been placed in collections.

My bigger concern for borrowers with the current low interest rate environment is what happens when interest rates rise?  This is of particular concern for those that have variable interest rate debt or short-term debt that will need to be rolled over. An increase in interest rates could be fatal.

Look no further than the federal government.

Consider this chart that shows the average interest rate paid on the $17 trillion in federal debt. As of September 30, 2013, the federal government borrowings were costing a mere 2.43%  As of June 30, 2014 the average interest rate had fallen to 2.4%.

However, what would be the impact on the federal budget if interest rates were to rise?

Consider that if interest rates were to rise to their historical average (6.85%) the federal government would be spending an additional $750 billion per year on interest expense.

Let's put that it in context.

Total projected individual income tax receipts for 2014 are $1.4 trillion. That means that individual income taxes would have to be increased by over 50% to just pay for interest on the federal debt. Of course, taxpayers would receive absolutely nothing in return. The interest would merely be paying for past spending well back in time.

If you don't like the idea of raising taxes to cover the added interest cost, how about cutting something in the budget to pay for it?

The Defense budget this year is $627 billion. You could cut the entire amount and still not have enough to pay the increased interest bill.

You don't want to do that?  How about Medicare? $531 billion. Still not enough by itself.

The fact is that you could cut out the largest single item in the federal budget (Social Security Old-Age and Survivor Benefits) at $713 billion and still not be able to cover this increase in interest costs.

Current interest rates have given a false sense of security to many borrowers. There is real danger ahead.

That leads us to the final perspective of the players in the debt scene---the real winners in all of this---those middlemen.  The Wall Street bankers who but the borrowers and lenders together---for a fee.

Of course, you might recognize those winners today as being the same players that nearly brought the whole house of cards down in 2008. And most of those names would no longer be in business but for the bail-outs compliments of American taxpayers.

Here are the biggest beneficiaries of the low interest rates as borrowers have lined up to get some of the "cheap" money that is available.


In total, the top 10 debt bookrunners have pocketed a mere $12.2 billion in manager fees for their efforts in just the first six months of 2014.

There is little question that in the 3-D world of debt that is the best place to be right now. Right in the middle.

That's great work if you can get it.

I just hope that all of this leads us to a place where more people can find any type of work.  And we don't end up in a place where we are going to see a whole lot more worry and "work-outs" on the other side of all of this.

I don't know about you but I don't like what I am seeing with this 3-D view of debt. It's a little scary.

Credit: John Dunbar Kilburn's Blog

Sunday, August 3, 2014

What Happened To "We The People"?

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

The preamble to the Constitution lists five significant priorities in order "to from a more perfect Union". Our founders specifically stated that they wanted to "establish Justice", "insure domestic Tranquility", "provide for the common defense", "promote the general Welfare" and "secure the Blessings of Liberty to ourselves and our Posterity".

Of these five priorities, note that four of them have strong verbs attached. They wanted to establish justice. They wanted to insure that there is domestic tranquility.  They wanted to provide for the common defense. They wanted to secure the Blessings of Liberty.   There seems to be no doubt that they saw all of these as the most important national priorities.

However, when it comes to the general welfare, they only wanted to promote it. There is no mention of establishing it, or insuring it, providing for it or securing it. They also did not say anything about individual welfare. They referred only to the general welfare.

This seems to suggest that when they referred to general welfare they were considering those things that would be generally available to all. They were not considering items that would make some people winners and other losers at the hand of the federal government.  What are items of general welfare? Roads, post offices, the coining of money, standard weights and measures and the regulation of international and interstate commerce are specifically mentioned in Article 8 as is the erection of forts, dockyards and other needful buildings.

You could probably also consider the national park system, public health programs, public transportation  and other broad-based programs available to the public at large to clearly be within the spirit of promoting general welfare.

How much of the federal budget is spent on defense, justice, police and internal security and other programs that benefit the population at large today?  Less than 1/3 of the budget is spent on what the Constitution established as the big priorities.  In 1945, we spent 97.6% of the budget on these items.  In 1960, we spent about 75% on these priorities. As late as 1990, we still spent the majority of the federal budget on these government roles.

Direct payments to individuals now account for 67.9% of all federal expenditures in the federal budget. In dollars, that is $2.57 trillion out of $3.77 trillion in total spending.

In other words, we are spending twice as much on these "special interest" payments as we do on defense, justice, roads, research, national parks and everything else that is for the overall "public interest"---combined!

If Defense spending is excluded (arguably the one function of the federal government that is probably most essential), direct payments to individuals account for 82% of all federal spending.

What are "payments for individuals"? These are federal government spending programs designed to transfer income (in cash or in kind) to individuals or families.  This includes Social Security, Medicare, Medicaid, Veteran's Benefits, Welfare, Food Stamps and Student Loans.  It does not include salaries to government workers or the military as these are considered to be payments in return for services provided.   Therefore, "payments for individuals" effectively represent what amounts to the redistribution of income from one person to another with the federal government serving as the middle man.

These are not outlays for the common defense, the common good, public works or public safety. These are government payments that are intended to benefit select individuals based on their age, their income, their health or any one of a number of other distinctions.

Where is this money being spent and who is receiving it?

Social Security and Medicare account for about half of it.  However, almost $1 trillion is being spent on direct or indirect forms of welfare---Medicaid, food stamps, disability, public assistance, housing assistance, unemployment assistance and student loans.

This chart shows the breakdown of payments of individuals in the 2014 federal budget.

By comparison, in 1974 the federal government spent just $120 billion on outlays for payments to individuals in the federal budget.  The various forms of welfare (Medicaid, unemployment, food stamps etc) have grown from $41 billion to $968 billion (an increase of 23.6x between 1974 and today.)

The chart below shows the increases in the major categories of payments to individuals in the federal budget between 1974 and 2014 in comparison to total spending, inflation, population and the Defense budget.

Interestingly, Medicare and Medicaid are both up over 50x in 40 years. Looking at these numbers who can honestly believe that more government money and regulation in the healthcare market through Obamacare is going to do anything but further increase costs? That is double the increase of any other spending category.

I am not suggesting that all of these programs are ill-considered or bad.  After all, Social Security and Medicare are there for everyone.  Workers pay into these programs and deserve a return on their "investment" without someone drastically changing the rules on them just as they near retirement.

However, we all need to look in the mirror and ask ourselves how we have allowed what began as well-meaning social safety net programs to reach the point that they now account for over 2/3 of federal spending?

Even worse, the federal budget for 2014 estimates that individual income taxes and payroll taxes will only amount to $2.4 trillion in the current year.  This means that the $2.6 trillion in "payments for individuals" in the federal budget are not even being covered by the $2.4 trillion in "payments from individuals" in taxes. You could call it redistribution but more is being redistributed than is being taken in.

What began as a social safety net has become a societal noose around our necks!

I don't believe that our Founding Fathers would believe it.

Is there anyone who still believes in what "We the People" means anymore?  It seems to be clear that the people we have been electing for the last couple of generations don't.

All of the data on federal government spending is taken from Budget of the U.S. Government, Fiscal 2014 Historical Tables.

Wednesday, July 30, 2014

What is a Hoosier?

What is a" Hoosier"?

Credit: Indiana Historical Association

I know that is what you call someone from Indiana. However, what was a "Hoosier" before Indiana became the Hoosier state?

I live 30 minutes from the Indiana state line. I once lived in Indiana. I drove across a good part of Indiana yesterday driving back from Chicago. However, I never knew what a "Hoosier" really was.

It seems that there is no definitive answer to what is a "Hoosier". There is a lot of speculation of where the term came from. Jeffrey Graf of the Reference Desk of the Indiana University Library provided the best summary I could find of the possible theories. These include:

  •  "Who's here?" as a question to unknown visitors or to the inhabitants of a country cabin;
  •  Hussar, from the fiery European mounted troops; "Huzzah!" proclaimed after victory in a fight; 
  • Husher, a brawny man, capable of stilling opponents;
  • Hoosa, an Indian word for corn;
  •  Hoose, an English term for a disease of cattle which gives the animals a wild sort of look; and the evergreen
  •  "Who's ear?" asked while toeing a torn-off ear lying on the bar room floor the morning after a brawl. 

However, Graf believes that a "Hoosier" was most likely used to describe a hick or a hillbilly.
The best evidence, however, suggests that "Hoosier" was a term of contempt and opprobrium common in the upland South and used to denote a rustic, a bumpkin, a countryman, a roughneck, a hick or an awkward, uncouth or unskilled fellow. Although the word's derogatory meaning has faded, it can still be heard in its original sense, albeit less frequently than its cousins "Cracker" and "Redneck."
From the South "Hoosier" moved north and westward with the people into the Ohio Valley, where it was applied at first to the presumably unsophisticated inhabitants of Southern Indiana. Later it expanded to include all residents of the state and gradually lost its original, potent connotation of coarseness in manners, appearance and intellect.
I am not sure any of these is correct based on a recent article I saw in Claims magazine (July, 2014) on the "10 Best and Worst States for Teen Drivers".

After reading that article, I would conclude that "Hoosier" meant bad teenage driver.

Consider these troubling facts if you travel the roads of Indiana:

  • Indiana has the most teen driver fatalities per licensed teen drivers in the U.S.

  • Indiana has the the second highest number (behind New Mexico) of teen "Under the Influence" traffic violations per licensed teen drivers.

On the hand, Indiana has fewer teens with driver's licenses than in any other state and they have some of the most restrictive laws in place for their teen drivers.

  • Indiana has the lowest percent of the teen population with driver's licenses.

  • Indiana is one of only 11 states that has at least five of seven optimal "Graduated Driver License Program Laws (GDL) which are designed to make teenagers better drivers. These include a minimum age of 16 for a learner's permit, 6-month holding period, 30 to 50 hours of supervised driving, nighttime driving restrictions, passenger restrictions, cell phone restrictions, and age 18 for an unrestricted license.

Go figure that one out.

What is a "Hoosier"?

I remain confused.

Tuesday, July 22, 2014

The Redistribution of Ohio

For the first 175 years of our country's history, it was generally accepted that the principal roles of government were to establish and maintain justice, insure that people were safe in their homes and on the streets, provide for a national defense and build and maintain public works such as roads, bridges, schools and libraries for the common good.

The focus was almost entirely on the collective and common good and the general welfare. In effect, doing those things that no one individual or small group could effectively do for themselves.

For example, in 1945 payments to individuals made up less than 3% of federal spending.  In 1970, it was only 30%. As late as 1990 it was still below 50%.

The majority of tax dollars were expended for the benefit of all.

The federal government will spend about $3.7 trillion this year. However, 68% of it will be in direct payments to individuals on spending for Social Security, Medicare, Medicaid and other entitlement programs.

What we would generally consider the traditional functions of government do not make up even one-third of our expenditures at the federal level today.

In effect, the federal government has become nothing more than a giant redistribution system in which money comes in at one end from one group of people and it goes out the other end to another group of people with a lot of bureaucracy and built-in bias in between. After all, you need a lot of both to decide who gets and who gives when you are picking and choosing winners and losers. I call it "The Redistribution of America".

The government we have today is far different than what our Founding Fathers thought they were establishing in 1787.  It is also far removed from the government construct for the American people that stood the test of time rather remarkably well for almost 200 years.

It is no different with state government.

I recently took a detailed look at the state budget of my home state of Ohio. I knew the same forces were in play at the state level, however, I was shocked at how far the role of state government has strayed from where most people expect their tax dollars are being allocated and spent.

When I ask most people what they believe the three most important functions of state government are, I usually get these responses.

Roads and Transportation
General Public Services & Safety (Parks, Water, Sewage Treatment, Public Safety)

Accordingly, I think that most people would believe that the three highest priorities for their tax dollars would be in these three areas.

They would be correct if they lived in Ohio in 1970.

In that year, 60% of the Ohio state budget was allocated to these priorities, all of which are expenditures for the common good. Public schools and universities that are for the benefit of everyone. Roads and rail lines that everyone can take advantage of. Parks, libraries, state police, prisons, water supply and sewage and other public services that serve the entire population.

Welfare spending, health care and pensions, all of which take the form of direct payments to individuals, made up 36% of the budget in 1970.

The remaining 4% of the budget was for general government and interest payments.

What does the picture look like in Ohio in 2014?

Education, roads and transportation, general public services and safety now make up just 19% of total spending in Ohio.

On the other hand, welfare, health care spending (the majority of it going to Medicaid) and pensions consume 79% of the state budget!

Let me do the math for you.

Spending on welfare, health care and pensions has gone from 36% of the budget to 79% of the budget since 1970.

This spending has effectively crowded out all spending on education, roads, public services and safety. Spending on these priorities in state spending have declined from 60% of the budget to a mere 19%.

We used to believe that the principal role of government was to provide public services. Today it is really about the provision of personal services in payments for individuals with pensions, nursing home and medical costs topping the list.

We are not talking about small amounts of dollars either.

In 1970, Ohio's total state budget was $2.6 billion.

In 2014, the state of Ohio will spend $58.1 billion.

That is a compound average increase in total spending of 7.3% per year.  Inflation over the same period has averaged a little over 4% per year.

To put that in perspective, if state spending in Ohio had merely stayed even with inflation, the state budget would be $16 billion today. Therefore, spending in Ohio today has increased by $42 billion over the rate of inflation in real terms since 1970.

The chart below shows the growth in spending of each of the major categories of state spending in Ohio in relation to inflation since 1970.  The blue column shows spending in 1970. The red column shows what that spending would be today if spending merely increased with inflation. The green column depicts what actual spending is in each category in 2014.

Since 1970, $1 adjusted for inflation, would be $6.14. Therefore, a 6.1x increase in spending would be expected to just keep up with inflation.  Spending in excess of that amount are increases in real spending.

Inflation                                      6.1x
Overall Spending                      22.3x
Education                                  14.5x
Transportation                            6.1x
Gen'l Public Svcs & Safety          5.4x
Welfare                                      13.5x
Health Care                               66.7x
Pensions                                    76.0x
General Government                 17.0x
Interest                                       12.0x

It is truly astounding to take a step back and see what has occurred in Ohio and the United States in my lifetime.

Now you know why I also refer to it as "The Redistribution of Ohio".

We have given up the public interest for the sake of personal interests.

We are taking from the private sector and giving the public sector wage and benefits packages that were long ago deemed unaffordable to those paying the taxes that fund those benefits.

Most importantly, we have massively tilted spending towards the older generation and away from the young in state education funding.

I am sure it is not much different in your state.

If you want to find the budget numbers for your state you can go to which has historical data for all states and the federal government.

Sunday, July 20, 2014

Rockets and Response

Thousands in Europe rally for Palestinians

Peaceful protest held in London while demonstrators in Paris defy ban on protests and clash with riot police

This was an Aljazeera headline to the story that began this way.

Thousands of pro-Palestinian protesters have marched across Europe, calling on their governments to condemn Israel's military bombardment of Gaza.

Of course, there was no mention in the story that the Israel's military action against Hamas in Gaza was in response to a continual barrage of rocket attacks from that territory.

How many rocket attacks have there been against Israel from the Gaza Strip over the last 13 years?

Over 16,000!

This is a graphic from the Israel Defense Forces of the number of rocket attacks on Israel from the Gaza Strip since 2001. Bear in mind that the 2014 number is the volume of attacks before Israel took any action.

Ask yourself what other country in the world would allow this many rocket attacks and do nothing?

Since Israel responded, Hamas has launched an additional 1,000 rockets at Israel.

The protests in Europe against Israel should not surprise anyone when you consider the fact that there are nearly 44 million Muslims in Europe today compared to 1.1 million Jews. 

In the United States, there are 6.5 million Jews and 5.1 million Muslims. There are actually more Jews in the United States than in Israel. In fact, 88% of all Jews in the world live in the United States (46%) or Israel (42%).

This is a major factor in the animus towards the United States in the Muslim world and why it is so difficult to engage Europe in an even handed approach in discussions about Israel and the Middle East.

It is not likely to get any better in the future. In fact, it is likely to get much, much worse. Although the overall fertility rate is low in Europe, the Muslim birth rate in Europe is three times higher than the non-Muslim rate. This will feed additional cultural and political divisions across Europe going forward.

With all that is going on between Israel and the Palestinians right now, I thought it was a good time to revisit a post I wrote almost three years ago for some perspective and context on the subject.

Palestine and Israel (first published in BeeLine 9/22/11)

We often hear of the plight of the Palestinians and we see the utter hatred of Israel and the Jewish people by Muslims.  Sitting here in the United States it is hard for the average person to figure out what is going on.  I came across three recent stories that provide a little context.

The first is "Debunking the Palestinian Lie" that I found on PowerLine.  We often hear about how Israel has pushed the Palestinian people from their rightful country.  The fact is that they never have had their own country. Their statehood was never even recognized when the Palestinians were part of the Turk's Ottoman Empire.  They were given plenty of opportunities to have their own country over the last 90 years.  They simply refuse to allow the Jews to be anywhere near them and have their statehood as well. They have made it perfectly clear they have no interest if they cannot also obliterate Israel.

View the short video linked in the Powerline story if you are not aware of the history and the multiple times that the Palestinians have been offered their own state.

You might also want to read this story, "A Century of Palestinian Rejectionism" by Fred Siegel, for some historical context.

The third story is a column by Diana West where she writes that "The Jihad is Against the Bible".  Ms. West says make no mistake, it is Israel in which the axis of Islamic Jihad turns.  Why Israel?  West quotes Bat Ye'or's new book "Europe, Globalization and the Coming Universal Caliphate".

Why Israel? Ye'or asks. "Given the immense territories conquered and Islamized over thirteen centuries of expansion and war," she writes, "why would Muslim countries keep plotting to destroy Israel?" And further: "Why does the immense oil wealth of Muslim nations nourish a flood of hatred that poisons the heart of humanity against such a small nation? Why is Israel considered so alarming?"
The well-read global citizen might regurgitate something about land, modern Zionism and the post-1948 "plight of the Palestinians," but these are stock narratives overwriting the age-old reason. "What Israel possesses," Ye'or explains, "is the Bible."
To appreciate the depth and breadth of this perhaps obvious but seldom pondered explanation, it's essential to realize that Jewish and Christian Bible characters, from Abraham to Moses to Jesus, pop up in the Koran as Muslim prophets who actually preach Islam, not Judaism or Christianity. This is the time-wrinkling, religion-morphing way in which Islam repudiates what it regards as falsifications in both the first (old) and second (new) testaments. Given that the Jewish and Christian religious books long predate the Islamic religious book, it's not surprising that in their Koranic guises the biblical characters "wander," as Bat Ye'or writes, "in uncertain space with no geographical or temporal references." Still, Muslims claim that these same "Muslim" characters lived in "Palestine," Bat Ye'or writes, on the basis of the "Jewish and Christian scriptures that they reject."
The land of Israel itself -- whose "every region, town and village is mentioned in the Bible with historical and chronological precision" -- is thus "sacrilegious" to Muslims, she explains. "They observe with destructive rage this unfolding return of history that they claim as their own. ... Any confirmation of the veracity of the Bible is seen as an attack on the Islamic authenticity of the Koranic figures taken from the Bible."
So much for those slivers of real estate as being the driver of war on Israel. It is, in fact, a jihad, a religious war against Judaism and the land of the Bible, root of Christianity. As Ye'or puts it, "Israel, in the land of its history, towns and villages, resuscitates the Bible, the book the Koran must supplant."
The bottom line according to West is that the war on Israel is also a jihad against the Bible and Christianity.  The real story is that Muslims believe that Christians have gone astray by placing themselves in the lineage of the Hebrew Bible when their real origin is Islam.

Getting rid of Israel and the sustaining Jewish roots is seen as necessary to facilitate the Islamization of Christians which is the final goal.

Thursday, July 17, 2014

The Reckoning

Border Chaos. Benghazi. Bergdahl/Taliban Swap. Ukraine. ISIS. IRS Scandal.VA Scandal.

In normal times any one  of these stories could stoke a media fire that could burn for months with the Washington media. Especially with a Republican in the White House.

All of these headlines are burning at once but there is only so much oxygen in the room and so much room on the front page. The Border Chaos story is burning the brightest right now (although the shooting down of the Malaysian jetliner has pushed that off the headlines today) but there are a lot of fires burning at once in the background.

In my lifetime I have never seen anything like it. It just keeps coming week after week. Scandals. Incompetence. Insouciance. It borders on the surreal as to how one man could create so much havoc.

Of course, with all of this going on it has been easy to forget about Obamacare. However, it is still there even though it has been knocked off the front page for now. It remains the biggest man-caused disaster of them all.

I thought it would be worthwhile to take a look at the expectations that were established for Obamacare when it was being lobbied for by the President and the Democrats in Congress and what it has actually delivered in results. You might call it a reckoning. How has Obamacare performed compared to how it was supposed to perform?

When Obamacare was being voted on in the Congress in early 2010 the Congressional Budget Office(CBO) projected that is would reduce the number of uninsured by 19 million in 2014.

After the U.S. Supreme Court ruled that portions of the Medicaid expansion provisions in the law were coercive to the states, the CBO adjusted that number down to 14 million.

In February, 2014, after the disastrous launch of the Obamacare exchanges, the CBO revised the number gaining healthcare coverage down to 13 million.

In April of this year, the CBO took the number down again---to 12 million.

The actual number who have been taken off the rolls of the uninsured, according to studies by the Urban Institute and Gallup---8 million!

All of the data above from this article in The Weekly Standard by Jeffrey H. Anderson.

If you are keeping score, that is about 40% of what we were told was the expectation when the law was passed.

What about the cost?

We were told that we could cover 19 million more people for a ten-year cost of $938 billion.

By 2012, CBO was estimating that it would cost $1.677 trillion to cover 14 million (their revised number of the number of uninsured who would be covered under the law).

The most recent CBO estimate is now $1.383 billion.

However, the fact is that the enrollments are 40% below expectations and the costs are over 40% above projections.

I guess all you can say is "it's good enough for government work".

When you put the two together you get this chart on the cost of providing government-provided healthcare coverage to each of those taken off of the rolls of the uninsured so far.

When the law was passed, CBO projections indicated that the cost to provide health coverage for each uninsured would be $49,368 (over 10 years). The cost has now ballooned to $172,875 per uninsured gaining coverage.

Why are costs so much higher than projected?  Start with the fact that individual-market premiums increased an average of 49% under Obamacare according to a study by the Manhattan Institute. Then consider the fact that an estimated 83% of the people signing up for Obamacare in the health care exchanges are eligible for a subsidy. Finally, understand that the average subsidy offsets 76% of total cost of the coverage.

Therefore, Obamacare had the result of dramatically increasing costs in the individual market and then provided federal subsidies using tax revenues to cover the additional costs in addition to the costs that were already not being covered.

So, by and large, all Obamacare has done is dramatically increase (rather than decrease) health care insurance costs in the individual market while at the same time providing subsidies (using tax dollars) to cover the newly inflated costs to create more people who are dependent on government for their needs.

At the same time, they have made the individual health insurance even more unaffordable for anyone who does not qualify for subsidies. That is the reason that all of the waivers and exclusions to the law have been provided by the Obama administration. That keeps the real facts from the people and out of the headlines until after the next election when those rules will be enforced under the law.

It is just too inconvenient for Democrats for President Obama to enforce the law that he advocated for and signed right before an election right now.

There will be a bigger day of reckoning on Obamacare . When will that be?

Is it going to be when everyone finally realizes what Obamacare is really all about after all the Presidential deferrals, deferments and delays are over?

However, if people are paying attention it should be in this November's election and those that will be subject to the reckoning are the Democrats who created this monstrosity. If not, the hard-working people who have to pay the bills in this country will lose again.

The people's power is absolute in our system.  Unfortunately, too many people don't believe it. Laws that do not have public backing do not survive over the long term. Lawmakers who make laws that people do not support do not stay in office.

Politicians have no power unless the people provide it. It is that simple.

We can complain about Barack Obama, Harry Reid or Nancy Pelosi. Throw in John Boehner or Mitch McConnell as well if you want to. The voters gave them the power they have. Throw out Eric Cantor. The people took away his power. It can and does happen when the people exercise their power.

Are the American people ready to reckon? It is in their power to do so.

Tuesday, July 15, 2014

Songs and Goldfish

"A picture is worth a thousand words."

"Music makes the world go 'round."

You have heard both of these quotes.

Google now puts the two together with an amazing interactive data visualization tool that shows the popularity of different musical genres since 1950.

This is how the music timeline is described by Google Operating System which is a blog about unofficial news and tips about Google.

Google found a great way to use the data from the people who uploaded songs to Google Play Music. Google Music Timeline "shows genres of music waxing and waning, based on how many Google Play Music users have an artist or album in their music library, and other data (such as album release dates). Each stripe on the graph represents a genre; the thickness of the stripe tells you roughly the popularity of music released in a given year in that genre."

You can visit the interactive timeline here. 

Using the interactive feature in the timeline you can see the ebb and flow of each musical style.

For example, here is the timeline of rock music which shows the emergence of rock music in the 1950's followed by its dramatic rise in popularity in the early 1960's followed by its fragmentation into surf rock (big in the mid-1960's) classic rock, hard rock and other smaller rock categories. over the years.

On the other hand, here is the timeline of jazz music which dominated the 1940's with Big Band and Bop and gave way to the emergence of Rock music in the 1960's.

The early 1980's brought two distinctly different musical genres to popularity--HipHop/Rap and Christian. It is interesting that they both emerged at the same time when their message and lyrics could not be much further apart. This is the timeline for HipHop/Rap.

The Christian/Gospel timeline looks like this. The late 1950's saw some popularity for what was called Country or Southern gospel music but in the 1990's Contemporary Christian music took hold and carried this genre to a lot of popularity. This is the music I am most likely to be listening to today. Mercy Me, Casting Crowns, Third Day, Chris Tomlin, Francesca Battistelli, Mandisa and Matt Redman are all artists that I like.

Country music has probably displayed the most consistency in popularity since 1950.  It had its hey-day in the late 1950's but it has stood the test of time better than most genres.

What is most interesting in looking at where we are today is the broad diversity and variety of music that is popular. No single genre captures more than 20% of the total and there are more music styles than ever before. The music world is as different and diverse as what we find in our own world today. There have been a lot of changes in the world in the last 60 years and music shows how that rhythm has changed through the years.

Speaking of music, I came across another interesting data visualization graph that showed the changes in the length of songs over time.

Before the 1970's songs generally were less than 3 minutes in length. Since the mid-1980's song length has averaged about one minute longer. Why it that?

Technology might be part of the answer. Songs are meant to be heard and until the early 1970's the best way to do that was to listen to it on the radio.  Disc jockeys at radio stations spun 78rpm or 45rpm records that only could hold about a 3 minute song.

DJ Alan Freed in the 1950's
Credit:The Pop History

Songs seemed to get longer with the increased use of cassette tapes in the 1970's that replaced records at radio stations and in homes. And the introduction of 8-track tapes in automobiles let people customize their song lists. Songs got even longer as digital CD's started being introduced in the mid to late 1980's and reached their greatest length in the mid-1990's.

8-track tapes

In the digital age we live in today there is no technological limit to the length of a song. However, over the last 20 years the average song length has slowly declined. This trend seemingly can also be traced back to technology. With the proliferation of digital devices, social media and the like, attention spans have gotten shorter and shorter. People will obviously only listen to a song for so long before they want to move on. Songwriters get it and song lengths have gotten shorter.

If you don't think attention spans are short today, consider this little factoid.

According to the National Center for Biotechnology Information, at the U.S. National Library of Medicine, the average attention span of a human being has dropped from 12 seconds in 2000 to 8 seconds in 2013. This is one second less than the attention span of a goldfish. That’s right, goldfish have an attention span of 9 seconds – 1 second more than you and I.

Wednesday, July 9, 2014

By The Book

If you are going to run for President its seems that you have to write a book before you start campaigning.

George W. Bush-A Charge to Keep (1999)

Barack Obama-The Audacity of Hope (2006)

John McCain-Hard Call (2007)

Mitt Romney-No Apology (2010)

Hillary Clinton has followed the same formula as she seems to be preparing for her campaign for the Democrat nomination for President in 2016.

However, Hard Choices has turned out to be a hard sell. It also it must be hard to read. Finally, Hillary has had a hard time of it as she has done interviews promoting the book.

The Washington Post reports just how bad sales have been for Hard Choices.

If you haven't been paying attention, national sales of Clinton's book in hardcover in the first week were well below sales of her biography, Living History (though they exceeded first week sales of other political works). In week two, according to Nielsen BookScan, sales dropped 44 percent. In week three, another 46 percent. And by week four, according to numbers from the Times' Amy Chozick, down another 36 percent, selling only about 17,000 copies.
It also appears that even when people are buying the book they are not reading it.

How would anyone know?  The wonders of modern technology tells us through e-readers.  For example, every time people highlight something in a e-book on a Kindle, Amazon has a record of that.

Jordan Ellenberg, a professor of mathematics a the University of Wisconsin, has developed what he calls a "Hawking Index" which takes that data and correlates them to a page number to estimate when someone stopped reading the book.

The Washington Post took that methodology and applied it to Hard Choices and compared it to other political books.

How far are readers getting when they pick up Hard Choices?  How about page 33?  Of 656 pages. I wonder how good it is as a doorstop?

The worst part of the book for Hillary have been her interviews while promoting the books. She has made a number of comments that indicate a level of detachment and tone-deafness that is amazing.

Here are a few.

In an interview on ABC, multi-millionaire Hillary Clinton complained about being too poor to afford her multiple houses after leaving the White House.“We came out of the White House not only dead-broke, but in debt. We had no money when we got there and we struggled to piece together the resources for mortgages, for houses, for Chelsea's education. It was not easy.”
Hillary Clinton, June 9, 2014 

Despite reportedly having $100 million in personal wealth, Hillary Clinton claimed she wasn't truly well off.“But they don't see me as part of the problem because we pay ordinary income tax, unlike a lot of people who are truly well off, not to name names; and we've done it through dint of hard work.”
Hillary Clinton, June 22, 2014 

Defending her nearly quarter million dollar college speaking fees, Hillary Clinton claimed she was redistributing the money to charity.
“All of the fees have been donated to the Clinton Foundation for it to continue its life-changing and life-saving work. So it goes from a foundation at a university to another foundation.”
Hillary Clinton, July 4, 2014 

However, my favorite is the one that I saw today from an interview that she had with Der Spiegel in Germany where Hillary Clinton claimed that she and Bill Clinton were so poor after leaving the White House that they could not get a mortgage.

We are very grateful for where we are today. But if you were to go back and look at the amount of money that we owed, we couldn't even get a mortgage on a house by ourselves. In our system he had to make double what he needed in order just to pay off the debt, and then to finance a house and continue to pay for our daughter's education.” (my emphasis)
Hillary Clinton, July 8, 2014 

Did you notice what Hillary said there?

They had to make double the amount they actually needed to pay down debt, save for a downpayment on a house and save for college.

Why would they need to do that?


You know, that money that federal, state and local governments want to take from you to redistribute to others.  The same taxes that she and her fellow liberal Democrats consistently tell us are not high enough already.

I also like the way she refers to it as if this a unique element of the United States "system" that is completely foreign to the Germans and other Europeans.  As if they are not familiar with high taxes of their own.

She acts as if the Clintons have been singled out in this nefarious system that has two elements-pre-tax and after-tax- that no one else is aware of.

I doubt any hard working Americans are sympathetic.  They have to make hard choices with what is left after taxes every day.

There is one other footnote to this story that played out this week that I found interesting.

The lackluster sales of Hillary's book is well-documented as detailed above.  At the same time, Dinesh D'Souza wrote a book titled "America" that was released a week before Hard Choices.  A movie of the same title hit theaters last Friday.

Therefore, I was surprised to hear Costco announce that they were pulling America from their bookhelves for "slow sales" but keeping Hard Choices in their inventory.

I love shopping at Costco.  I know that the founders are hard-core liberals and big Obama supporters but I always thought they were smart business people as well.  I have written about Costco and their contradictions before.

As soon as I saw the report I went to Amazon to see where each book was on the Amazon Top 100 List.

Here is what I found.

Hard Choices #90

America #3

Costco took a barrage of criticism after the story broke and I am happy to report that they have rescinded their order to remove America from their shelves in the wake of what looked like a politically-motivated decision (which Costco totally denies).

As of this writing, Hard Choices is now #95 on the Amazon list. America is  #1.

Thank you, Costco!

As for Hillary, it may be time to start her vacation in the Hamptons a little earlier this year than she planned.  I heard on tv that the place that she is renting on Amagansett will cost about $250,000 for the stay.

That means she has to earn over $500,000 pre-tax to pay for it!  So unfair of our "system".

More hard work will be required. About 4 speeches should do it.

Or a small fraction of a very big book advance (a reported $14 million for Hard Choices).