Sunday, July 31, 2011

The Tipping Point

I came across an interesting study this week on Tipping Points and the Spread of Ideas.  Scientists at Rensselaer Polytechnic Institute have found that when just 10% of the population believe something totally (e.g. an unshakable belief), their belief will always be adopted by the majority of the society.

Here is an article about the study.
“When the number of committed opinion holders is below 10 percent, there is no visible progress in the spread of ideas. It would literally take the amount of time comparable to the age of the universe for this size group to reach the majority,” said SCNARC Director Boleslaw Szymanski, the Claire and Roland Schmitt Distinguished Professor at Rensselaer. “Once that number grows above 10 percent, the idea spreads like flame.” 
As an example, the ongoing events in Tunisia and Egypt appear to exhibit a similar process, according to Szymanski. “In those countries, dictators who were in power for decades were suddenly overthrown in just a few weeks.”
A big reason for the spread of beliefs is the fact that most people are conformists.  They do not want to stand out from the crowd.
“In general, people do not like to have an unpopular opinion and are always seeking to try locally to come to consensus. We set up this dynamic in each of our models,” said SCNARC Research Associate and corresponding paper author Sameet Sreenivasan. To accomplish this, each of the individuals in the models “talked” to each other about their opinion. If the listener held the same opinions as the speaker, it reinforced the listener’s belief. If the opinion was different, the listener considered it and moved on to talk to another person. If that person also held this new belief, the listener then adopted that belief.
“As agents of change start to convince more and more people, the situation begins to change,” Sreenivasan said. “People begin to question their own views at first and then completely adopt the new view to spread it even further. If the true believers just influenced their neighbors, that wouldn’t change anything within the larger system, as we saw with percentages less than 10.”
I think this is interesting research especially as it related to what is going on in the country today.  The so-called Tea Party movement is a perfect example.  This movement traces its origins from a rant by news correspondent Rick Santelli on CNBC in February, 2009.

The Washington elite seem to view the Tea Party as a distasteful fringe group.  However, the views of that group clearly influenced the 2010 vote.  It was a vote of the People, not the Tea Party alone, that changed the composition of Congress.  That vote, in turn, has had major ramifications in the Capitol.  That influence is so great that it appears right now that the debt ceiling deal that has been agreed to by both a Democratic President and Democratic Majority in the Senate will include no tax increases,  a promise of some cuts in entitlements and a potential vote of a Balance Budget Amendment.

This all would have been considered a pipe dream a year ago.  We may be in the midst of a tipping point.  Based on the RPI research this may be more a function right now of the passion of the Tea Party than their sheer numbers.  This was clearly evident in that many of the members of the Tea Party caucus on the Hill were simply not going to settle for another "kick the can down the road" Washington solution.  They were unshakable.  We have not seen that same total belief for the defenders of entitlement and government spending.

On the other hand, we see a similar trend in the issue of gay marriage.  The proponents have gained momentum compared to several years ago.  Traditional marriage advocates had the upper hand a few years ago and were successful in defining marriage as between one man and one woman in a number of states.  It will take renewed passion on the part of those opposing gay marriage to defend against this potential tipping point toward gay marriage.

What beliefs do you hold that are unshakable?  Your passion could be contagious.

UPDATE 8/2/11:  Jeffrey Lord of The American Spectator has similar thoughts in American Tipping Point.  He provides an excellent chronology of the slow spread of conservatism from the New Deal to today.
Thanks to the Tea Party movement, Conservatism is on the verge of a major victory that dwarfs the technical and actual realities of whatever the details of the resulting deficit deal passed last night. Yes, there is a long, long way to go. But the idea that America doesn't, in fact, have to be governed for eternity as a debtor nation with a mammoth, out-of-control, ever-expanding government is winning the day. It is tipping the balance with increasing decisiveness against an idea that has become so much a part of conventional wisdom that even some conservatives, startlingly including, inexplicably, the Wall Street Journal, have displayed the wobblies at the thought of confronting the Leviathan. 

He spends time setting the background on "tipping points" with reference to Malcom Gladwell's excellent book which used examples of the resurgence of Hush Puppy shoes in the mid-1990's and Paul Revere's famous ride to show how the tipping point is reached.

America -- and the eternally Big Government, tax and spend ideas of the American Left -- will never be seen the same way again. Which is precisely why the Left is writhing and foaming as this goes to Internet print. 
The Tea Party is the new Hush Puppy. They are, to use a Gladwell example, Paul Revere. The message has been delivered with maximum impact. The revolution is here.
A new American Tipping Point has arrived.

Saturday, July 30, 2011

Time For A Hail Harry?

The House passed the Boehner bill debt ceiling bill last night and it took Senate Majority Leader Harry Reid and 58 other Senators less than an hour to table the bill.

What next?  We are now 3 days from reaching the debt limit that would effectively mean that over 40% of what the federal government spends money on will stop.

It is unfortunate it has come to this because if you look at this objectively there should be a clear path to an agreement.  Failure to put a deal together should rest squarely on the shoulders of President Obama.  He simply did nothing to lead.  He swore an oath to his country not to next year's election.

These should have been the goals and how a true leader would have worked toward a solution..

1. Increase the debt limit and do what was necessary to avoid a debt downgrade

  • This should mean that the deficit reduction package should have been at least $5 trillion over the next decade.  Did we ever hear the President forcefully make this argument?  He was too busy talking about accelerated depreciation on corporate jets.  This tax provision amounts to about $300 million dollars a year out of a $1.5 trillion deficit.  The bottom line is that he wasted his pulpit talking about frivolous points that did nothing to move the country to a solution.  He seems conditioned to be a divider rather than a uniter.
2. Put all the Bush tax cuts (now the Obama tax cuts) on the table.
  • As the law stands now these tax cuts expire at the end of next year.  If they expire, they raise revenue of approximately $3.6 trillion over the next 10 years according to the CBO.  About 80% of these tax benefits go to taxpayers earning less than $250,000 per year.  20%, or $720 billion, go to the wealthy. 
  •  If President Obama believes so strongly in deficit reduction and in protecting Social Security, Medicare, welfare, green jobs and the life, why did he not start from the premise that current law is going to solve $3.6 trillion of the problem.? He could have then promoted a true "balanced" approach for $7.2 trillion in deficit reduction and negotiated from there.  
  • If he had done this he would have given himself the opportunity to get his tax increase on the wealthy and also given the Republicans room to argue they did not increase taxes. The final negotiation would have actually resulted in a tax decrease compared to current law.  Even better, the Bush/Obama tax cuts for those making less than $250,000 would have been made permanent.  In addition, if President Obama really believed in the principle of shared sacrifice any tax increase should have been across the board.  Considering that the top 10% of wage earners pay 70% of the tax burden, 70% of an across the board tax increase would fall on the rich anyway.  The top 1% pays 38% and the top 5% pays 59%.  The bottom 50% bear less than 3%.

3. Any final deficit reduction deal should be composed of 80-85% spending cuts at a minimum.

  • There have been a number of academic studies on the history of successful efforts to correct large fiscal imbalances like we have now.  This Goldman Sachs Economics Paper is an example.  The main findings are that in every major fiscal correction in the OECD since 1975, decisive budgetary adjustments that focused on reducing government expenditures were successful in correcting fiscal imbalances, boosting growth and resultant bond and equity market out performance.  Tax increases typically failed to correct the problem and also damaged growth.
  • President Obama should have kept this research in mind as he brokered a final deal.  If you assume that what he really wanted was the $720 billion from the rich then he should have been willing to be agreeable to $4 trillion in spending reductions for a $4.7 trillion package. This would be an 85% spending cuts, 15% tax increase package that would be right on the money based on the empirical research.
  • To make this even more palatable to Republicans, the tax increase portion of the package could have been made contingent by President Obama on the first half of the spending cuts taking place.  Thus, the current tax rates for higher incomes would actually have been extended compared to current law.
Why even bring up these what ifs?  All of this does not matter right now.  I agree.  It does not matter except as a lesson on choosing our leaders. Many voters do not think that it matters who we send to Washington.   I have tried to show above that this could have played out far differently if we had a real leader.

The bottom line is that I don't think I have ever seen poorer leadership or negotiation skills than has been exhibited by President Obama in this entire episode.  Every American is paying the price for his weak resume before assuming the Presidency.  He clearly is out of his element when rhetoric no longer works and it is required you work with reality.

It is now Senator Reid's turn.  It is time for a Hail Harry.  He needs to be able to do the equivalent of a 60 yard heave into the end zone with seconds on the clock to get 60 votes in the Senate.   Give credit to Speaker Boehner for getting the ball up the field for a shot at the end zone.  Give no credit to the starting QB- Obama- who benched himself barely into the game.

Thursday, July 28, 2011

Deficits and Debt=Downgrade

The Wall Street Journal has an excellent review of how we got to the brink of a debt downgrade in "The Road to a Downgrade". 

Two key charts tell a big part of the story.  This chart shows spending as a % of GDP.  There were modest increases in the Bush Administration after 9/11 for the Iraq and Afghanistan wars and the Medicare Drug benefit but spending was still less than 20% of GDP.  Spending exploded with Obama-Pelosi-Reid.

The second chart shows a number I have written about previously.  The shocking fact that 66% of all spending by the federal government is in the form of payments to individuals.  This compares to only 28% in 1965.  2/3 of the total activity of the federal government today is to take money from one person and give it to someone else.  This has become the principal role of the federal government.

Who is getting all this money?  Here are the number of people receiving money and benefits in each of the major entitlement programs as detailed by The Wall Street Journal.

  • 52 million on Social Security
  • 50.5 million on Medicaid
  • 46.5 million on Medicare
  • 44.6 million on food stamps
  • 24 million receive the earned income tax credit
  • 7.5 million on unemployment benefits
  • 5 million on Social Security Disability 
By comparison, how many taxpayers pay federal income taxes that have incomes over $75,000?  This was not in the Journal story but I looked it up.  Compare the numbers of those receiving checks and those writing checks.

Only 29.5 million.  This group of taxpayers is paying 83.4% of the total income taxes collected.

Over $50,000?

Only 47 million.  92.4% of all income taxes are paid by this group.

For more perspective read my previous post, "The Wagon Is Getting Heavy"

There Is Still Hope...Millennials Ahead Of The Curve

Our nation's future will ultimately depend on the generational cohort generally born between the early 1980's to the late 1990's.  They are referred to as Gen Y's or the Millennial generation.  In other words, this is the group of young people under the age of 30 all the way down to the middle school ages right now.  Right now they are on the hook to bail us out with the future taxes they will pay to pay for the entitlement system that has been built over the last two generations.  However, if there voice is heard loud enough in 2012 they could become a major force in shaping the future agenda on taxes and spending.
Michael Barone is one of the most astute political observers in America.  I first became acquainted with him in the early 1980's when I was introduced to "The Almanac of American Politics" which he authors every two years with the change in each Congress.  It is a must-have for any political junkie.

He has an interesting article in Real Clear Politics which looks at recent polling data on the fairly significant shift in the political identification of white Millennials.  This is a group that voted 66-32 for Obama in 2008.  At that time they also identified themselves as Democrats over Republicans by a 60-32 margin.

However, white millennials have been moving away from President Obama and the Democrats in droves since that time as Barone explains.
The Democratic edge in party identification among white Millennials dropped from 7 points in 2008 to 3 points in 2009 to a 1-point Republican edge in 2010 and an 11-point Republican lead in 2011.
An 18 point shift in party identification in 3 short years is a seismic shift!

There have been shifts of similar magnitude among whites who are low-income, who have no more than a high school education, and who live in the Midwest.It's not hard to come up with plausible reasons for these changes.

Obama campaigned as the champion of "hope and change" in 2008 and assured crowds of young people that "We are the change we are seeking."But the change they have seen is anything but hopeful. Youth unemployment rates have been at historic highs. Young people have seen their college degrees produce little in the way of job offers.They are choosing more often to keep living with their parents. From the Obama Democrats they have gotten only a promise that "children" up to age 26 can stay on Mommy and Daddy's health insurance plans.

In the wake of the 2008 election, I argued that there was a tension between the way Millennials lived their lives -- creating their own iPod playlists, designing their own Facebook pages -- and the one-size-fits-all, industrial-era welfare-state policies of the Obama Democrats.
Instead of allowing Millennials space in which they can choose their own futures, the Obama Democrats' policies have produced a low-growth economy in which their alternatives are limited and they are forced to make do with what they can scrounge.
There is little evidence that the Millennials believe their plight can be relieved and opportunities opened up by slapping higher taxes on Bill Gates and Steve Jobs or by restricting deductions for corporate jets, as Barack Obama urged in his Monday night speech calling for tax increases (although Senate Democrats gave up on them) in debt-ceiling legislation.
The intended purpose of legislation like the stimulus package and Obamacare was to improve the situations of those least able to take care of themselves -- the young, the less educated, the low-skilled. But it is just such groups that, the Pew Research Center numbers show, have been moving away from the president's party. An instructive achievement, no? 
Another article in The Wall Street Journal by Karlyn Bowman and Andrew Rugg, "The GOP's Secret Weapon: Flower Power"  reviews the data that shows that the Baby Boomer generation continues to get more conservative as they get older.

The shifting views of the liberal and libertine '60s generation aren't new. It started becoming more conservative some 20 years ago.
Consider a 1986 poll for Time Magazine conducted by the firm Yankelovich Clancy Shulman. It reported that 64% of 30-40 year olds said their political views had become more conservative since the 1960s, while 27% said they were less so. Forty-one percent described themselves as conservative, yet only 28% said they were conservative in the '60s and '70s. Of those who had moved rightward, the top explanation they gave for their shift was assuming family responsibilities. More of those 30-40 years olds still described themselves as Democrats (38%) than Republicans (24%). But the trend, according to the pollster, was in the Republican direction.
The University of Michigan's American National Election Study provides additional perspective. In 1972, 51% of eligible voters in the cohort born between 1943 and 1958—the front end of the baby boom—called themselves Democrats, and 29% identified as Republicans. In 2008, those responses were 45% Democrat and 48% Republican.
The ideological identification data from the surveys are even more striking than party affiliation. Thirty percent of today's near olds called themselves liberals in 1972. In 2008, 12% did. The proportion calling themselves conservative rose to 46% in 2008 from 21% in 1972, according to the survey.
A study conducted by the National Opinion Research Center also shows a substantial increase (18 points) between 1974 and 2010 in conservative identification for the 55-64 (near old) cohort. They also moved 11 points in the Republican direction during that period.
This all reminds me of a famous quote from Winston Churchill when he commented,
"If you're not a liberal at twenty your have no heart, if you're not a conservative at forty you have no brain."
The millennials appear to be a little ahead of schedule.  There is still hope...

Wednesday, July 27, 2011

Live To Fight Again

Tomorrow is a big day for the House Republicans.  They control the battle.  However, they must remember that they are in a war.  When you are in a war the most important thing you can do is live to fight another day.

The towering debt that we have accumulated did not suddenly appear.  The spending disease that caused it will not disappear easily.  Especially when the Democrats in the Senate and the President are still not willing to confront the problem.  Look no further than the President.  He totally ingnored his own debt commission recommendations-the Simpson-Bowles Commission.  He reneged on a big deal with Boehner.  He rejected a compromise deal that Boehner and Senator Reid had worked out last weekend.  It makes you wonder if the President just wants to take us over the cliff.  This is not the way Presidents are supposed to lead.
The Republicans have won several battles already.  It is now accepted that spending cuts must be at least as large as any increase in the debt limit.   In addition, all the plans on the table right now have no revenue increases as part of the deficit.  These are both big wins for the House Republicans that were once thought unattainable less than a year ago.  This was only made possible by the People (and the Tea Party) and their votes in last November's election

They need to win one more small battle and take a breather.  I know it is not the frontal assault on the budget deficit with all the heavy guns that many want (including me).   However, it is a battle they have to win.  They cannot afford to die on the battlefield when so much more needs to be done.  Live to fight another day.  It will be necessary later this year, in 2012 and many years into the future if we are to dig our way out of this hole.

Why does this matter?  If the House Republicans pass the Boehner bill tomorrow then the pressure and responsibility are transferred to the Senate Democrats and President Obama to act.  If they do not pass it, they will  be blamed for everything that follows.  This is far from the truth but it is the narrative that the President wants to use and the mainstream media is all too happy to repeat it.

If they pass the bill. it will mean that that the House has once again put a plan on the table and put votes behind it.  For those counting it will be the 3rd time they have passed a bill that addresses the deficit problem. They passed the Ryan budget bill earlier this year that would have reduced spending by over $6 trillion over the next decade.  They passed a Cut and Cap bill that would have reduced spending by a similar amount. The President and the Senate have never even put a plan on the table!

It is time for the President and the Senate to stand up and be counted.  The Boehner plan is the absolute bare minimum that is needed in spending cuts. It is actually trillions below the bare minimum. If the Democrats can't agree to these reasonable changes, it is clear they won't agree with anything.  If they refuse to raise the debt limit over these small cuts then there is little hope.   It is hard to see how we can avoid a downgrade in our debt as it is.  This should be the most important priority for everyone in Washington, most particularly President Obama.  When the history of this era is written no one is going to remember who was in Congress if our debt is downgraded.  It will be written of as the Obama downgrade.  It will forever be his legacy.

I am not one that believes that we can fail to raise the debt limit and somehow get by.  The people who spew this scenario in blogs and television do not know what they are talking about.  This country is borrowing over 40 cents of every dollar it spends.  The argument is made that we can pay Social Security, Medicare and military pay.  That may be right but who is going to send out the checks if we have laid off everyone in the federal government?  How is anyone going to travel if there are no air traffic controllers?  Who is going to guard the prisons?  Who is going to investigate federal crimes if there is no FBI?  Let's get real.  You can't cut over 40% out of any budget without drastic effects.

Pass the Boehner bill and the House Republicans will live to fight again.  The war has barely started.

Sunday, July 24, 2011

The Speech John Boehner Should Make On Monday

This week marks a critical juncture in the history of the United States of America. We have the opportunity to confront our unsustainable federal deficits and the legacy of debt we are leaving for future generations. We also bear the burden if we fail to act for the long term health of our nation. I firmly believe that this is the time and place to take the necessary steps to put our fiscal future on a sound path. To that end, the House of Representatives has led the effort to craft a way forward. Let me provide a little recent history.

We passed a 2012 budget in April spearheaded by Budget Chairman Ryan that would have reduced our deficit by over $4 trillion in the next 10 years.

We passed a Cut and Cap plan that would have reduced our deficit by almost $6 trillion in the next 10 years.

We passed a Balanced Budget Amendment to the U.S. Constitution that would have assured we would be constitutionally required to live within our means.

Let me also provide some historical context to these actions.

Article I, Section 7 of the U.S. Constitution explicitly places the power of the purse in the hands of the House of Representatives. Let me read it for you.

"All bills for raising revenues shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on any other bills."

I think that is pretty clear, don't you?  President Obama may not like it.  Senator Reid might like it.  However, that is our Constitution.  The best judgment of George Washington, Thomas Jefferson, James Madison, Alexander Hamilton and our other Founding Fathers was that the power of the purse should be vested with the House of Representatives.  They believed that the representatives that are closest to the People and have the most accountability to the People, due to the requirement that we stand for election every two years, should take the lead on matters of the purse.  

Less than 12 months ago we had an election that saw the House of Representatives have the largest political party change in decades.   The Representatives who came to Washington were given a clear directive by their constituents to rein in federal spending and reduce the deficit spending.  The  Republican position on taxes and spending was well known to the voters.  We did not say one thing during the election and come to Washington and start doing something else.  We have been very consistent in our insistence that it is time to get our financial house in order.

While we have been been introducing and passing concrete plans and budgets to this end we have seen nothing from either the President of the Senate.  In fact, President Obama's proposed budget for 2012 was voted down 97-0 in the Senate.  He could not even garner one vote from his own party.  

As for the Senate, they have not introduced or put a budget on the table for over 800 days.  We should also not forget that President Obama and the Democrats controlled both the executive and legislative branches of government until January of last year.  They could do anything they wanted.  This debt ceiling limit did not just suddenly appear.  In fact, President Obama signed the current public debt limit into law in February, 2010 raising the limit from $12.4 trillion to the current $14.3 trillion.  They had the power to set the limit wherever they wanted.  They also had the power to do anything they wanted through December of this past year.   The People took that power away just as the Founding Fathers envisioned would happen when the general opinion was that the Federal Government was not serving the interests of the People.

Despite the fact that we have been the only branch of this government trying to lead, we have been castigated by President Obama.  He asked in his press conference on Friday  "Can we say yes to anything".   Yes we can.  We are on record of saying yes to many things as our votes show.  President Obama just does not like the answer when we say "yes" to fiscal responsibility.

Despite the fact that we put everything on the table with our debate and open votes in full view of the People in the House, I also agreed to meet with President Obama and Senate leaders privately to try to broker a deal.  I did this with deference to President Obama who wanted it this way.  I would have much preferred that he put his full plan on the table for all to consider.  He did not want to do this.  Therefore, I acceded to his wishes in hopes that we could broker a "grand bargain".   

I did everything in my power to compromise with the President.  Yes, I even agreed to some revenue increases in order to build consensus and show our commitment to the future of our country.  However, President Obama seemed incapable of closing the deal.  In fact, he reneged at the last minute on the important agreement that we had made on revenues.  When we had come so far to reach an agreement with President Obama it was bitterly disappointing. 

I am also aware that in a little over a year my fellow members of the House of Representatives will once again stand in front of the voters.  For that reason we are not just considering last year's vote but what is truly best for this country.  We are looking at this with clear eyes and a full heart to do what is necessary at this point in our history. 

This leads us to today.  We have worked over the weekend with our Senate colleagues to craft a plan that will assure that we meet our financial obligations next week and sets a path to return our country to  sound financial principles.  Due to the late hour, we determined we had to move forward consistent with our constitutional obligations without the President.  The House of Representatives will meet our obligations both constitutionally and financially.  That I can assure you.  I trust that the Senate will do the same.

The President will then have to exercise his constitutional responsibilities.  At that point, history will be the judge.  If President Obama vetoes the legislation that comes to him and we don't meet our obligations, history will only remember him.  There are many advantages to being President but you also stand in history as the symbol of that era- good or bad. That is the way history is written-fair or unfair.  John Boehner, Eric Cantor, Nancy Pelosi and Harry Reid will be long forgotten when we look at this consequential time in our history.  President Obama will not.  His legacy is yet to be determined.  However, if he vetoes this legislation he will always be remembered as the President who was in office when we failed to meet our obligations.  

We have provided the President a very reasonable way to avoid that from occurring.  Only he can determine how history will be written about the Obama era.  May God provide the President the inner strength to make the right decision.  Any may God continue to bless the United States of America.

Postscript:  These are serious and tough times.  When I need to keep myself upbeat about our abilities in this country to do the right thing I like to listen to Lee Greenwood's "God Bless The USA".  Here are the links to 3 versions on YouTube for a little motivation to start the week.

 The original music video God Bless the USA by Lee Greenwood 

God Bless the USA performed live by Lee Greenwood 

The most viewed God Bless the USA video on YouTube

Saturday, July 23, 2011

China Cell Phone Market

I thought this was an interesting graphic in The Wall Street Journal this week.

It gives you some perspective on just how big China is.  There were 116 million cellphones sold in China in the last 3 months.  That compares to 43 million in the United States.  However, about half of the 43 million were smartphones in the U.S. while only about 12% were smartphones in China.

A big reason is that the cost of an iPhone in China will consume about 50% of average annual household income compared to a mere 1% in the United States.  Yet another reason that we are blessed to live in The United States of America.  If only we had some elected officials who could find a way to balance the budget.  They have trillions of dollars at their disposal and still can't do it without more.

You might want to check out the full story on Apple's designs on the Chinese market. 

Another interesting is this one from the AP which reports that entire Apple stores are being faked in China.

A final piece of Apple news I saw this week is that Apple is on track to sell more iPhones this year than in all previous years (2007, 2008, 2009 and 2010) combined-an estimated 108 million phones!

Getting Out Of The Box

President Obama said yesterday that the House Republicans are in a box.  I agree.  I have argued in this blog for a long time the errors in their debt ceiling strategy.  They are like a running back in a football game that has broken through the defensive line and secondary and is 10 yards away from any defender and 10 yards from the end zone...and fumbles the ball.

Of course, President Obama has not boxed himself in because he never even got close to a box.  He never put anything on the table.  It is tough to box yourself when you never get close to the box.  The House Republicans should never have let him get away with that.

There is a meeting today in The White House beginning at 10am.  It is unbelievable that Washington can be this dysfunctional that with a debt ceiling deadline looming in a little over a week the House and Senate are both in recess for the weekend.  And all of this is left to some back room dealings.

It is what it is.  Negotiations like this are like the battlefield in a war.  It is ever changing.  It does no good to dwell on "what ifs".  It is all about "what now?".  It is also takes a will to say "why not!".  This still can get done and it still can be a win for the American People.

What can be done by the House Republicans right now?

I don't think they have any way out of agreeing to a revenue increase in form if not in substance.  I have stated that from the beginning.  It is all about perception as I have said before.  Taking the position they did made them look unreasonable in the eyes of most Americans.   They also failed in not understanding the trade-offs.

Republicans would like to see meaningful spending reductions.  At the end of the day what would most people consider a better deal? $1 trillion in spending cuts with no tax increases or $5 trillion in cuts with $1 trillion in spending.

My suggestions for the House Republicans in dealing with President Obama.

  • Offer to raise revenues $1 dollar for every $5 dollars in spending cuts President Obama offers in public.  No revenue increase could take effect until at least half of the spending cuts were in place.  The revenue increase would be accomplished by a tax reform package that would lower the marginal rates and broaden the tax base.  Tax reform would not become effective until half the spending cuts were in place.  If the tax reform measure did not increase revenues to at least 18.5% of GDP by the time the $6 in spending cuts were fully implemented, rates could be raised across the board to meet this revenue target.

  • If this fails with the President to produce an agreement, challenge the Senate to pass a spending cut package equal to 5/6 of the debt ceiling increase that is desired.  The House will then pass a tax increase equal to 1/6 of the debt ceiling increase.  This also is the way the Constitution is supposed to work.  
These are quick thoughts off the top of my head.  There have to be a lot more good ideas keeping several key principles in mind.  They should also be clearly laid out to the American people as what the Republicans have offered as compromises to the President to get to a deal.

  1. There must be deficit reduction equal to or greater than any debt ceiling increase.  (The House Republicans got this right).
  2. Revenue increases will be part of the solution but only if spending cuts are in the bank first.
  3. There must be $5 dollars in spending cuts for every $1 in revenue increase
  4. Any revenue increases should broaden the tax base and lower marginal rates 
  It is not too late to pick up the fumble.  The ball is still sitting on the field waiting to be picked up.

Thursday, July 21, 2011

CNN Poll Shows Republicans Can Put Democrats Permanently On The Run

CNN released a poll today that show that the Republicans can put the Democrats on the run permanently if they adopt "The Reasonable Budget" that I have proposed.  The People are solidly behind the policies that the Republicans are trying to achieve.  However, they think that Republicans have been unyielding.  This is exactly what I pointed out in my post Politics Is Perception

As I have stated before, I agree with all the objectives of Cut, Cap and Balance and this poll indicates that the People do well.   The Republicans have just positioned this poorly and their PR has failed them.  There is hardly a scintilla of difference in the policy result between my Reasonable Budget and Cut, Cap and Balance.  As this poll shows, the policy is right they just have to tweak the packaging.  A slight change in the package right now could result in a change in perception and a victory on the policy.

A few of the interesting poll results.

  • 36% OPPOSE raising the debt ceiling even if Congress takes action to reduce spending!!
  • 45% FAVOR raising the debt ceiling ONLY IF Congress takes action to reduce the amount the government owes by trillions of dollars
  • IN SUMMARY, 81% are firmly behind very dramatic action for change in Washington's deficit spending.

  • 64% would like to see a plan that includes a combination of spending cuts and tax increases on higher-income Americans and some businesses.  

  • 52% believe that President Obama has acted responsibly and only 33% think that Republicans in Congress have acted responsibly.  Moreover, if the debt ceiling is not raised more would hold the Republicans responsible (51%) than would President Obama (30%).

  • 66% would favor an increase in the debt ceiling in return for spending cuts of $2-$4 billion in spending cuts and raising taxes on some businesses and higher-income Americans.
  • HOWEVER, 66% also favor raising the debt ceiling ONLY if a balanced budget amendment were passed by both Houses of Congress and substantial spending cuts and caps on future spending.  (No taxes were mentioned at all in this poll question).

  • 74% FAVOR a constitutional amendment to require a balanced federal budget.

  • 60% believe that it is necessary to pass a Constitutional amendment requiring a balanced federal budget.
The bottom line here is that if the Republicans would make just a few cosmetic changes in the Cut, Cap and Balance bill it could be a total game changer.  It not only could clear the way for a transformative budget and debt ceiling deal but it could set the stage for the Republicans to become the ruling party for a generation.

The most striking thing in the poll data is looking at the underlying demographic data.  As Ed Morrissey in Hot Air points out.  The highlighted portions are particularly interesting.
When one scrolls down to the crosstab sections of the raw data, the consensus becomes very, very clear.  The CCB/BBA approach wins majorities in every single demographic — including self-described liberals.  Sixty-three percent of Democrats back the House bill.  The least supportive age demographic is 50-64YOs at 62/37; the least supportive regional demographic is the Midwest at 61/39.  Even those who express opposition to the Tea Party supports it 53/47.
In other words, it’s a clean sweep.  Simply put, there is no political demographic at all where the CCB/BBA doesn’t get majority support.  The BBA on its own does even better.  It gets 3-1 support (74/24), and except for those Tea Party opponents (56%) and self-professed liberals (61/37), doesn’t get below 70% support in any demographic.
Guess what doesn’t get much support?  The McConnell plan.  Respondents rejected the idea of letting Obama raise the debt ceiling on his own, 34/65.  Not one single demographic supports the idea, not even Democrats (40/60) or liberals (34/65).
Where should the House Republicans go from here?

The Senate will vote on Cut, Cap and Balance tomorrow.  If it passes tomorrow, it is game over for President Obama.  If he vetoes the bill he will risk bearing almost all the responsibility for the failure to raise the debt ceiling.   It is almost unfathomable that he would take that risk.

If Cut, Cap and Balance fails to pass in the Senate as is predicted, I believe the Republicans in the House should come back immediately for another vote and drop the Balanced Budget Amendment section (still promising to make it a major issue in the 2012 election.)  They should also agree to the contingent tax increase in The Reasonable Budget, if needed, once spending is cut to the 19.9% level in the Cut section with revenues limited to no more than 18% of GDP.  If we can't get the economy generating more jobs and taxes with the current tax code structure to get back to the 18% GDP level in the next 5 years or so, we have much bigger problems.

Making these small changes positions the Republicans as the true adults in the room.  They are also giving nothing more than the sleeves in their vest to get where they want to go. However, they come across as reasonable and willing to compromise for the good of the country.

Doing these simple things would have broad bi-partisan support of THE PEOPLE for something very close to what the Republicans have already passed in the House based on the poll data.


Wednesday, July 20, 2011

The Power Of The People Over The Purse

There was a lot of excitement today over the possibility that the "Gang of Six" in the U.S. Senate may be close to putting a package together that could garner bi-partisan support.  In the meantime, the House passed the Cut, Cap and Balance bill.

The Senate package reportedly is a combination of spending cuts and revenue increases that would result in $3.75 trillion in budget savings over a decade.  Included in this number is about $1.2 trillion in new revenues.

I have made my views known that I am not opposed to revenue increases as part of a "grand bargain". However, I am adamantly of the view that they should not take effect until the money is in the bank from any spending cuts.  Spending cuts should also be at least 5-6 times as large as any revenue increases. 

However, the biggest problem I have with any "grand bargain" involving tax increases that originates in the Senate is that it is UNCONSTITUTIONAL.  Due to this inconvenient fact, I think the House has additional leverage they can deploy in any final agreement.

Article I, Section 7 of the U.S. Constitution reads,

"All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on any other bills."
That could not be simpler or more straightforward.

What does this mean right now?  I don't know how any proposal that attempts to raise revenue as part of a debt ceiling deal can proceed unless it is first introduced and passed in the House.  I think that the House Republicans should immediately start talking about the Constitution to counter balance the Senate talk.  If there is a deal in the making they need to be at the table.  This is the Constitution we are talking about.

This power over the purse was given to the House of Representatives very purposely by our Founding Fathers.  Consider the thoughts of James Madison in Federalist Paper 58 as translated in The Original Argument.
Forgetting for the moment the equal authority between the Houses of Congress (except on money bills)-since the House of Representatives will not only have a greater number of members but will also be supported by the more powerful states-it will no doubt have an advantage over the Senate in any endurance contest between the two, especially when it is speaking and acting upon the known opinion of the majority of the People.
Of course, that opinion is reinforced every two years.  Last year's election made the opinion of the people pretty well known on what they wanted done regarding fiscal issues.
The House of Representatives will be aware of these advantages, as well as the fact that they would be supported by right, by reason, and by the Constitution, just as the Senate would be aware of the fact that it would be contending with all of these powerful forces. 
That is very powerful language but it gets even better.

The House of Representatives are also the only ones that can provide the necessary financial resources for the operations of the government.  In a word, they hold the purse...

In fact, this power over the purse may be regarded as the most effective weapon that the People's Representatives themselves can ever be given by a Constitution in order to obtain a redress of any grievance, and for carrying out every good and beneficial plan. 

I have written previously that I would not have approached the debt ceiling vote as was done today.  My end goals were the same but I think a much better job could have been done on the positioning and perception of the Republican plan in the House.

However, from where the House Republicans are right now I would come out strong tomorrow quoting the Constitution and James Madison.  President Obama may not like it.  The Senate may not like it.  However, the Constitution gives all the power to the House Republicans.  It can be very effective if they use it responsibly.  If they do not, the Founding Fathers made sure the opinion of the majority of the People will have another chance to be heard next year.

Monday, July 18, 2011

If Only Those Republicans Were Not So Partisan!

Over the next week or so you are sure to hear about the excessive partisanship of the Republicans in not working more cooperatively with President Obama on the debt limit increase.

However, on the debt ceiling limit increase vote in 2006 not one Democrat voted for an increase in the debt limit when President Bush was in office.

Here is the roll call vote.  Senator Barack Obama was one of the Democrats to vote No.  He now says that was a mistake.  How do we know he is not making a mistake right now?

It is going to be a very interesting week.  Kudos to Senator Tom Coburn for his proposal today that put a blueprint on the table that would cut $9 trillion from the deficit over the next 10 years.  This is made up of about $8 trillion in spending restraint and $1trillion in new revenue from overhauling the tax code. That is over double the deficit reduction in the Ryan plan.  However, federal spending is currently projected to exceed $50 trillion over the next 10 years.  Therefore, a $8 trillion cut is only about an 16% overall reduction in projected spending.  84% of federal spending would still remain.  Would this be painful?  Absolutely. However, how many families and businesses in this country have had to deal with far bigger cuts in their standard of living from time to time?  Ryan's plan would reduce spending by about 10%. Is there any budget that cannot withstand a 10% cut if push comes to shove?

The CBO projects that we will add about $9 trillion in additional debt over the next 10 years on top of the $14 trillion we already owe if we continue on the current path.  If we don't take action, where is the money going to come from to finance this deficit spending?  China?  Japan?  Europe?  Printing Press?  That is the real problem.  At some point, the money dries up.  At that point it is not going to be pretty for anyone.

Sunday, July 17, 2011

Politics Is Perception

The Republicans in the House appear to be ready to bring the Cut, Cap and Balance proposal to the floor for a vote next week.  I believe this is a mistake.  It is not that I disagree with any of its objectives.  However, politics is about perception.  Proceeding with this plan the way it is packaged is going to allow the Democrats and the mainstream media to feed the narrative that Republicans are unreasonable ideologues.

Cut, Cap and Balance is relatively straightforward.  The proposal would require immediate cuts in the 2012 budget of $111 billion.  It would set a statutory, enforceable cap to align federal spending with average revenues of 18%.  Finally, it would require passage of a Balanced Budget Amendment to the U.S. Constitution that would then go the states for ratification.

In return for the passage of Cut, Cap and Balance the Debt Ceiling Limit would be increased by $2.4 trillion.

If you read my previous post, "A Reasonable, Balanced Plan To Balance The Budget", there is hardly a scintilla of difference in the policy result between my suggestion and Cut, Cap and Balance.  There is a significant difference in how it would be perceived.  Perception is reality in politics.

For example, let's look at the Cut.  The Cut plan will talk about $111 billion in cuts to the 2012 budget.  My plan would state that we are only asking for about 4% in reductions from President Obama's 2012 budget request.  Get off the dollar amounts and talk about percentages!  What budget cannot withstand a 4% cut?  That seems reasonable, $111 billion or $161 billion, that is a lot of money in anyone's mind until you compare it to the $3.7 trillion in spending that is in President Obama's 2010 budget request.  It is about perception.

I work toward a spending cap of 19% of GDP in my Reasonable Budget.  As I stated, I would set the glide path at 5 years in my proposal but I would give the Democrats the opportunity to extend it to 10 years.  Again, showing a reasonable approach and a willingness to compromise with the Democrats.  In addition, the Reasonable Budget sets up across the board spending cuts unless a better plan can be agreed to before the trigger dates.  President Obama has asked for shared sacrifice.  The Reasonable Budget says we heard you.  Defense, special interest subsidies and everything else would be on the chopping block equally.  There are no sacred cows.  It is about perception.

Finally, the Reasonable Budget puts potential tax increases in the mix.  They can be raised once we reach the spending targets if the current tax code is not providing sufficient revenues.  It is also reality that if we don't create more taxpayers, we will have no choice but to raise taxes anyway.  I would rather have a line in the sand as to what that amount is as a % of GDP.  However, just as the President stated, we have to eat our peas first.  Spending cuts have to come first but tax increases are not precluded if we need them.  This would be seen as a major concession by Republicans and would put the Democrats on the defensive.

However, if our economy comes back and we create more taxpayers I doubt it would ever be triggered.  If the Democrats want to put their favorite tax increases on the list right now for possible increase in the out years, I would let them do it.  However, the spending cuts much come first.  Tax increases fill the gap when the heavy lifting is done if it is still required.

I would rather see a commitment to major tax reform that would rid the tax code of most of the preferential deductions in a revenue neutral manner..This would then allow for the lowering of both individual and corporate rates.  However, give the Democrats a chance to say they got something.  Again, it is all about perception.

I did not address the Balanced Budget Amendment in my proposal for the simple reason that I don't think it adds much right now.  It is a bridge too far.  It is unlikely that it will get the necessary 2/3 vote in the House and Senate.  Even if it did, President Obama would be even more unlikely to sign it.  What is the point of of trying to make a point?  It does not really help the Republicans bridge the issues right now.  I would take this off the table and save the issue for the 2012 elections.  Get the process started and starting making progress on the budget problem and the amendment gets a lot easier to pass in the future.

The bottom line is that the Republicans have to look at the end result rather than the process. Cut, Cap and Balance and the Reasonable Budget do the same thing.  However, the Reasonable Budget can be sold to the American people and it is totally defensible.  I don't think Cut, Cap and Balance can be marketed in the same way in the current political environment.  It is all about perception and that it what politics is all about.

Friday, July 15, 2011

A Reasonable, Balanced Plan To Balance The Budget

The debt ceiling showdown is really going to heat up this weekend.  I have written about my ideas before on the debt ceiling and the federal budget.  Here is the simple, 3-step BALANCED approach to BALANCE the budget that I have outlined before.

The federal budget deficit for the fiscal year beginning October 1, 2011 is projected to be $1.2 billion.  That is 7.4% of GDP.   I have previously written about a budget plan that would commit to reduce the budget deficit by 1% of GDP for each of the next 5 years.  This is how to get there in a 3 step plan that is balanced and reasonable and easy for the people to understand.

First, spending cuts of about $160 billion would be required in the 2012 fiscal year to meet the first year goal.  Compared to projected spending of $3.8 trillion for next year per the CBO, this would represent a cut of about 4% of total spending.  I would think that a vast majority of Americans could see this as very reasonable.  This should be the required downpayment on any budget ceiling increase.  We don't need funny money involving cuts 10 years out which we will undoubtedly get in any deal with The White House.  We need to take some cost out now. These cuts should also be specifically identified before the debt ceiling vote.

Second, there should be a further commitment to reduce the budget deficit by an additional 1% of GDP for the next 4 years.  These would automatically be triggered as across the board spending cuts (interest payments excluded) unless an alternative plan was approved by Congress before the beginning of the next fiscal year. In other words, defense, Social Security, Medicare and everything else gets cut across the board unless a better plan can gain a majority of the Congress and it can survive a potential Presidential veto.  Following this budget plan would reduce federal spending from the current level of approximately 24% of GDP to 19% of GDP in 2016.  Make no mistake, this would not be easy.  Each year's cuts would get progressively more difficult.  However, we have little choice or we face much more difficult choices later.  However, to show how reasonable I am, I would let the Democrats pick the period over which the spending cuts are phased in.  If they think 5 years is too quick, take any period up to 10 years.

Third, contingent on these spending budget goals being met, a tax increase would be triggered at the end of the fifth year if revenues are not generating at least 18% of GDP.  To put this in perspective, revenues are currently about 15% of GDP.  18% is the historical average since World War II.  I know Republicans don't like this talk but if they truly believe that the lower rates will generate greater future economic activity they are risking very little.  More taxpayers will assure that revenues will rise if we can get the government out of the way of our people.  In return, they are gaining the spending cuts that are absolutely necessary to save our Republic.  Most importantly, they position themselves as the Reasonable Party with the voters.  The Democrats get the increased revenue they say we need-guaranteed.  They just are not going to get the 20% of GDP figure they crave.  And they are not going to get anything until they eat their peas! Even if they choose a 10 year phased spending cut plan.

I have no doubt that President Obama and the Demagogue Party would attack this plan as they are sure to do with almost anything that the Republicans propose.  However, I would take this plan to the people every day of the week and let the chips fall as they may.   I would much rather be in the Reasonable Party than the Demagogue Party heading into 2012.

I know that if you read this closely you see that this plan brings spending down to 19% of GDP and assures that revenues would increase to only 18% of GDP leaving a 1% deficit.  Surely this is close enough for government work!  However, if absolutely necessary I am willing to split the remaining difference between revenues and spending if we can get there in 5 years (or 10 years for that matter).  After all, I AM REASONABLE.

Thursday, July 14, 2011

Two Lessons on Prosperity From Obama's Cousin

I came across this op-ed today by Dr. Milton Wolf in The Washington Times entitled 'German Miracle" Barack Obama doesn't see.  Wolf is actually a cousin of President Obama.  I have the feeling he may not get invited over to The While House very often.  Dr. Wolf writes,

Obamanomics has produced the weakest, most anemic recovery since the 1930s, when another generation’s big-government planners turned their great recession into the Great Depression. To be fair, President George W. Bush certainly did not give the best economic handoff - he too was addicted to spending - but to be clear, President Obama has unarguably fumbled the ball. He has, to borrow his own phrase, put his “boot on the neck” of American businesses with his increased taxes and regulatory burden; he has grown government with his wildly increased spending and outright take-overs; and he has weakened the dollar with his “quantitative easing” printing press.
The devastation caused by Obamanomics is now undeniable. According to Investors Business Daily, 2 million net private-sector jobs have been lost; unemployment has increased by 1.5 percentage points; long-term unemployment is the worst ever on record; the dollar is 12 percent weaker; the number of Americans on food stamps has increased by 37 percent; the Misery Index (unemployment plus inflation) has increased by 62 percent; and the national debt has exploded by an alarming 40 percent. Mr. Obama is on pace to saddle America with more job-killing debt than all the first 43 presidents - combined.
It didn’t have to be this way but Mr. Obama is trapped in the mistaken belief that America’s problems can only be solved by growing our government ever larger. When all you have is a hammer, everything looks like a nail. 
Dr. Wolf points to the instructive lesson of Germany after World War II for a proven path forward that we could learn from.

In the aftermath of World War II, a defeated and devastated Germany was under American occupation, controlled by Keynesian economists including the American price-control czar himself,John Kenneth Galbraith. The American overseers, as well as Germany’s new Social Democratic Party, favored maintaining the Nazi’s top-down, government-directed economy with its price and wage controls and restrictive regulations, which, unsurprisingly, created economic stagnation and crippling shortages of basic goods.
One bold German economist who understood the power of freedom dared to disagree. In a swift and masterful move on June 20, 1948 - a Sunday - economic director Ludwig Erhard freed the German market (and the people) by abolishing most of the restrictive price controls and other burdensome governmental regulations while he simultaneously solidified monetary policy with the introduction of the deutsche mark. The American Keynesians and German socialists were aghast but Erhard was quickly proven right.
Germany’s economy responded with a roar heard round the world. Within weeks, businesses sparked back to life and crippling shortages were eliminated. Within a year, the war-torn western zones united to become West Germany which quickly and overwhelmingly outpaced the Soviet-controlled East Germany. Within a decade, West Germany’s economy doubled, leaving behind Allied “winners” of the war, France and England, despite the Marshall Plan largesse these nations enjoyed. Within a half-century, the Berlin Wall crumbled and with it, the Soviet’s Evil Empire. This is the story of the “Wirtschaftswunder,” the German economic miracle.

While checking Dr. Wolf out I found that he also writes a blog.  I thought his blog on "How the Free Market Spreads the Wealth ) and Gives Us Cool Things Like iPhones) was particularly on point considering the class warfare rhetoric that is so popular today.  Another lesson worth considering from President Obama's cousin.
When we say free market, what we really mean is free people. At the core of the free market is voluntary, rather than compulsory, cooperation. For a capitalist to be successful -- for you to be successful -- you must first please someone else. You must meet someone else's needs. And therein is its genius, its elegant simplicity. 

[C]apitalism, paradoxically which starts with self-interest but is guided by freedom, maximizes social welfare.
No human construct will ever achieve perfection but the free market is not only the most effective and efficient method of allocating our limited resources in a manner that maximizes a society's prosperity but it is also the most compassionate. It creates a voluntary, rather than forced, redistribution of wealth.
Check out this video that says (and shows) it all.  "Would You Give Up the Internet for $1 Million?  The vast majority of people would not.  Doesn't that make all of us wealthy??

Wednesday, July 13, 2011

Debt Ceiling Showdown

I laid out the problems in dealing with the Debt Ceiling Dilemma in January and my suggestions for a path forward here.

It is showdown time.  Will anybody blink?  I continue to believe the Republicans have the high ground on this issue but the political winds are changing and one side or the other is going to get it right.  I will repeat again what I wrote in April.

Opposing all tax increases is the only way that any Republican has been able to stay politically viable.  If you even hint that you would consider a tax increase, your political future is over.  However, I don't see how that strategy can continue under current circumstances if Republicans want to become the governing party for the long term.  I also don't see how the Democrats can be viable if they do not come forward with plans for real spending cuts.  The future is going to belong to the party that shows that it has a practical plan to dig us out.  Which party can uphold their principles and also be practical? 

I think the Republicans would be well served to agree to a tax increase in the upcoming debt ceiling discussions, if and only if, federal outlays are firstreduced to no more than 20% of GDP (we are now over 24% of GDP).   Tax increases would be in play but would only be triggered if the spending cuts come first. If a tax increase was required, taxes as a % of revenues could not exceed 18% in total (which is the long term historical average over the last 30 years).  See the chart below from the Heritage Foundation's Chart Book:

In fiscal 2010, federal revenues were only about 15% but they are expected to recover with the economy.  The current OMB estimate for next year is that revenues as a % of GDP will be 16.6% of GDP.  Therefore, spending cuts of of at least 4% of GDP would be needed first in order to trigger any tax increase on the back end.  There would need to be $3 or $4 dollars of spending cuts in advance for every $1 of tax increase using this approach.  

Does this strategy sound familiar?  I learned it from my mother.  I could not have my dessert until I ate my vegetables.  I could not play baseball until I did my homework.  I could not watch television until I cleaned my room.  The taxpayers should not put a dime into any budget deal until the spending cuts are in the bank. However, if you look at the chart above it is clear there is a revenue problem in addition to a spending problem.  Facts are facts.  I am convinced that the taxpayers (including that 1% at the top who pay 40% of all the income taxes collected) would support this deal if they believed that they would not get stabbed in the back as they have so many times before.

Now is the time for the Republicans to lead us out of the mess.  However, to do this they must be realistic and reasonable.  This plan is both and would be difficult for the Democrats to defend against. With this plan in play I would be very comfortable in having a showdown on the debt limit.  The Democrats want tax increases.  They can have them but they can't have their dessert first.  Let the Democrats be the ones to take us over the cliff if they want to.  They would have a tough time explaining their position to the American people.  I want the Republicans to maintain the high ground and I want them to be in a position to win it all in 2012.  To do that they have to show that they are both practical and principled.  They have to also show that they can be trusted.  This is their chance to do it.  It is the time to go all in but only if they have a totally defensible position.

Interestingly, President Obama said this week that it is time to eat some peas.  My sentiments exactly.  However, it is President Obama who needs to pick up the fork.  He is in this problem of his own doing and he has been put in this place by one of the ingenious features in the U.S. Constitution.

The terms of the House of Representatives were specifically established at only 2 years because our Founding Fathers never wanted the federal government to get too far removed from the will of the people.  The enormous landslide in favor of Republicans in last year's election was meant to send a message just as they envisioned that the people wanted another direction.  Second, the Constitution went further and in Article I, Section 7 states that all bills for raising revenue shall originate in the House.  This was also written to increase accountability to the people when it came to tax increases.

The bottom line is this.  President Obama and the Democrats had the ball all to themselves for 2 years and they fumbled it.  The people had the chance to make a change and they made a clear choice for a stronger defense against spending and taxes by their votes in last year's House races.  That is the playing field right now.  The Constitution is pretty clear.  He needs the House to agree to tax increases and it is not going to happen because of the Constitution.  He's supposed to be the quarterback, not the punter.  I have even called a play for him and the Republicans.  Time to eat some peas!

The Original Argument

I am just back from a week long trip to Houston, Texas.  When I am in Texas I always come away with renewed hope for the potential of our country.  There is a sense when you are in Texas that all things are possible.  It is "can do" country.

While I was on the trip I bought a copy of Glenn Beck's new book, "The Original Argument", which is an updated writing of the Federalist Papers.  It takes the archaic vocabulary and sentences of the original Federalist Papers and "translates" it into contemporary English. It provides the background and arguments that Alexander Hamilton, James Madison and John Jay provided to the public in late 1787 and early 1788 in order to gain the support for the ratification of the U.S. Constitution.

It is an amazing body of work considering that the entire work is over 175,000 words.  This is close to the length of a Harry Potter novel.  No small feat considering the fact that the writing was done with quill pens and some of the writing was done under candlelight.

Just as amazing is the background story on the development of the book.  Its genesis really started with a college student, Joshua Charles, from the University of Kansas.  Joshua "translated" Federalist 1 and sent it to some friends and family for their reaction.  He was heartened when they told him how much better they understood what the Founders were saying about their reasoning behind the Constitution.  However, there are 85 Federalist Papers.  He had translated just one.  It was a nice diversion but what would be the point of doing more.  Who would care about a 22 year-old college student's modern translation of the Federalist Papers?

It  could have ended there but shortly after he was watching the Glenn Beck show on Fox News Channel when Beck said, "We need really smart people that can take the Federalist Papers and rewrite them for the common man...If we rewrite these things in common language, people can access them a lot easier".  With nothing more than that statement, Joshua decided to complete the entire translation.  He took several months off last summer to labor over the Papers day after day to complete the project.  He took another six months of concentrated effort to get in front of Beck.  The book is the result of that effort.  The front cover carries Beck's name but Joshua Charles should receive the lion's share of the credit.

I am only part way through the book but it becomes apparent very quickly how far we have diverged from the path our Founding Fathers laid out in the Constitution. For example, Alexander Hamilton was known as one of the stauchest pro-Federalists of our Founders.  He was in favor of a strong federal government.  However, look at how he viewed the power of the federal government vis-a-vis the states.   In Federalist 17, Hamilton wrote:

"Even if I allowed for the greatest amount of love of power possible for any reasonable man, I confess that I don't know of any reason why anyone of authority within the General government would ever wish to take for themselves any of the states' powers."
At the same time, Hamilton was a strong opponent of the Bill of Rights and argued in the Federalist Papers that they were unnecesary.  Why?  First, a detailed Bill of Rights was not required because these rights are endowed by our Creator. Including a Bill of Rights in the Constitution implied that somehow these rights come from the government according to Hamilton.  Second, Hamilton argued that the Constitution's scope was to be so narrow and the federal government's power so limited that a Bill of Rights was not necessary.  By including them, people might interpret that the Framers were intending the Constitution to control "all sorts or personal and private matters". 

Wow!  This was from Alexander Hamilton the Federalist, not a states rights advocate!

The Original Argument.  Check it out.  Thanks to Joshua Charles for this great work.