All posts by mrossol

Married, 1st generation American, Christian, conservative, GCC parent, Agribusiness manager, long-time Mac-owner, in Ohio.

An Opportunity For Major Reform, If We Can Take It

Some thoughts on a July 19, WSJ article…

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Emil W. Henry Jr.’s “America’s Debt-Ceiling Opportunity” (op-ed, July 19) clearly states what should be obvious to all: The federal government is extremely poorly run and ignores the basic rules of business economics and accounting. In fact, it often crosses the line into what would be criminal for the rest of us.

As an attorney, if I were to take money out of my client’s escrow or trust account and spend it on personal or firm expenditures, I would be disbarred without any question, and possibly prosecuted for theft by conversion. Yet, there is no doubt that our government has raided and spent the $2.6 trillion that is supposed to be in the Social Security Trust Fund, the very fund that the government tells us will self-finance Social Security for 26 years. Should we disbar or prosecute Congress?

If a corporation told its shareholders in an annual report that a new project was going to save the company money, to the benefit of the shareholders, but management knew full well that this program would actually increase costs to the corporation and cause severe economic stress, would not the government go after the CEO and others for various securities violations, among other things? Yet, ObamaCare was touted as a cost-saving program and rammed down our throats by parliamentary tricks, and it is not credible to believe that the president and certain members of Congress were unaware of what are now widely exposed, but previously undisclosed, costs that will explode our deficit.

If it is a federal crime for us to lie to Congress, why is the converse not true?

John H. “Chuck” Watson

Marietta, Ga.

Very substantial and significant assets and liabilities are missing from the USA Inc. report, which concedes this with respect to liabilities but glosses over unreported assets, saying only that Treasury Department valuation is accepted for the report. This is an easy out for a knotty problem which could lead to a partial solution.

The fixed assets of the U.S. could be as massive as its massive debt, but I don’t know of any cogent analysis of what potential assets Uncle Sam really has. Presumably that process would be based on a fair market value, and a highest and best-use basis. Such an analysis would certainly expose a stunning amount of dead weight (with attendant suffocating, ongoing carrying cost) that could be shed. It’s the first thing any business of any size would do.

Kenneth D. Perkins

Sewickley, Pa.

Why is the elephant in the room being ignored? The present value (PV) for federal Medicare, Medicaid and Social Security (MMS) obligations is now about $46 trillion. The General Accountability Office projects the MMS share of GDP escalating from 10% to 24% during the next 70 years. That’s about 1.3% per year growth in GDP share. Adding in 3% inflation and 3.5% real GDP growth shows about $3.7 trillion per year growth in PV MMS entitlements—and it is accelerating.

I suspect that today’s young people and future generations will pare back the entitlements; after all, they didn’t sign up for financial servitude.

John Schuyler

Aurora, Colo.

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Toying With Default

I just hope “they” don’t make the situation worse than it already is.

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Barack Obama was in full-scold mode Friday night, summoning Congressional leaders to the White House to “explain to me how it is that we are going to avoid default.” It’s a terrific question, albeit one the President refuses to answer. He remains far more interested in maneuvering to blame a default or credit downgrade on Republicans than in making himself part of any plausible solution to a crisis he insists is imminent.

Senate Minority Leader Mitch McConnell, who figured out earlier than most that the President wasn’t serious, long ago turned to crafting a deal within Congress. He’s now been joined by John Boehner, who was prepared to take political risks to reach for the “big deal” only to tire of White House antics. Now House Republicans and Senate Democrats are each working to craft their own plans, and it says something that the country has a better shot of getting something out of a divided Congress than it does out of the Oval Office.

Then again, it has long been clear that Mr. Obama isn’t interested in spending reform. In February he proposed a budget that spent more than any in U.S. history. In April he demanded that Congress pass a “clean” debt ceiling hike that included no spending cuts whatsoever. Only after House Republicans unveiled their own sweeping budgetary reforms did the White House rush to also claim it wanted deficit reduction as part of the debt-ceiling debate.

In June, the President dispatched Joe Biden to negotiate spending cuts, only to have the White House insist at the last minute that modest trims be accompanied by significant new taxes. Mr. Boehner and the Senate’s bipartisan Gang of Six produced plans that would have acceded to that White House demand in exchange for substantive tax reform that would have lowered individual and corporate rates. Yet last week the White House backtracked on its agreement for the lower tax rates and demanded another $400 billion in tax revenues above the $800 billion the Speaker had already conceded.

The President insists his party is offering serious spending cuts and entitlement reform. He also likes to talk about “balance,” which to him means real tax increases immediately and speculative spending cuts some time in the distant future. Behind the scenes the White House has only ever agreed to token reform and cuts. Here’s a number for the debt history books: Mr. Obama’s final offer in the Biden talks was a $2 billion cut in 2012 nondefense discretionary spending. The federal government spends more than $10 billion a day.

Now we’re days from the August 2 default deadline set by the Treasury Department, and the President’s only response has been to blame everybody else for deficient seriousness.

Mr. Boehner reached out to Senate Majority Leader Harry Reid this weekend, only to have Democrats continue to insist any deal include a sweeping debt ceiling increase that provides the White House with political cover through the 2012 election. The Speaker’s goal now should be to get his House members to design a package of cuts—no matter how small—that can pass both chambers, and pair this with a debt ceiling increase that avoids default. Even many Democrats agree with Republicans on a base of about $1 trillion in cuts over 10 years. Mr. Boehner would also be wise to make sure his bill doesn’t include a mandatory balanced budget provision, or any other clause that the White House can label a poison pill.

Mr. Boehner can then toss this fix to the Senate and let Democrats decide if they want to trigger a default. If the bill falls short of President Obama’s and Mr. Reid’s demand for a big enough debt increase to push any further fights until after the election, then let the White House or Senate Democrats take responsibility for killing it on those political grounds.

This fall-back position is far less than many House Republican freshmen, particularly those in the tea party, were hoping to leverage out of this debt fight. It may not even be enough to avoid one or more of the ratings agencies from stripping the U.S. of its AAA rating.

But it is growing abundantly clear that this may be the best Republicans can do with a President who is using these negotiations to finance the blowout spending of his first two years with a tax increase. Voters can decide for themselves who was toying with default come the real moment of truth in November 2012.

Review & Outlook: Toying With Default – WSJ.com.

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Obama Playing Russian Roulette? – R Benko

Right on the money…

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Ralph Benko, Forbes-commentary:  President Barack Obama is on the verge of terminally discrediting himself by playing some very bad games very badly.  The means of avoiding default are crystal clear.  Obama is not just ignoring them, but evading them.  He is guilty of playing Russian Roulette with America’s creditworthiness.  His administration is playing Three Card Monte with the American people.

House Speaker John Boehner (R-Ohio) and Majority Leader Eric Cantor (R-Va.) show true courage walking away from the president’s bad faith “negotiations.”  Senate Majority Leader Mitch McConnell (R-Ky.) shows himself a worthy strategist in proposing, as an emergency Plan B, to force the president to suffer the consequences of his cynical tactics if it comes to that.

The Republican leadership has taken, so far, a no new taxes stand that is principled and practical.  It also is a stand that is overwhelmingly popular with the American people. That is something (Mr. President, technically it’s called “the consent of the governed”) right from the Declaration of Independence.

President Obama dismisses the value of integrity, of keeping one’s word:  “… for us to be more worried about … what pledge we signed back when we were trying to run … instead of thinking about those folks is inexcusable.”

Mr. President?  The voters sent their representatives to Washington in part because they made that pledge.  To consider yourself somehow superior to the people who elected you to keep your promises and therefore exempt from showing integrity is naked elitism and ethically bankrupt.

Speaker Boehner has said: “Dealing with [Obama and administration officials] the last couple months has been like dealing with Jell-o.” “Dealing with Jell-o” seems to be an excellent metaphor for the president’s attitude toward keeping one’s word.

The president’s response to the conservative Republicans drawing a line in the sand determined, as best they know how, to begin to stop the spending madness?  Obama and his minions such as Senate Minority Leader Harry Reid (D-Nev.) heap sanctimonious vilification upon the Republican leaders.

The president and his allies are keeping up a nasty slander campaign against those who stand, as best they know how, for free markets, spending cuts, and limited government.  Boehner and Cantor show real courage, knowing they will be defamed for so doing, in walking away from the table every time the Democrats pull yet another “Three Card Monte” trick — like attempting to slide in an extra hundreds of billions in tax hikes.

The president is entitled to his opinion (even against all evidence) that big government is beneficial to working people.  He has put America into this mess by failing to adopt the job-creating policies that would generate more revenue.  His posture is weird but that’s politics.  He, however, is not entitled to pretend that he is anything less than aggressively, negatively, nastily, partisan.

The president now, with the debt ceiling negotiations, is playing one of the oldest and most reprehensible bureaucratic tricks in Washington:  the Closing the Washington Monument maneuver.  When told that their budget must be cut senior bureaucrats do not root out wasteful programs. Rather, they pick highly popular programs as sacrificial lambs. “To achieve these cuts we will have to close — possibly dismantle — the Washington Monument.”

Playing the angles, the permanent government of which Obama is the avatar more often than not, cunningly manages to bluff the politicos into folding. Threatening default is the Washington Monument maneuver gone thermonuclear.  The GOP, and Boehner, do not appear to be falling for it.

Obama is offering a narrative of “shared sacrifice” as a means of hiking taxes and permanently growing the federal government’s share of the economy. The government permanently grows and the private sector permanently gets less.   It is reminiscent of the Brezhnev Doctrine, “What’s ours is ours, what’s yours is up for grabs.”

The Republican Congressional leadership is offering — and, at last, seems to be ready to fight for — real spending cuts and no new taxes to achieve smaller government and economic growth. If Obama really wanted change he would not be vilifying conservatives as tools of the rich who are intent to loot the middle class.  He’d stop with the veiled insults.  But this president — a basketball player, not a baseball player — nonstop trash talks his opponents.

The game isn’t over yet but so far Boehner, Cantor and other fighters for spending cuts such as Rep. Steve King (R-Iowa) deserve three cheers from smaller government, free market, budget-cutting economic growth conservatives. King laid out the Democrats’ shabby hustle with extraordinary clarity in an interview on ABC News:

We have about $200 billion a month coming into our coffers from tax receipts before we start to borrow money from American people and from abroad. That $200 billion is plenty more than enough to pay our military and service our debt. … It is irresponsible of leaders to step up and say we are going to default.   America is not going to default.  We are just trying to scare people into being stampeded into a debt ceiling increase.  We would hold our full faith and credit together regardless unless the president had decided to punish America by refusing to pay our bills.

King pointedly notes that the debt payments and military salaries together add up only to 15% of government revenue.  Chance of a reality-based default?  Zero. And there are ample funds left over to pay every one of our elderly their social security and, beyond that, meet other essential outlays.  Before borrowing.

How did Obama respond?  Did he make a firm and credible ironclad commitment not to default to our creditors, our warriors, and our seniors?  No.  He used his public comments to raise anxieties and pour on the sanctimony. Rather than reassuring the American people, our allies, trading partners, and our creditors that under no circumstances will America default, the president’s comments he slyly held out default as possible and attempted to frame the Republicans to take the fall.

This is, of course, the very “politics as usual” that the president superciliously deplores and has proved himself not so much a masterful practitioner as an addict.  As Rep. Paul Ryan (R-Wis.), who also has shown real integrity in this showdown, earlier stated, the president “is poisoning the wells.”

And as Rep. King bluntly stated:  “We would hold our full faith and credit together regardless unless the president had decided to punish America by refusing to pay our bills.”  (Emphasis supplied.)

It would be shocking but not unthinkable that this president has decided it is time to “punish America.”  If that is not his intent it’s time for him to end the theatrics and make an unshakeable commitment that America will not default.  If, instead, he continues to play Russian Roulette with America’s reputation as an honorable borrower in order to try to get his longed-for tax hikes he will have accepted full blame when he pulls the trigger one time too many.

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AttaBoyBoehner – Joel Rossol

Not a bad perspective for a young man [of whom I’m proud].  (emphasis, his)
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If Obama REALLY THINKS we are going to stumble into disaster should the debt limit not be rasied… then it seems to me that as a leader… the impetus is on him given he is largely responsible for getting us into this mess. But he cares too much about raising taxes to do the right thing. That is the shocking thing here…. not Republicans ‘throwing democrats a bone’. Remember Simpsons-Bowels? He told us all he was going to appoint a commission to fix the debt problem… and then promptly ignored it (probably) because it didn’t call for massive tax increases – thereby going counter to an ideological position he wasn’t willing to compromise on anyway. Its Obama’s fixation with raising taxes (in the midst of a double-dip) on the rich that is the roadblock here. Why should Republicans compromise on a plan that will make everything worse?

The only reason we are in this crazed position is because the president has been lying about what will happen if we reach our debt limit. All we are talking about here is a de-facto balanced budget amendment. We will not default (unless Obama prioritizes OTHER payments ahead of debt payments… in violation of the 14th amendment). This is pure fear-mongering going on here… and the media is just repeating and racheting up the levels of fear. I guess to put it another way: if our government can’t live within its means… if it can’t function on the highest national revenues ever captured in human history… without needing to borrow trillions of dollars a year… than we’ve got much bigger problems on our hands… and raising the debt limit only pushes THAT problem down the road (and that problem is a much bigger problem than a slight downgrade from Moodys).

And what exactly did Obama supposedly ‘offer’ in terms of medicare… Means-testing and higher taxes? Oh, so the rich will pay more and get less. Talk about a spineless political maneuver. This isn’t even a structural change… its just cutting a few hundred thousand off the rolls. In short, Obama isn’t willing to compromise on structural entitlement reform. That’s why Republicans aren’t budging.

The only way to avert disaster is to cut spending. PERIOD. Thank God Republicans are finally putting a line in the sand on this issue… because its the only way we avert this coming disaster. Maybe they aren’t doing enough to communicate the truth of the situation… which is a valid criticism… but to call them child-ish for picking the better of two bad options is a bit harsh in my opinion.

As I like to say on Twitter: #attaboyBoehner

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