Category Archives: Money

What Western powers should do in response to Russia’s aggression

 

ReaganPeaceQuoteThe Russian aggression against Ukraine, initiated by President Vladimir Putin, has surprised many but not me, and should have surprised no one.

It is simply an inevitable consequence of the West, and especially America’s, shameless appeasement policy towards Russia combined with a long-running policy of unilateral disarmament (while Russia, under Vladimir Putin, has been arming to the teeth).

For many years, and especially the last five, Western nations have been dramatically cutting their militaries, defense budgets, weapon programs, and ambitions, while Russia has been dramatically expanding its own.

And for the last five years running, this writer has been sounding the alarm about these suicidal policies, warning that they would only lead to Russian intimidation, coercion, excesses, muscle-flexing, and eventually, aggression.

This writer most notably sounded the alarm in May 2009, writing that:

“Unless European states and America suddenly adopt a hawkish foreign policy and strengthen their militaries, Europe will become a mere province of the Russian empire.”

And as usual, this writer was right all along.

Meanwhile, all those who falsely claimed that “the Cold War was over”, “Russia is our friend/partner, not our enemy”, “you are a Cold War dinosaur”, “you need to shed this Cold War mentality”, and “the 1980s are asking to have their policy back” were dead wrong.

All those who claimed Russia was a partner and not a foe, that it should be appeased and accomodated, that Obama’s “reset” policy was right, that the US could afford to cut its nuclear arsenal further – from Colin Powell, Condoleezza Rice, and the Cato Institute, to the CNAS, Michele Flournoy, Michael McFaul, Barack Obama, Hillary Clinton, Henry Kissinger, and Pat Buchanan – were DEAD WRONG ALL ALONG.

These people should now publicly admit being wrong and shut their ignorant mouths up. But we should be under no illusions that they will.

Now Ukraine, a strategically important country and a weak neighbor of Russia, has been invaded by that country under the utterly false pretext of protecting Russian citizens and ethnic Russians in the Crimea – who were not threatened by Kiev in any way – just like Hitler annexed the Sudetenland in 1938, ostensibly to protect the Sudetenland Germans from the Czechoslovakian government.

In any case, what can and should Western powers do to stop Putin from going any further?

The first and most important thing is to immediately and permanently STOP listening to the advice from the Powell-Kissinger-Flournoy-Clinton school of foreign policy, which has once again (but not for the first time) been proven DEAD WRONG.

This means no more cuts in the West’s nuclear or conventional arsenals, no more “arms control” treaties, no more accommodating of the Russians’ demands. By committing such a blatant act of aggression, they’ve forfeited the right to be heard on any issue and to make any wishes or demands.

But the West must do much more to convince Vladimir Putin that it’s serious. Mere promises of toughness, verbal condemnations, and “dialogue” won’t stop him from committing further aggression.

Therefore, the US, Canada, and European countries should, until such time as the Putin regime collapses:

1) Immediately institute a TOTAL embargo on ALL Russian products except raw minerals.

2) Hasten the deployment of all stages of the European Phased Adaptive Approach to missile defense in Europe, and build an East Coast missile defense site.

3) Immediately withdraw from the Comprehensive Test Ban Treaty, the Partial Test Ban Treaty, the New START, and the CFE Treaty.

4) Ban the Russian national air carrier, Aeroflot, from flying into US, Canadian, or EU airspace.

5) Warn Russia that any of its military aircraft that venture into US, Canadian, or EU airspace will be shot down without warning.

6) Expel Russian ambassadors from Western countries.

7) Boycott the upcoming G8 summit and Paralympic Games in Sochi.

8) Reverse all defense (budget, programmatic, force structure) cuts undertaken in the last 12 years and start building Western militaries up. In particular, the US should reverse all the cuts in its nuclear arsenal and fully modernize it; revive the MEADS, Airborne Laser, Kinetic Energy Interceptor, and Multiple Kill Vehicle programs; cancel the F-35 program and resume F-22 Raptor fighter production; develop the Reliable Replacement Warhead and the Robust Nuclear Earth Penetrator; increase its inventory of MOP bombs; reintroduce S-3 Vikings into service; improve its Navy’s ASW equipment and skills; build a Conventional Prompt Global Strike system; develop ASAT weapons; order more THAAD brigades; speed up naval railgun and laser development and deployment; and make more Aegis-class warships BMD-capable.

9) Lastly, and most importantly, Western countries should strike Russia where it is weakest: its economy. Specifically, Western countries, led by the US, should:

a) Impose total economic sanctions, including a total embargo and asset freezes, on Russia; and

b) Start freeing itself from Russia’s oil and gas domination by opening the Outer Continental Shelf, the ANWR, the National Petroleum Reserve-Alaska, all shale oil and gas deposits throughout the West, and the reserves in the Everglades; liquifying coal; using methane in lieu of natural gas; cancelling the South Stream pipeline; authorizing the Keystone Pipeline; and building the Nabucco Pipeline instead (and as quickly as possible). In addition, the US, which is already a net oil and gas exporter, should immediately start exporting these fuels to Europe to help it wean itself off Russian hydrocarbons.

The Russian economy is terribly dependent on raw minerals exports; 66% of the Kremlin’s revenue comes from these exports, while manufactured goods exports account for only about 10%. Moreover, Putin’s invasion of Ukraine has already caused significant unrest at the Moscow stock exchange, whose main index has seen a 10% fall (and a 20% decline in the Russian currency’s value to the dollar) just today (as of 8:24AM ET, 18:24 Moscow time).

Moreover, Putin’s totally incompetent interference in the affairs of Gazprom, the Russian gas producing and exporting company, has driven it into a debt of $50 billion – equalling its turnover of one year.

This invasion, and Vladimir Putin’s entire buildup of the Russian military, would NOT have been possible absent the boon provided by high oil and gas prices (oil now stands at $105/barrel) and Russia’s stranglehold on their supplies to Europe. If that stranglehold is broken, and if these prices decline dramatically and soon, Putin will have no choice but to withdraw his troops, and his wannabe Evil Empire Redux will fall like a deck of cards.

Those who advocated the ridiculous policy of appeasement and unilateral disarmament that brought us into this mess in the first place now falsely claim that the only alternative to dialogue with Russia is war with that country. That is completely false.

No one wants war with Moscow. And since the Russian military is already more than strong enough to defeat the US military easily, it would be ill-advised.

But as stated above, Russia has one great glaring weakness – its economy – and as Sun Tzu wisely counseled, the right way to defeat your opponent is to strike his weaknesses, not his strengths.

Just as Ronald Reagan (who was vilified as a warmonger who would cause nuclear war) won the Cold War without firing a shot, the West, if it applies the right policies, can defeat Russia today, also without firing a shot, by pulling the economic lever. It absolutely can do so. The question is whether Western leaders will now have the intellectual courage to acknowledge the utter failure of their appeasement policy.

Apple’s Stock drops on underperforming iPhone Sales

Apple stock drops

Apple announced earnings today and it wasn’t what analysts had expected to hear – the tech giant missed expectations and gave lower future guidance.

Apple sold 51 million iPhones during the last quarter vs. analysts expectations of 55 million units.

The company also announced that it expects to bring in $42-44 billion in revenues. Analysts had expected more than $46 billion.

The downside announcements sent the stock down 5% and BGC downgraded the stock from “buy” to “hold.”

A larger story may be the lack of innovation coming from the technology darling. The next two iPhones slated for release seem to be nothing more than the current model with a larger screen.

Samsung and other players in the smartphone market can easily upsize or downsize screen sizes to match while also adding new features at pace that Apple is struggling to match.

Leading-edge products like the iPod, iTouch, iPad and iPhone were the steps Apple took to get where it is. The question on investors minds is – got anything left?

CNN spins Obama’s failures on the economy .. again

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CNN.com’s Annalyn Kurtz starts out her article with a strong headline that plants the blame for a floundering economy squarely where it belongs, but then arranges factors and symptoms in an odd order to soften the blow.

The emboldened headlining paragraph reads:

Five years into his presidency, Barack Obama is still falling short of his number one goal: to fix the economy for the middle class.

Ok, first, why fix it just for the middle class? Shouldn’t we just want the economy to work so that everyone has an opportunity to make out of it what they can?

The article is titled “7 Setbacks for the middle class”, but actually there’s just one that’s the cause and most of the others are effects stemming from the primary failure – the economy isn’t producing jobs.

Annalyn lays out the 7 setbacks as thus:

  1. Workers are taking home their smallest slice of U.S. income on record
  2. Inequality has widened
  3. The job market still faces a gaping hole
  4. The poverty rate remains high
  5. Record number of Americans are on food stamps
  6. The manufacturing revival was a mirage
  7. Global trade isn’t helping much

The first two “setbacks” appear as though income inequality is a major factor in causing the economic hardships Americans have been facing under President Obama. Most informed Americans would have perhaps made a list looking more like this:

Prime Issue: The job market still faces a gaping hole

Effects of the Prime Issue:

  1. Workers are taking home their smallest slice of U.S. income on record
  2. Inequality has widened
  3. The poverty rate remains high
  4. Record number of Americans are on food stamps

Obama’s cash for clunkers, stimulus, stimulus two, extension of unemployment benefits, easing of welfare regulations and numerous other initiatives have done nothing to spur businesses into hiring – government programs rarely do. Add on Obamacare and the costs to business and consumers – there isn’t as much money left to spend in the economy so that retailers, manufacturers and service industry companies have the ability to hire.

With the, often last-minute, executive proclamation changes to regulations, any business that would think of growing is instead saving for a rainy day – it might just come tomorrow at the stroke of Obama’s pen.

Government intervention is holding back the recovery. Obamacare alone may stall it and the breakdown of the effects demonstrates the true relationship:

Workers taking home smallest slice of U.S. income on record:

Duh! With the labor participation rate at its lowest since Jimmy Carter, disability and food stamps at record levels – of course those living off the government aren’t getting a cut of the profits. That’s the difference between a paycheck and a handout.

Inequality has widened

Ok, what part of this “setback” doesn’t feel like a repetition of the last one? Yes, if fewer people are working, fewer people will be making as much money. Government handouts do not offer opportunity – just enslavement. The last five years have been a steady proof of that.

The poverty rate remains high

Of course is does. Not to sound like a broken record player but.. if you aren’t working, it is very hard to not be poor. No one gets rich on disability, welfare and food stamps.

Record number of Americans on food stamps

No way not to repeat myself here, so I won’t

You see, it comes down to a President and Congress who have no idea how to get out of the way and allow the economy to recover.

Economic Inequality is the mantra of the left and where it appears Annalyn was trying to take the reader, albeit unconvincingly. Measures such as raising the minimum wage, extending unemployment benefits to almost two years, relaxing welfare requirements are all doomed to failure and they are likely going to be the themes upon which many re-election campaigns are rested.

 

Shock: EPA Administrator Pushes Job-Crushing Climate Regs But Is Incapable Of Supporting President’s Warming Claims

Jeff Sessions

In a hearing yesterday on climate regulation, Senator Sessions pressed EPA administrator Gina McCarthy to support the President’s statements on warming which are used to justify massive proposed administrative actions which would hurt millions of workers. McCarthy proved unable and unwilling to support the President’s claims despite being the central figure crafting and implementing EPA regulations.

Sessions: “Do I not have the right to ask the Director of EPA a simple question that is relevant to the dispute that is before us? Is the temperature around the globe increasing faster than was predicted, even 10 years ago [as the President claimed]?” 

McCarthy: “I can’t answer that question.” 

Sessions: “You are asking us to impose billions of dollars of cost on this economy and you won’t answer the simple question of whether [temperature around the globe is increasing faster than predicted] is an accurate statement or not?”

Latest Jobs Report ‘Very Bad’

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Directly contradicting President Obama’s claim yesterday that the recovery is “very real”, the latest jobs numbers show an employment situation that even White House friendly MSNBC had to call “ugly” and “very bad.”

From a political perspective, there is a silver lining – the unemployment rate, which most news outlets report on, dropped to 6.7% from the previously reported 7%. Unfortunately, it was due almost entirely due to Americans giving up on finding a job and leaving the workforce.

91.8 million Americans are not in the workforce as of this month’s report – a new record. The labor participation rate, a measure of the percentage of the working age population that is working, dropped to 62.8%, a level not seen since Jimmy Carter was president.

5 times as many people left the workforce than the number of jobs the economy created.

As the current administration sees these numbers as a recovery, it should not be long at all before they take a victory lap – right about the time we have about 50% of all working age Americans employed and a 3% unemployment rate because everyone else has given up on even trying to find a job.

American Capitalism & The Illusion of Laissez Faire

To draw from an opening phrase, in the beginning, there was capitalism. More accurately, at the beginning of our Constitutional Republic, government was committed to limiting – drastically – it’s footprint in the new American marketplace. Americans were free from the tyranny of government interference leveled at the former colonists at the hand of King George III. Our Founders and Framers sought to secure the right of the individual not only to property, but to commerce in a form lightly touched by government. My, how far we have fallen from the Framer’s original intent.

The original intent of the Framers where commerce was concerned – and especially under the Articles of Confederation – was to leave the new American people to reap the benefits of their crafts and labors. The Framers embraced a laissez faire system of capitalism. Laissez faire capitalism is defined as:

“…a doctrine opposing governmental interference in economic affairs beyond the minimum necessary for the maintenance of peace and property rights.”

A system of government’s only responsibility in a laissez faire capitalist system, where commerce was concerned and if adhering to the original intent of the Framers, was:

“…to protect the rights of the individual, by banning the initiation of force, thus making all relations between men peaceful, i.e., free from the threat of violence and fraud…

“…a system of checks and balances so ordered to protect the rights of the individual, from criminals and most importantly from the democratically elected voices who claim to speak for the ‘public good.’”

Today’s American “free market system” is actually anything but a laissez faire capitalist system; a free system.

Starting a small business today requires that the aspiring entrepreneur incur significant start-up costs including fees, costly regulatory acquiescence, licensure requirements, taxes, tariffs, diversity quota hiring and other associated costs, taxes, actions and/or fees. Add to that the impossible task of acquiring necessary to-market development capital from a financial institution – many of which were afforded lifesaving financial infusions of taxpayer dollars, courtesy of crony capitalists in Washington, DC – and you have a formula for a stagnant economy and high unemployment for the “producers,” and the selective enrichment of the connected, the elite and the “chosen few.”

This was not the case so long ago. And as little as 30 years ago, starting a small business meant reaping the rewards of ingenuity and hard work. Someone with a dream; someone with a “good idea,” was able to acquire capital to launch small business initiatives based on that tangible idea; based on a well-crafted business plan and model. Sadly, today, no one “invests in ideas” anymore. Financial institutions and capable venture capitalists balk at the “good idea”; recoil from the uncertainty of start-up entrepreneurship because of the non-guarantee of return on investment, even as many of them have been deemed “too big to fail” when they make bad business decisions of their own, only to receive government-funded (read: taxpayer-funded) bailouts. This all happening while the “good idea” start-up concepts wither on the vine for lack of start-up capital.

Additionally, many a creative entrepreneur is neutered – or hamstrung – by the fact that the “powers that be” have declared they did not jump through the traditional “educational hoops”; did not attain the necessary piece of paper and the required student loan debt to be considered “competent” or “intelligent” enough to conceive of the “next big thing.” Of course, this certainly must come as a surprise to Bill Gates, or to the late Steve Jobs, two pioneers of the computer age who dropped out of college. So, too, must is be shocking news to the many “gangsta” rap moguls who possess a depth of language proficiency usually reserved for those with a single or low double-digit intelligence quotient, and most of whom know the assembly of automatic weaponry better than algebraic theory.

And while the successful navigation of the “educational hoops” does not guarantee entrée into the realm of the financially anointed, sometimes the connections and friendships acquired at many upper-echelon secondary education establishments can serve to circumvent the ties that bind “producer Americans” to the grind of the average. Yes, I am talking about elitist crony capitalism.

Case in point: Toni Townes-Whitley.

According to TheDailyCaller.com:

“Toni Townes-Whitley, Princeton class of ’85, is senior vice president at CGI Federal, which earned the no-bid contract to build the $678 million [failed] Obamacare enrollment website at Healthcare.gov. CGI Federal is the US arm of a Canadian company.

“Townes-Whitley and her Princeton classmate Michelle Obama are both members of the Association of Black Princeton Alumni.”

Coincidentally, George Schindler, the president of CGI Federal’s Canadian parent CGI Group, became an Obama 2012 campaign donor after his company gained the Obamacare website contract. What a coincidence…

What does all of this have to do with laissez faire capitalism? Well, actually, nothing. It has nothing to do with laissez faire capitalism. And that’s the point.

Considering that our economic system has turned into a fiscal bordello of short-cuts for the Progressive chosen few, bailouts for the “too big to fail” financial institutions, and a playground for the crony capitalists, is it any wonder the financial markets have ceased reflecting the health of the American economy? How are investors supposed to know when the next major economic disaster is approaching when risky investments and questionable financial schemes are always rewarded in their failures and losses with government-backed (read: taxpayer-funded) bailouts? For the “chosen ones,” where is the “risk”?

The original intent of the Founders and Framers was to have an “American capitalism”; a system of commerce and investment based on achievement, investment, hard work, production and, yes, failure. The American system of capitalism was designed to leave the evolution of society and the decisions about the “common good” to the people. Today’s “anything but free market system” is a disingenuous scheme establishing pre-determined winners and losers; a manipulation of the laissez faire capitalist purity that promotes equality in outcome over an equality of opportunity: economic and social justice.

In an economic system enslaved by the Progressive ideology, economic and social justice is of a paramount importance, trumping the small business, the innovator, the entrepreneur and the producer; trumping and extinguishing opportunity for all, opportunity guaranteed in the United States Constitution.

An economic system enslaved by the Progressive ideology dictates who will win and who will lose; who will acquire wealth and who will live just above poverty, all according to an oligarchical elites’ idea of what is fair, what is not and who is worthy.

Under a Progressive economic system, opportunity is dead and the American Dream, but for those chosen by the Progressive masters, swings from a rope off a branch of a socially engineered (read: Socialist) tree, long-standing on the Progressive plantation.

“Not houses finely roofed or the stones of walls well builded, nay nor canals and dockyards make the city, but men able to use their opportunity.” – Alcaeus

Rebuttal of William Hartung’s blatant lies about the threat environment

Display of might

The leftist “BreakingDefense” website has recently (on Dec. 12th) published yet another utterly ridiculous leftist screed, this time by ignorant anti-defense hack William Hartung from the far-left “New America Foundation”, an organization that seeks to turn America into a socialist, militarily weak country. In that garbage screed, Hartung falsely claims that:

1) The world is much safer now than during the Cold War and there is no significant threat to America’s or her allies’ security;

2) US military superiority is uncontested and there’s no one able to contest it;

3) The US spends too much on defense and should cut it by $100 bn per year, below Cold War average levels;

4) The only threats to US security on the horizon are the politically-correct threats of man-made climate change, disease, hunger, and nuclear-armed terrorists, and potential “miscalculations” in the current territorial disputes in East Asia. Hartung falsely claims none of America’s current or future security challenges can be solved through the “traditional means of military power”;

5) The Ryan-Murray budget deal would give an additional $20 bn to the DOD every year and would effectively increase defense spending.

All of Hartung’s claims are patently false. All of them.

1) Despite his pious denials, the world is far, far more dangerous than at any point during the Cold War except the Cuban Missile Crisis over 50 years ago. It is, in fact, more dangerous than at any point since WW2, again excluding only the CMC. During the CW, the US had to deter only one hostile superpower. Today, it has to deter and keep in check TWO hostile superpowers with large nuclear arsenals – Russia and China – as well as a nuclear-armed and belligerent North Korea, soon to be joined by a nuclear-armed Iran. It also has to fight terrorist organizations, such as AQ and Hezbollah, around the world. To cut US defense spending even further (after all the previous, pre-sequestration rounds of defense cuts implemented by the Obama admin) would be suicidal. No, the US is not spending too much on defense; if anything, it is spending too little. The world is decidedly NOT safer now than during the Cold War; for all of the above reasons, it is far MORE dangerous.

2) US military superiority is mostly a thing of the past already. Russia and China both wield large, modern, and growing nuclear arsenals as well as large, modern conventional militaries. In most categories of weapons, they’ve already matched or bested the US and are now working on closing the remaining few gaps. Their Flanker fighters are superior to everything the US flies except the F-22 and upgraded F-15C/Ds. Their PAKFA, J-20, and J-31 stealth fighters will best everything on the planet except the F-22 (whose capability they will nonetheless approach). Their Sovremenny and Type 052 DDGs are better than the USN’s DDGs, their submarines are quieter than the USN’s (who also sucks at ASW), and the PLAN already has far more attack subs than the USN does. In a few years, the PLAN will have more submarines, and more ships, in total than the USN. They both also have IRBMs, a class of weapons the US does not have, and China also has a huge arsenal of GLCMs. It is now also developing a stealthy, intercontinental bomber capable of reaching the CONUS.

But most troublingly, these countries (and on a lesser scale, rogue states like the DPRK and Iran) have fielded large, multi-layered networks of anti-access/area-denial weapons and capabilities that can shutter the US military out of entire war theaters completely, by destroying US land bases, USN surface ships, US satellites, and crippling US cyber networks as well as denying access to their airspace to all but the most stealthy a/c (F-22s and B-2s, plus the future LRSB/NGB). Their air defense systems can shoot any nonstealthy aircraft from hundreds of kilometers away. This means the US will have to acquire a wholly new series of long-range strike platforms that can access even the most heavily-defended countries, hit their assets, and operate at great distances, as well as disperse, harden, and fortify its current land bases and upgrade its air and missile defenses. This cannot be done on the cheap – it will require significant and sustained investments.

So Hartung’s claim that there’s no threat to US military supremacy is also a blatant lie – like the rest of his screed.

3) How much money the US has spent on defense in decades past is completely irrelevant to how much money should it be spending on defense right now. The only way to determine the right amount is to ask: “What exact capabilities (and thus weapons) do we need, at what level of sophistication, and at what quantity, and how much will it cost to recruit, house, feed, equip, train, maintain, care for, and compensate such a military?” Only this way can the right amount of defense spending be determined.

Raw figures and exclamations, like “oh my gosh, we’re spending $480 bn to $500 bn per year on defense, can’t we provide for our security with that amount?” and “oh my gosh, we’re spending more than during the Cold War on defense!” are utterly irrelevant and childish. Not to mention that the dollar is worth far, far less today than during the Cold War, and that as a share of the federal budget and of GDP, the US now spends LESS on defense than at any point since FY1940.

Hartung, whose goal is to totally gut America’s defense, OTOH, wants to arbitrarily cut US defense spending deeply so that it will be woefully inadequate.

4) Despite Hartung’s blatant lies that the world’s current security threats cannot be solved by military means, nothing could be further from the truth. Today, the biggest threats to America’s and its allies’ security are: an ascendant and aggressive China, a resurgent and aggressive Russia, a nuclear-armed NK preying on its southern neighbor and the US itself, an Iran speedily developing nuclear weapons and BMs, and terrorist groups of global reach like Hezbollah and AQ. These threats cannot be defeated by ANYTHING other than military means – because the ONLY thing these potential aggressors understand and respect is military strength. It’s the only thing that can deter and if necessary (Hezbollah, AQ) defeat them.

5) Contrary to Hartung’s blatant lies, the Ryan-Murray budget deal would not add a penny to the defense budget. It would only slightly reduce the amount of sequestration-required budget cuts the DOD would have to make in FY2014 and FY2015: by roughly $20 bn this FY and $9 bn the next, out of over $50 bn in cuts mandated by the sequester for every FY going forward thru FY2022. After FY2015, the sequester would return in full force.

Even before sequestration, the DOD had already cut almost a TRILLION dollars out of its budget: in over $330 bn in cuts resulting from the killing of over 50 crucial weapon programs by Sec. Gates, $178 bn in his later “efficiencies”, and $487 bn under the first tranche of BCA-mandated (pre-sequester) budget cuts. Sequestration is only the newest series of defense budget cuts being implemented by the Obama administration, which targeted defense for deep cuts as soon as it took office. Any claim that Ryan and Murray want to add any amount of money to the defense budget is a flat-out lie.

6) The Stimson Center’s proposals are useless, because they would “achieve” $25 bn in “savings” only by deeply cutting the military’s MUSCLE – America’s military CAPABILITIES, not the fat. Specifically, the Army would see even deeper cuts than those proposed by Obama, and the Navy’s planned SSBN replacement fleet would get cut from the barely-adequate planned number of 12 to just 10 boats. This is the defense policy of a madhouse.

7) Hartung shows his true colors when he calls on Congress not to spare the DOD at all from the sequester… but does not object to Congress reducing the scheduled sequester cuts to nondefense (domestic) discretionary programs, the vast majority of which are unconstitutional. This proves, once again, that Hartung’s goal is NOT to save taxpayers money, but to gut America’s defense.

And for that, he should be damnated forever as the traitor he is.

Shame on Hartung for lying so blatantly, but above all, shame on BD and its editors, Colin Clark and Sydney Freedberg, for publishing his litany of blatant lies and thus giving him yet another avenue to lie to the public, as if he didn’t have enough. Shame on you, Messrs. Clark and Freedberg!

Rebuttal of anti-nuke hacks’ lies about US nuclear weapons spending

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The leftist “National Defense Magazine”, which has often published utterly false propaganda screeds on defense issues, has recently published yet another one of this kind: an article that falsely claims US nuclear weapons spending is poised to skyrocket and is exempt from sequester.

Even worse, that garbage screed uncritically repeats the lies of several extremely leftist anti-nuclear activists and organizations, such as the Council for a Livable World’s Kingston Reif, the CATO Institute, and POGO.

The screed repeats Kingston Reif’s blatant lies that nuclear weapons spending is supposedly poised to “soar” at a time when the rest of the military budget is declining fast, that such spending will increasingly crowd out funding for conventional weapons, that it will force the DOD into very difficult between nuclear and conventional arms, that deeply and unilaterally cutting the nuclear arsenal would still leave the US with a “devastating deterrent”, etc.

All of these claims are blatant lies borrowed uncritically from leftist groups and activists. Here are THE FACTS:

1) Nuclear weapons and their delivery systems are NOT, have not been, and will not be in any way spared or shielded from the sequester. There is NO provision in the Budget Control Act (BCA), which created the sequester, or in any other law, that would shield/ring-fence the nuclear arsenal from budget cuts. In fact, by the National Defense Magazine’s own admission, the sequester has recently cut the B61 warhead modernization program’s budget by $30 mn.

And in 2012, then-SECDEF Panetta said that if sequestration persists, the DOD would have to eliminate the entire ICBM fleet, cut the bomber fleet by 2/3s, kill the NGB program, cut the SSBN fleet, and delay the SSBN replacement program.

So any claim that nuclear weapons spending is protected from the sequester, or is set to skyrocket, is a BLATANT LIE, meaning that the people making such claims are LIARS.

And no one should be fooled by Kingston Reif’s false concern for conventional weapon programs. His organization advocates, and has long advocated, deep cuts in America’s conventional and nuclear weapon programs like – in ALL categories of American military power. They simply want to gut America’s defense.

At present, the entire nuclear arsenal and its associated infrastructure cost only $31-32 bn per year, that is, a paltry 5% of the entire military budget. Therefore, Kingston Reif’s claim that nuclear weapons will force the DOD to choose between them and conventional weapons is a blatant lie. At just 5% of the military budget, US nuclear weapons spending is too low to have that effect.

Even cutting US nuclear weapons spending deeply, or even eliminating it entirely, would not come anywhere close to freeing up enough funding for (increasingly expensive) conventional weapon systems.

OTOH, terminating the useless F-35 program (whose cost is nearly $400 bn) and reforming the DOD’s grotesquely costly pay, personnel, and benefits schemes and its byzantine acqusitions system would yield huge savings that would allow significant investments in both nuclear and conventional programs.

Absent such reforms, however, there will not be enough money for any weapons – nuclear or conventional – because personnel costs will eat up an ever-larger share – and eventually the whole – of the US military budget! By FY2039, on present trends, there won’t be a single dollar for ANY weapon – nuclear or conventional – because 100% of the DOD budget will be spent on personnel and their benefits!

2) Kingston Reif is not an expert on anything, let alone nuclear weapons. He’s a far-left anti-nuclear activist. He has zero knowledge of nuclear weapons or US defense budgets. Calling him an “expert”, as the NDM has done, is ridiculous and an insult to every real expert on the subject.

3) Kingston Reif’s “estimate” of the costs of nuclear modernization ($300 bn/25 years) is a wild exaggeration designed to mislead the public and thus to get the public to abandon the program. It isn’t based on any sound sources. But even if his wildly exaggerated “estimate” were true – and it isn’t even CLOSE to being true – that would amount to only slightly more than $10 bn per year ($300 bn over a period of 25 years – a quarter of a century). That’s very much affordable.

That Reif and other anti-nuclear activists make such grossly exaggerated claims is not surprising – they want America to disarm itself unilaterally (and thus to open itself to attack by powers which these anti-nuke activists serve) by simply allowing its nuclear arsenal to decay and rust away without modernization.

4) Reif’s claim that the US could still have a “devastating” nuclear deterrent after cutting the planned new SSBN fleet from twelve to just eight boats and delaying the next-gen bomber program until the mid-2020s is likewise a blatant lie. Such actions would GUT the nuclear deterrent while saving only a pittance – according to the CBO’s grossly exaggerated estimate, $48 bn over two decades – and possibly inviting a Russian nuclear first strike on the US, since, after such deep cuts, the US would have only 4-5 boats and 450 ICBMs of any credible retaliatory power. (The rest of the boats would be in overhaul, and the USAF would lack bombers that could penetrate Russian airspace in retaliation.)

With just eight SSBNs, only four to five at most would be at sea at any given time (the rest would be in refit/overhaul). That’s a paltry number, and nowhere near enough to provide a sufficient nuclear retaliatory capability, even if all 4-5 SSBNs that would be at sea at any moment survived an enemy first strike… which would be highly unlikely, given that America’s enemies and allies alike have, in recent decades, REPEATEDLY detected, snuck upon, and scored goals against American (Ohio class) SSBNs.

Moreover, even if 4-5 SSBNs still survived, they would still be woefully inadequate to deliver a sufficiently devastating second strike, because they wouldn’t have enough missiles and warheads on these paltry 4-5 boats. A single future SSBN will have only 16 missiles, so 5*16=80 missiles, armed with, at best, 10 warheads each. That’s just 800 warheads compared to the over 1,400 (and growing) that Russia’s 13-strong SSBN fleet can deliver.

Nuclear deterrence is a numbers game. More nuclear weapons mean a stronger, more credible, more survivable nuclear deterrent.

The Navy did not take the planned number of new SSBNs (12) out of thin air; it arrived at that number after a careful, thorough analysis of how many subs are needed to provide deterrence after New START entered into force. The exact opposite of the “eight SSBNs” number proposed by the CBO and by pro-unilateral-disarmament groups like CLW, POGO, and others – which was taken out of thin air.

And make no mistake: these treasonous pro-unilateral-disarmament groups treat that as a mere step on the way to disarming America completely and unilaterally.

As for the next-gen bomber, it is urgently needed NOW and cannot be delayed any further. It is absolutely needed for both nuclear and conventional missions on which it would have to penetrate highly-defended airspace – Russian, Chinese, North Korean, Iranian, and Syrian airspace defended (or soon to be defended, in Iran’s and Syria’s case) by sophisticated, modern (excl. NK), highly capable long-range air defense systems like the S-300, S-400, S-500, HQ-9, and HQ-16 (not to mention any systems Moscow or Beijing may field in the next decade or two, like the S-500 currently in development).

Currently, America has only a handful of bombers able to penetrate such airspace – a paltry 20 B-2 bombers. That’s woefully inadequate. Moreover, even B-2 bombers may, in the early 2020s, lose ability to penetrate defended airspace (CSBA’s Mark Gunzinger, a REAL expert on bomber and nuke issues, says they will). This means the next-gen bomber is needed NOW and cannot be delayed any further. In fact, it was already delayed for way, way too long before the program was launched in 2011. Without it, the USAF will completely lose its ability to penetrate defended airspace by the 2020s.

The urgent need for this bomber, and for development to be conducted NOW, has been reaffirmed by the 2006 and 2010 QDR, by every SECDEF since at least Bob Gates, by every SECAF and USAF Chief of Staff since the Gates years (Wynne, Donley, Fanning, Gens. Moseley, Schwartz, and Welsh), by the USAF as a whole, and by numerous independent (outside the DOD) think-tanks from the Mitchell Institute to Heritage to the Lexington Institute to the CSBA, CNAS, and AEI, and to the Joint Force Quarterly publication. And just recently, both Gen. Welsh and (outgoing) Deputy SECDEF Ash Carter have STRONGLY reaffirmed the need for a next-gen bomber.

For more on why the NGB is needed, see here, here and here.

The need for the next-gen bomber is INDISPUTABLE. It’s an undebatable FACT.

The CBO’s “recommendations” should be ignored. The CBO only employs bean-counters who know nothing about defense issues.

5) POGO’s and others’ claim that the B61 nuclear bomb modernization’s cost is “out of control” and “unaffordable” is also a blatant lie. At $10 bn in total, over a span of 11 years, it works out to just $900 mn per year, a perfectly affordable cost – a fraction of one percent of the military budget (let alone the entire federal budget or GDP). Don’t tell me America can’t afford to spend one sixth of one percent of its military budget modernizing its most important nuclear warhead.

You know what’s really unaffordable? The federal government’s social spending, which now comprises over 60% of the federal budget. It – not defense spending – is driving America ever deeper into debt. That is to say nothing of the coming tsunami of Social Security and Medicare spending as the Baby Boomers retire.

6) POGO’s and others’ claim that the B61 bomb is not needed in Europe is likewise patently false. The B61 is VERY MUCH NEEDED in Europe to deter Russia, which has a huge tactical nuclear arsenal (4,000 tactical warheads and the means to deliver all of them by a wide range of systems), and just in the last 6 years has threatened to aim, or even use, its nuclear weapons against America or its allies at least FIFTEEN separate times. It has also repeatedly flown nuclear-armed bombers into or near European countries’ airspace and simulated nuclear strikes on them – even on neutral Sweden!

Putin’s Russia is an increasingly aggressive potential adversary and can only be deterred with strength, not unilateral disarmament like POGO advocates.

Moreover, as recently as the last NATO summit, NATO REAFFIRMED the need for US tactical nuclear weapons in Europe, and America’s European (and Asian) allies have REPEATEDLY, in recent years, stressed the importance of America’s extended nuke deterrent which the B61 bomb constitutes.

The need for B61 modernization has recently been reaffirmed by top DOD, DOE, and NNSA officials, including STRATCOM commander Gen. Bob Kehler.

 

7) POGO is not a watchdog group. It is a treasonous, anti-American, pro-unilateral disarmament organization partially financed by George Soros.

8) Dianne Feinstein’s and others’ claim that the US has more nuclear weapons than it needs is also a blatant lie. The US barely has enough deployed weapons to deter Russia and China. Russia’s ICBM fleet (430 missiles in all) can deliver at least 1,684 warheads to the CONUS; Russia’s bomber fleet, over 2,000, and Russia’s SSBN fleet, over 1,400. Russia’s tactical submarines armed with cruise missiles can deliver further warheads. China, for its part, has between 1,600 and 3,000 nuclear weapons. A small nuclear arsenal, like Sen. Feinstein demands, could be easily destroyed by Russia or even China in a first strike. Cutting the US nuclear arsenal further will only invite such a strike eventually, and it will also leave America’s allies (esp. Japan, SK, and the Gulf states) with no choice but to build their own nuclear weapons. 66% of South Koreans already want to do so. South Korea and Japan are ready to do so within months if need be.

Thus, the end result of cutting the US nuclear arsenal would be a world with MORE nuclear weapons (outside the US) and more nuclear-armed states. In other words, nuclear proliferation would get much worse.

The US nuclear arsenal is BY FAR the most valuable counter-proliferation tool the US has at its disposal.

9) CATO’s claim that eliminating the ICBM and bomber legs of the nuclear triad would save $20 bn per year is a blatant lie as well. In fact, doing so would “save” only $2.6 bn per year. That’s how little it costs to maintain these two legs of the triad.

CATO’s claim that the triad came to exist only because of interservice rivalry is a blatant lie, too. If it were true, why weren’t the Army and the Marines given any nuclear role?

CATO’s claim that the triad is a Cold War relic is likewise a total falsehood. If it were true, why are the Russians, the Chinese, and the Israelis retaining, modernizing, and expanding their own nuclear triads?

Answer: because they know that a nuclear triad is BY FAR the most survivable nuclear deterrence arrangement.

In sum, not a single claim that CATO, POGO, or CLW anti-defense hacks like Reif make is true. Not a single one. All their claims on nuclear weapons are blatant lies. Shame on the NDM for publishing yet another litany of blatant lies and for uncritically repeating the blatant lies of anti-nuke activists who only seek to disarm America unilaterally and thus to expose it to great danger.

The Opportunistic Politics Rolls On

Just as the American people begin eying the torches and pitchforks, readying their maps of Washington, DC, the establishment politicos have set themselves to brazenly cover their butts yet again. This time, they are proposing a way to absolve themselves from tough votes on raising the debt ceiling.

In the aftermath of our current President’s disingenuous declaration that raising the debt ceiling “doesn’t necessarily mean adding to the debt,” and his infantile temper-tantrum about the government being held “hostage” because House Republicans wouldn’t let him have the federal credit card for his “date with destiny,” it isn’t surprising that the usual suspects are floating a fiscally irresponsible, but politically advantageous, plan to avoid the ugliness of actually governing where the debt and debt ceiling are concerned.

RedState.com reports:

On Meet the Press, Chuck Schumer, who has enthusiastically praised [Senate Minority Leader Mitch] McConnell, (Ri-KY), for doing his bidding, announced that he would introduce legislation echoing the “McConnell rule.”

“Sen. Chuck Schumer (D-NY) will propose legislation that would make permanent a plan to take the decision to raise the country’s debt limit out of Congress’s hands.

“By making the so-called “McConnell rule” permanent, the president would have ultimate authority to raise the debt limit and prevent the United States from defaulting.

“Congress would still have power to oppose raising the debt ceiling, but would not have to vote to increase the borrowing limit.

“‘If we were to do that, the chances of going up to the brink again, the chances of this kind of debacle, will decrease,’ Schumer said on NBC’s ‘Meet the Press’ on Sunday.”

The politics is brazen. The abdication of constitutionally mandated obligation absolute.

It is not negotiable – aside from passing a constitutional amendment – that the US House of Representatives is tasked with the exclusive – exclusive – authority to generate legislation having to do with the raising of revenue. This means that no piece of legislation emanating from the Senate, no executive order, no agreement amongst a “Gang of Idiots,” has the constitutional authority to raise revenue, including the expansion of our nation’s level of debt.

Raising the debt ceiling so that the federal government can continue to operate in the red expands the expenditures of government. This can only be viewed as authorizing the need to extract revenues from the only constitutional source of revenue the federal government has: the American people via taxation.

Perhaps the American people have forgotten this critical point. The United States government does not produce a product. Therefore, the United States government cannot produce a revenue stream outside the realm of taxation, or, at least this was the way it was supposed to be before the federal government got into backing “winners and losers” (read: every Energy Department funding initiative) through government-backed special interest subsidies and the quasi-nationalization of certain private-sector companies (read: GM and Chrysler).

It is for this reason the generation of revenue legislation – and later legislation authorizing the extraction of taxes from the American people – rests solely with the US House; the elected body closest and most vulnerable to the people. It is for this specific reason that US Representatives are elected every two years instead of four or six, and why they represent the least number of people, by comparison, in our federal system of government. The Framers wanted these people – these elected representatives – to be vulnerable to their constituents. This was the “stick” to the carrot of elected privilege.

Creating a mechanism by which our elected representatives can simply remain silent in order to allow the Executive Branch (read: the President) to mandate the raising of revenue – in this case the debt ceiling and along with it the ability to spend – is literally unconstitutional. Additionally, that Senators are even broaching this subject presents as unconstitutional because the US Senate is not vested with the power of the purse, only the US House has that power.

People like Mitch McConnell and Chuckie Schumer get away with floating unconstitutional political mechanisms like “The McConnell Rule” because our citizenry exists as constitutionally illiterate and selfishly apathetic to their role in government: engaged oversight. Until the American people start to consistently and constantly embrace a jealous appreciation for limited government – and through that jealously an elevated addiction to freedom and responsible individualism – political reprobates like McConnell and Schumer will continue to destroy the Constitution and, along with it, our freedoms; your freedom.

Why the government shutdown is the worst idea ever

johnboehner

House Speaker John Boehner flanked by his House colleagues. Photo credit: Associated Press/J. Scott Applewhite.

Never, ever shut down the federal government again.

- President Bill Clinton, 1996 State of the Union Address

 

As everyone knows, on October 1st at midnight, the federal government shut down for the first time in 17 years. This event has had and will have lasting, serious, negative consequences for the entire country, and even moreso for the two political parties. This article will explain why, looking from a conservative Republican perspective, shutting down the federal government is the worst idea possible for the GOP, the conservative movement, and the country that my fellow conservatives claim to care about first and foremost. In short, the shutdown is bad policy AND bad politics.

Why it’s bad politics for the GOP and conservatives

Contrary to what many of my fellow conservatives think, nothing good can come out of this conundrum for conservatives or for the Republican Party (regardless of whatever future you wish for that party). This is a battle we simply cannot win, and no amount of throwing the RINO epithet at everyone who disagrees with you will change that fact.

Some have pointed out to polls supposedly showing Barack Obama’s approval ratings as being at 40% or lower, and disapproval ratings going over 50%. Even if these polls are scientific and accurate – and depending on who commissioned them, they might not be – these people completely ignore the fact that Congressional Republicans and the Tea Party have even lower approval ratings in the eyes of the American people.

According to polls commissioned by Fox News – hardly a liberal outlet – Congressional Republicans had only a 23% approval rating in June and August, with disapproval ratings of 67% and 66%, respectively. That means that fully TWO THIRDS of the American public view Congressional Republicans – especially their conservative wing – negatively.

By contrast, Congressional Democrats’ approval ratings, while still dismal, were better than Republicans': 32% approval and 60% disapproval in both June and August.

Moreover, Senate GOP leader Mitch McConnell has the worst ratings of any major party leader in America today: 22% approval, 42% disapproval in October.  John Boehner has 27% approval and 51% disapproval ratings (in April, he had 31% approval and only 41% disapproval). Even Harry Reid now does better at 27% approval and 43% disapproval) in the same month. Nancy Pelosi is at 35% approval, 47% disapproval (whereas in April, she was at 31% approval and 48% disapproval, so her image has improved since then).

Barack Obama, meanwhile, while having seen his approval ratings slump somewhat, still enjoys much higher popularity than anyone in Congress. His approval ratings, according to various polls, average at 45%, and range from a low end of 40% (Fox News, 54% disapproval) to a high end of 47% approval and the same amount disapproving.

So no matter what poll you take, Barack Obama, while hardly at the peak of his popularity, is STILL seen far more favorably than anyone in Congress, ESPECIALLY Congressional Republicans, ESPECIALLY their conservative wing.

It is inevitable that this government shutdown will take a heavy toll on the Tea Party’s, the conservative movement’s, and the GOP’s image in the American public’s eyes, and it may well prevent Republicans from retaking the Senate and the White House in 2014 and 2016. Even before the shutdown began, polls were warning that more Americans would blame the GOP than Barack Obama for the shutdown. Now, after it has happened, the veteran political analyst Charlie Cook warns us that the shutdown could cost the GOP future elections.

Despite the garbage that the Tea Party and its allies on talk radio like Rush Limbaugh probably feed you, the reality is that the absolute majority of Americans wants moderate policies from the GOP and wants both parties – including Republicans – to compromise. Gallup has demonstrated this repeatedly over the last several years, over and over again, including here, here, here, here,  here, here, and most recently here. In fact, as the shutdown drew closer, Americans’ desire to see the two parties compromise increased.

According to that most recent poll, published just a week before the shutdown, 53% of all Americans (an absolute majority), as well as 56% of moderates, 65% of liberals, 55% of indies, 61% of Democrats, and even a plurality of conservatives (42%) said, just a week before the shutdown, that it was more important to compromise and avert the shutdown than to “stick to principles.” Just 25% of all Americans, and only a third of conservatives, said it’s more important to “stick to principles.”

The two groups most hostile to compromise were Republicans (only 38% supported it) and Tea Partiers (39%). 36% of Republicans and 40% of Tea Partiers said it’s better to “stick to principles” even if it means shutting the federal government down.

This fact is not lost on the American people; by far their biggest criticism of the GOP is that it is “unwilling to compromise.” This is the biggest criticism levied at the GOP by Dems, independents, and even Republicans themselves.

The current government shutdown will only aggravate this problem. The longer it continues, the heavier the toll on the GOP’s and the conservative movement’s image will be.

Contrary to what the Tea Party and the likes of Rush Limbaugh tell you, the GOP is not “Dem lite” or “not conservative enough” and does not want to “surrender” on Obamacare. The GOP is, in fact, criticized by American voters, including a plurality of Republicans, for being too unwilling to compromise. And compromise is not nearly the same thing as surrender – under a compromise, EVERYONE has to swallow unpalatable stuff, Republicans as well as Democrats.

The biggest damage will be in the eyes of moderates, women, youngsters, and minorities – the very voters the GOP will need to win future elections, or to even stay relevant as a party.

Why it’s a bad policy

The shutdown is not only bad politics, it’s bad policy too. The GOP’s objective, as we all know, is to get rid of, or defund, Obamacare. However, that – or any other meaningful policy change – CANNOT come about while Obama is still in office and controls the Senate. Republicans simply CANNOT govern the country from one half of Congress – as the astute Charles Krauthammer, Brent Bozell’s MRC’s latest award recipient, has rightly remarked in a column warning Republicans against the shutdown.

To defund Obamacare, Republicans can do only two things: either shut the entire government down, as they have done, or somehow convince Senate Democrats to pass, and President Obama to sign, a bill defunding Obamacare.

As Krauthammer has warned in his seminal column, there is NO WAY IN HELL Obama will sign into law a bill defunding, or delaying the implementation of, his singular legislative “accomplishment” – the Dems had been waiting for over 50 years to check this item on “FDR’s Unfinished Business List”, as Ann Coulter calls it.

Obama will never agree to anything that defunds his sole legislative “achievement”, the sine qua non of a liberal welfare state, liberals’ Holy Grail. Nor will Senate Democrats, marching in lockstep with Harry Reid, vote for defunding or otherwise gutting Obamacare.

And short of them agreeing to the impossible, the only way to defund Obamacare is to shut the federal government down completely.

Republicans have already tried this, in a way. In 1995, under Newt Gingrich’s leadership, they offered President Clinton a budget funding parts of, but not all, of the federal government; cutting spending faster than he was willing to accept. When Clinton said no, Republicans shut the federal government down – and that killed their chances of winning in 1996. Eventually, Republicans had to agree to a budget on terms not much different from what Clinton offered before the shutdown.

So no, there is no way Republicans can win this shutdown battle – or to defund Obamacare while Obama is still in office.

And let’s use some common sense. Does ANYONE really believe that Republicans can undo ANY meaningful Obama policy – ANY significant part of Obama’s “legacy” – while he’s still in office, wielding a veto pen, a bully pulpit, and a 55-seat Senate majority?

Margaret Thatcher famously said “first you win the argument, then you win the vote.” What she forgot to add is “and only then can you make policy.” Thatcher would’ve never been able to make any policy changes had her party not won a clear majority in the Commons. And that, in turn, would’ve never happened if she had led her party to the right fringe of British politics, alienating the vital center.

Republicans first need to convince a clear majority of Americans that Obamacare still can and should be repealed, then win back the Senate and the White House, and ONLY THEN can they make any policy changes, like repealing Obamacare.

So the shutdown, however it ends, will CLEARLY fail to achieve the GOP’s objective: defunding Obamacare.

The damage to the military

In addition to the damage the shutdown will do to the GOP’s and conservatives’ public image, it will also wreak havoc on the US military, adding greatly to the damage being done by the sequester.

A government shutdown means that eventually, when the money runs out from previous years’ approps, there will be nothing to pay the troops with, no money for their and veterans’ care, and no money for current training and equipment maintenance, operations (like protecting the skies over the US), and the development and acquisition of new equipment, nor to pay DOD civilian employees (the majority of whom are not pencil-pushers but real hard workers, like mechanics at military depots).

Why shut the government down?

The ancient Chinese strategist Sun Tzu advised against fighting on ground, or at a time, disadvantageous to you, or when the enemy is too strong. He further wisely counseled (The Art of War, ch. 12, v. 17):

“Move not unless you see an advantage; use not your troops unless there is something to be gained; fight not unless the position is critical.”

So how did America get into this mess in the first place? If the shutdown won’t achieve any conservative policy objective and will only do damage, why was this stand-off started?

Because the fringe of the GOP, including the Tea Party, which views any compromise as betrayal and anything other than scorched-Earth tactics as surrender, demanded that Republicans shut the government down over Obamacare. And most Republicans in Congress, scared to death of a Tea Party primary challenge, listened to the Tea Party and followed suit – thus driving America over the cliff.

Most House Republicans and many GOP Senators, including Ted Cruz, Mike Lee, and Rand Paul, come from single-party GOP monopolies where most people are hardline conservatives who see any compromise as treason. These politicians live in single-party conservative cocoons and are thus totally detached from reality and out-of-touch with most Americans (as is the Tea Party itself). Just check the PVI ratings of Raul Labrador’s district (ID-1) and of the states of Texas, Utah, and Kentucky. Their districts and states are no more representative of America than Nancy Pelosi’s SF district.

Thus, they have no incentive to compromise, and far more to fear from a Tea Party primary challenger than a general election Democratic opponent. So they continue pushing the country to the brink, as the Tea Party demands, the consequences be damned.

Sadly, they may well take the GOP, and not just the country, over the cliff with them.

Quantitive Pain

Janet Yellen - The Face of Pain
Janet Yellen - The Face of Pain

Janet Yellen – The Face of Pain

Ben Bernanke out, Janet Yellen in. But, don’t worry, the same failed fiscal policy will continue chugging along.

For those playing catchup, since 2008 the Fed has been using a practice called “Quantitative Easing” or QE. Since the interest rates have already been at or near 0%, it’s the Fed’s way of inflating the money supply. The theory goes that by buying financial assets, businesses will have access to easy credit and easy cash, then they’ll open factories, hire employees, and that will get the economy going again.

As it happens, there are two big problems with this plan: the capital is straight out of Wonderland, and everyone knows it.

When the Federal Reserve prints cash to buy assets, business hasn’t improved, there’s no extra demand needing to fill, and there’s no reliable projection to indicate it’s going to get better anytime soon. No decent businessperson is going to expand operations today, knowing they won’t have the magic money tomorrow. In other words, no one is going to take on additional liabilities without confidence they’ll have the revenue to cover them tomorrow.

Much to the contrary, it’s a very dangerous fiscal policy to follow, and one we’re all to familiar with.

When we throw good money after bad, we create an artificially large market: or, a bubble.The problem with bubbles is that they cannot be sustained forever. Already the Fed owns over $2 trillion worth of bonds and other financial assets under QE, but the Fed cannot continue to buy tens of billions of dollars worth of assets every month. The money runs out, and the bubble bursts.

Instead of the markets returning to their natural levels, investors will attempt to avoid losses and pull their cash out as well. The market contracts below its natural growth and the economy contracts. In other words, we go into recession.

This isn’t some big secret. Investors have been paying close attention to the Fed in the hopes of pulling out their cash before the QE fountain runs dry. Companies know it as well, and have been reluctant to grow, knowing the contraction which will eventually follow.

Instead of growing the economy, the Fed’s policy creates a bubble in financial markets which is not reflected in economic growth. Instead of investors being able to judge profits and growth based on customer demand, they play a game of beat-the-Fed, and businesses grow slower than they otherwise would.

Contrary to growing the economy, Quantitative Easing only slows recovery.

If you doubt it, just ask yourself why the Stock Market has hit record highs in 2013, yet unemployment remains at 7.3% and labor participation remains at a 35 year low.

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Federal Government: Embarrassing to the Point of Painful

As the so-called “government shutdown” drags on, one thing is hard not to admit: the Obama Administration is acting in a manner that is attempting to extract the maximum amount of pain on the American people. While many are wondering how it came to this point, those of us who actually paid attention in Social Studies, Civics and American History classes – school subjects that are, today, given little, if any, attention –
understand it’s because the US Constitution and the purity of the original governmental process has been raped by the opportunistic political class.

Our nation has always had a robust political discourse, commencing from before we were even a documented nation. We have always been represented by a passionate, spirited political class; strong in their beliefs, but educated and knowledgeable enough to legislate and govern for the good of all the people. Today, this is not the case.

Today, we have a political class that insists on the importance of ideologically motivated political “achievements” over the honest representation of the American people; loyalty to political faction – of which each and every Framer and Founder warned – over loyalty to those who delivered them to power via the ballot box.

Today, we literally have people in the political class that have an inferior command of the English language, an inferior and under-performing understanding of the principles of the Constitution and the Charters of Freedom, and a devotion to Progressivism; a non-indigenous, Marxist-based ideology that believes the State is the Alpha and the Omega; the giver of rights and the final arbiter of freedom and liberty.

Today, we have a government that does not – does not – serve the American people, evidenced – in a singular point – by the overwhelming and sustained majority of Americans who do not want the Affordable Care Act implemented on any level.

FOX News reports:

Is the Obama administration employing a make-it-hurt strategy to gain political leverage in the budget battle on Capitol Hill?

Republicans are making that charge as the stalemate drags on, and point to the Pentagon furlough of 400,000 civilian staffers — even though Congress passed and the president signed a bill to supposedly keep them on the job…

Republicans argue that the intent of the law was to keep them on the job, and that the Obama administration “narrowly interpreted” it against congressional intent in order to furlough more employees.

It’s one example of how, Republicans say, the administration is making the partial shutdown of government services worse than it needs to be. Many have complained about the National Park Service cordoning off even open-air monuments in Washington, DC, such as the World War II Memorial.

Senate Majority Leader Harry Reid (D-NV), responded to criticisms by saying, “It is time for Speaker Boehner to stop the games.”

Shamefully, FOX also reported that correspondence on this situation has stalled because, as Rep. Buck McKeon (R-CA), stated, “Unfortunately, most of the staff who draft congressional correspondence are furloughed.”

A few notes on this shameful situation.

First, and to be equally critical to both sides, if “staffers that draft congressional correspondence” have been furloughed, perhaps those elected to Congress should learn to (and actually) write their own correspondence.

Second, to the Progressives, Democrats and our embarrassing President, it is never “game-playing” when the taxpayer’s money is being spent. It is “game-playing” when members of our military who have been maimed and permanently injured can’t get medical care because the politically opportune refuse to entertain appropriations passed through a traditional method (not every spending bill has to be an omnibus package, in fact traditionally, the 12 appropriation bills have been passed separately).

House Republicans “screwed the pooch” when they didn’t advance ACA funding as a separate, stand-alone appropriations bill from the start. When House Speaker Boehner stated that this Congress would operate under “regular order” he should have stated that the House would be de-bundling all legislation into stand-alone pieces, shining the light of truth and accountability on everything that passed across the House floor. Sadly, traditional, inside-the-beltway pork politics prevailed and the practice of bundling legislation to appease the politically greedy has delivered us to this point.

Truth be told, had the political class not blindly followed the Progressive Movement into ratifying the 17th Amendment, none of this would have ever come to pass. But, then, the Commerce Clause wouldn’t have even come close to allowing much of what the Federal government has done that encroaches into our daily lives.

Additionally, if Harry Reid would have operated lawfully, the omnibus appropriations package would have already been legislated, as he is – is – bound by law to have produced a budget by April 15 of each year. He has not done so since before Republicans took control of the House.

The sad, but glaringly true, fact is this. Our government has become too big and too bureaucratic. Our government has manipulated and strayed from the boundaries of the US Constitution, which is a mandated blueprint for limiting government.

Until We the People insist on repealing the 17th Amendment so as to re-employ constitutional protections for the States, and until Congress re-visits the Federal government’s grotesquely over-reaching interpretation of the Commerce Clause, it will be up to the States to save the nation, either by Constitutional Convention (which in and of itself is very dangerous were the original words of the Constitution to be manipulated by the opportunistic) or by, God forbid, secession.

And it is with tears in my eyes for our country; for freedom; for liberty itself, that I acquiesce to the notion. Buy, my God, are we to allow the greatest achievement of freedom in the history of the world be extinguished at the hand of ideological bullies?

The words of Patriot Patrick Henry said so very seriously then, are just as cogent today:

“Why stand we here idle? What is it that gentlemen wish? What would they have? Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery? Forbid it, Almighty God! — I know not what course others may take; but as for me, give me liberty or give me death!”

To win, Republicans should focus on economics

fairtax

fairtax

As I have written a number of times here on CDN, the GOP is viewed very negatively by the majority of the American public, especially women, youngsters, and minorities – key demographics that the GOP absolutely must win over to remain a viable party, let alone to win future elections.

What is the key to winning their votes? It’s not accepting amnesty for illegal aliens or abortion on demand. Instead, Republicans should focus like a laser on the issue most important to these groups (and to the American electorate at large): the economy.

According to Gallup polling, economic issues (jobs, economic growth, the federal budget, taxes, fair trade) are by far the most important issues for American voters, far more than education, healthcare, or foreign policy. Yet, these days, we seldom hear Washington and the media talk about anything other than Benghazi, Syria, the Obama admin scandals, immigration, and social issues. While these issues are not irrelevant, they pale in importance compared to the economy. It doesn’t matter if the Benghazi scandal is investigated fully if the economy doesn’t recover and unemployed Americans (including college grads) don’t find jobs.

It’s the economy, stupid!

Republicans need to note that and act accordingly. Luckily, there’s a huge opening for Republicans here, because, as stated above, BOTH major parties and the media seldom talk about the economy, despite its importance to American voters (including the key demographics listed above), so Republicans have a chance to distinguish themselves from the Democrats.

From now on, Republicans should devote only a minimum amount of time and hearings to Benghazi, Syria, Obama admin scandals, and social issues, and devote the vast majority of their time and legislation to the economy, while also conducting town hall meetings, listening tours, and media interviews on that subject – and thus, force the media and the Democrats to shift the subject of the national discourse to the economy.

Thus, Republicans would force Obama and the Democrats to fight on grounds favorable to Republicans – grounds where the Democrats cannot win.

But just talking about the economy won’t be enough; one must also propose, and attempt to implement, effective policies. Specifically, Republicans should pass in the House, and introduce in the Senate, bills that would:

  1. Cut spending seriously along the lines proposed in the Ryan Plan or, even better, the Republican Study Committee’s plan, e.g. the RSC’s Spending Reduction Act.
  2. Privatize government-owned enterprises such as Amtrak, the Postal Service, the Corporation for Public Broadcasting, etc.
  3. Provide full funding and a permanent authorization for the Export-Import Bank, which supports US industry and exporters without providing any subsidies.
  4. Institute the Export-Import Certificates for foreign countries proposed by Warren Buffett – thus allowing foreign countries to export to the US only as much as they import from the US, and also institute strict product quality standards on foreign (including Chinese) products.
  5. Strengthen Buy American laws.
  6. Utterly reject any form of amnesty for illegal aliens and dramatically cut down the levels of immigration, both legal and illegal, while making it easier for highly-skilled foreign workers and university grads to immigrate to the US and contribute to the US economy.
  7. Block-grand Medicaid to the states and pass Medicare and SS reform.
  8. Pass legislation that would legalize fracking throughout the country, open all shale oil and NG reserves, open the ANWR and the National Petroleum Reserve in Alaska, authorize the Keystone Pipeline over Obama’s objections, and authorize offshore oil drilling.
  9. And most importantly, abolish the IRS, the Internal Revenue Code, and the 16th Amendment and replace them with the FairTax (H.R. 25). The IRS is not an agency whose powers have been abused – the IRS and the federal income tax are DESIGNED for abuse. They are DESIGNED to be tools of oppression per se. Making the income tax flat, or eliminating section 501(c)3, or “improving oversight”, or passing a mild reform bill will NOT solve the problem, because it would still leave the IRS (with its awesome audit and status denial powers and its huge bureaucracy) and the income tax (which punishes people for productivity and takes away what they’ve earned) still in place. So a flat income tax would change NOTHING. ONLY the FairTax bill (H.R. 25) would solve the problem by abolishing the IRS and the income tax FOREVER, mandating the destruction of all personal records held by the IRS (except those related to SS, which would be transferred to the SSA), and initating the repeal of the 16th Amendment.
  10. States should also enact significant economic reform by cutting taxes and spending, implementing tort reform (including the Loser Pays rule), and adopting Right-to-Work laws.

Last but not least, Republicans should explain, in detail, to average Americans how exactly these policies would benefit them directly. This is something that Republicans have so far failed to do.

In trying to win future elections, Republicans will be climbing uphill. But the economy is not an issue of just one special interest group or one demographic. It is an issue which all Americans care about, and the vast majority prioritize above all other issues, yet, the media and Washington seldom talk about it. If Republicans start prioritizing the economy instead of Benghazi and Syria, they’ll show the public they are totally different – they’ll offer a totally different, and a much different, product to a public that is eager to buy it.

The Flat Tax fantasy

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In the wake of the recent IRS scandal, some well-intentioned but badly misguided people have begun touting the flat income tax (called the flat tax for shorthand) as a replacement for the current tax code. They claim it would be an antidote to the IRS’s abuses and curb that agency’s powers while also supercharging America’s economy.

But they are dead wrong. The flat tax is no solution at all. It would not solve any of the problems with the current tax code and the IRS, and it could be replaced with a progressive income tax by the next Congress anyway.

Here’s why the flat tax would utterly fail to solve the problem, and why the FairTax – a flat 23% consumption tax designed to replace all federal internal taxes (income, payroll, excise, gift, death, etc.) is the solution:

  • The flat tax would still be an income tax, and as such, would still punish hard work, wealth creation, productivity, and savings, taking away from people what they have earned. Making an income tax flat does not change the fact that it is still a punitive tax on INCOME. By contrast, the FairTax, as a consumption tax, would be levied only on retail sales, not on income, inheritance, or the sales of raw materials or unfinished products.
  • With the flat [income] tax, you would still have to file tax returns every year by April 15th, and be liable for any mistakes you make therein. With the FairTax, there would be no such problems.
  • Administering the flat [income] tax would still require having a large IRS with dozens of thousands of staff to receive and review tax returns, audit people and organizations, and punish cheaters, and the IRS would, of course, retail ALL of the awesome powers it currently has, all of its staff, and all of its budget – and would still retain all your financial records. By contrast, with the FairTax, the IRS would be abolished PERMANENTLY, and under the FairTax bill (H.R. 25), all IRS records would have to be destroyed within 2 years of the FairTax being enacted – the sole exception being records related to Social Security, but these would be turned over to the Social Security Administration, not retained by the Treasury.
  • Unlike the flat [income] tax, the FairTax would be administered by the states, who would then send the revenue (minus their costs of administering the FairTax) to the federal government. Thus, it would dramatically shift the balance of power in the US in favor of the states and against the federal government. There would only be a federal Sales Tax Bureau with 51 personnel to audit the states in rare cases of state malfeasance.
  • The flat [income] tax would keep the current tax code, although it would be somewhat slimmed down from today’s 70,000 pages. The FairTax would abolish the federal tax code completely and replace it with the simple 123-page FairTax Act.
  • The FairTax would provide sufficient revenue for Social Security, though not for the entire federal Leviathan that exists in Washington today.
  • The FairTax would be completely transparent – you would know how much you pay in taxes everytime you make a retail purchase. By contrast, even under the flat tax, you would not know how much you really pay in taxes.
  • The flat [income] tax would keep the 16th Amendment. The FairTax Act would jumpstart the process of REPEALING the 16th Amendment forever, and would sunset (i.e. expire) automatically 7 years after its enactment if the 16th Amendment is not repealed within that time. But once Congress passed a resolution repealing the 16th Amendment, the states would be eager to ratify such resolution, as it would shift the balance of power in their favor.
  • The flat [income] tax would keep tax exemptions and thus allow the IRS to decide who deserves them and who doesn’t. Conservative groups applying for such exemptions would still face IRS audits.
  • And last but not least, the flat [income] tax would not remain flat for long. The next Congress could repeal it and replace it with a progressive one. The evidence? The current monstrosity of a tax code started in 1913 as a flat income tax at a 4% rate. But just 4 years later, in 1917, it was a heavily progressive income tax, with a maximum 77% rate. Although the maximum rate was later cut under the Coolidge Administration to 24%, it was still a progressive income tax – and 24% was still a rate that not even the most fervent advocate of the income tax had hoped for in 1913. Similarly, when President Reagan and the Congress enacted the 1986 tax reform bill, creating only two low rates, it took the Congress and Reagan’s successor, George “Read My Lips” H. W. Bush, only 4 years to add two new, higher rates, and thousands of pages, gimmicks, exemptions, and loopholes, thus essentially undoing President Reagan’s tax reform in just 4 years.

The flat [income] tax is not a solution. It would not solve ANY of the problems with the current tax code, the IRS, the 16th Amendment, the income tax itself, or the US political system. Only the FairTax would do that – by doing away with the income tax, the IRS, and the 16th Amendment PERMANENTLY.

It is no coincidence that the FairTax bill now has over 70 sponsors and cosponsors in both houses of Congress (including such conservative stars as Sen. Ted Cruz and Congressman Tom Price), while the flat tax bill has only one sponsor in the Senate and no companion bill in the House.

The flat tax is not a solution to anything and should not even be considered.

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Shock! IMF cuts global economic forecast.. for third time this year

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chart-imf-620xaTuesday, the IMF updated it’s World Economic Outlook downgrading three-out-of-four of the world’s most powerful economies.

While the Eurozone was given an outlook putting them more into reverse, the U.S. and China are now expected to grow even more slowly than the previous projections. Only Japan was given an improved outlook.

News reports have spun the three consecutive downgrades as showing the global economy “in nuetral”, but declining expectations and now U.S. small business sentiment dropping in June paints a much more bleak picture – the recovery that has been heralded seems not to be materializing.

There are approximately 9 million fewer jobs in the U.S. economy than when the recession started. With only 47% of adults holding full-time jobs, things are not likely to improve soon as government programs pull more money out of the economy through fees and taxation and leave less capital for growth and investment.

The latest Bureau of Labor statistics report echoes the IMF’s report. The report showed that job growth was mainly in part-time jobs and that a large portion of the American workforce remains unemployed which gives no reason to doubt the recent IMF downgrade.

Emerging markets took a hit as well. Brazil had it’s growth prediction dropped from 3% to 2.5%.

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