Liberty and Equality: Are They Compatible?

Both represent ideals we Americans hold dear. But they aren’t really the same thing and as we have seen in the still acrimonious national debate over the issue of health care and the government’s proper role in providing it, the two concepts come into stark relief.  Moreover, a tension between the meaning of freedom and the meaning of equality will be tested further as President Obama and his newly muscular acolytes in Congress, still intoxicated by the success of their battering-ram legislative strategy, begin to eye other opportunities to (as our president likes to remind us) transform America.  And make no mistake about it; the transformation “party” the president is hosting has only just begun. Think card check, think cap and trade, think compensation control, think regulatory expansion and think, REALLY THINK, about the greatest search in the history of America, through every nook and cranny of our economy, for new sources of tax revenue to pay for the transformation.

To us the word “freedom” embodies the individual right of free choice. The word equality encompasses the bedrock principle that every person should have the same rights to all the protections and rights granted under our Constitution.  Thus, the rallying cry of Patrick Henry, “give me liberty or give me death” exists side by side with the proposition best enunciated by Martin Luther King’s I Have a Dream speech where he envisioned a world “where people would be judged by the content of their character and not the color of their skin.”   In other words, the concept of  “equality” defined as Dr. King stated it can, and should, live side by side with the concept of “liberty (an individual’s right to personal choice) as enunciated by the famous remark of Patrick Henry. But with regard to the expansion of government into the private sector the two words can run into conflict.

Those of us who were, and are, appalled by last week’s heavy-handed spectacle of one-party rule mandating the biggest expansion of government in the lifetime of almost everyone reading this essay are alarmed about the ramifications of almost tyrannical rule by a ruling class seeking to expand government into the furthest reaches of what has always been within the domain of the private citizen’s personal choices. Our friends on the left say that we are on the wrong side of history, but it is they who occupy that space.  It is they, including our president and his party, who are racing full speed backwards to emulate societies with entitlement systems that threaten to hobble one nation after another. Think Portugal, Italy, Greece, Spain, Great Britain, France, Ireland, Japan and on and on.  The governments and economies of Greece, Portugal, Italy and Spain are hanging on by their finger tips, more or less, counting on the healthier members of the EU (e.g. Germany) to bail them out although “not so fast” say the Germans).  We could go back into history a little further and romanticize the failed egalitarian dreams of the Soviet revolutionaries or, perhaps, Chairman Mao’s People’s Republic of China.  But the Soviet Union crashed nearly a generation ago and China abandoned Chairman Mao’s dream as soon as he died (and they have had nothing but robust economic growth to show for it).  So exactly who is on the wrong side of history here?

Make no mistake; the transformation that the left has in mind for America is nothing more than a grab for the redistribution of wealth. They disdain the creation and broadening of wealth. And that is where liberty and equality may very well come into conflict. The left wants to create a society based on some expanded notion of egalitarianism which has nothing to do with equal opportunity under the law, and throw under the bus the ordered liberty which has been the bedrock principle which every generation of Americans has enjoyed, and countless others around the globe have envied. It is what Ronald Reagan had in mind when he correctly described our country as the shining city on the hill. Unfortunately the leftists who now run this nation only know one hill and of course that is Capital Hill from which they dictate their ever-expanding mandates.

We believe that individual liberty, that radical Lockean idea which our founders bequeathed to us, has produced the greatest, most vibrant and most promising society man has ever known and, in fact, actually provides the greatest amount of equality for the greatest number of people.  Our society has prospered because so many Americans were willing to fully participate, to the best of their ability, in pursuing the proverbial American dream.  Wave after wave of immigrants who escaped oppressive regimes or societies that afforded no real hope of achieving their highest aspirations for their children have invigorated our nation and been an engine for constant economic growth and the creation and expansion of private wealth to the betterment of all our citizens. A national policy such as that which appears to be unfolding in America today, the cornerstone of which is the promotion of economic egalitarianism (as we said above, nothing more than a fancy term for the redistribution of wealth) can only be pursued by vastly limiting the personal freedom of individuals to chart their own course through life.

The radical 17th century thinker, John Locke, whose writing so influenced our founding fathers, advanced the notion that the role of government should, more or less, be confined to protecting the people…and their liberty.  His writing, Second Treatise Concerning Civil Government could have served as a template for our own Constitution (and it probably did) with its formulations of checks and balances and representative government. He equated government encroachment on individual liberty as tyranny.  To our founding fathers, that said it all.

Washington, Adams, Hamilton, Jefferson, Franklin, Madison, George Mason and others enshrined the thinking and, indeed, the exquisite wisdom of Locke in our founding documents including the Declaration of Independence and the Constitution of the United States. That radical thinking generated the energy that enabled a newborn country of mostly poor people to make a dash to freedom and prosperity the likes of which the world had never seen. The peoples and governments of Europe, much of Asia and even many in Latin America were quickly inspired by the American experience.

As we watched the well-orchestrated farce played out from the US House of Representatives last Sunday night, we couldn’t help but think of the choices being stripped from the people and their state governments throughout the land.  As has been frequently written in recent months, many healthy, young families choose to allocate their limited resources to other needs besides health insurance. Many of us would view that as a poor choice.  But the choice to buy or not to buy health insurance has always been theirs to make, and the argument that if the uninsured fall ill it is a burden on our economy is not nesessarily true. Friends, families, private charities often cushion the impact.  Not anymore. “You will buy and you will buy the coverage we say you must buy, or we will fine you,” our government will, in effect, soon tell them.  And just in case anyone thinks that might be an overstatement, the government is now authorized to hire nearly 17,000 new IRS personnel to monitor which individuals are, and are not, complying with these and a plethora of other new rules.

An individual or a small business making over $200,000 is now deemed to be wealthy, which is Obamacare speak for those who will find the government’s hand in their pockets to grab extra tax money to help fund this newest of entitlements.  And, if those same people have worked hard enough and have saved some money to invest in dividend or interest-bearing securities, well, thank you very much, the government will tax that income over and above the higher tax already paid on it under the now higher personal income tax they have now legislated for these wealthy citizens.  A variety of businesses will also be (pardon the term) shaken down to help fund the new health-care “entitlement”.  Pharmaceutical companies, medical device companies, tanning salons, medical cosmetic surgery practices, insurance companies and other industries who we presume will be added will be charged fees to help fund the program.

We will leave it for now to others to pick apart the new so-called health-care  “reform.” There is no end to the writers and commentators who are already doing that.  We do, however, wish to advance the thought that the reported 30 million Americans who are uninsured and are, therefore, according to the government’s case for taking control of the nation’s health care, denied adequate medical treatment, can be doctored up for a lot less than the trillions this enormous new medical entitlement is going to cost.  In fact, the government could hire 30,000 new doctors at $200,000 per doctor (more than the earnings of the average physician) each managing 1000 patients a year (less than the average number of charts per physician) and provide doctors for all of the uninsured for about $6 billion per year. And yes, we recognize there will a few billion more required for various tests and procedures, but the trillion-plus-dollar takeover, for the medical-care makeover is an enormous and irresponsible burden to place on the American economy.  We can’t afford it, just as Europe can’t afford it.  But as the President said, that’s what he came to Washington to do.

Perhaps the ubiquitous Reverend Al Sharpton who seems to insinuate himself into every high-profile controversy said it best on Fox as the infamous vote was being tallied. When rhetorically asked by the equally ubiquitous Geraldo Rivera whether he was concerned that the vote was a big step toward socialism, Reverend Al happily responded that when America voted for Barack Obama, America voted for socialism. And he was right…only most Americans who voted for Obama really didn’t know or believe that.

That is why, with this president and this Congress we are facing the possibility that the change Mr. Obama promised could be irreversible. Entitlements, once enacted, become taken for granted. Moreover, they become the baseline for future generations . To those in power, the thinking of John Locke, Adam Smith, not to mention, George Washington, Alexander Hamilton, Thomas Jefferson, Benjamin Franklin, James Madison and virtually all of the founding fathers are clearly passé. Instead our leaders, seemingly blind to the wreckage caused by regimes which followed the discredited theories of economists who preached about the wonders of state-controlled economies, are blindly heading in the wrong direction in order to take over more and more of what has always been part of the private sector and our private personal responsibilities.  In their view, government knows best.

The president’s audacious but absolutely honest campaign promise that he was going to “fundamentally change America” couldn’t have been more candid.  And as last week’s House vote was evolving toward a nearly certain majority in his favor, he, again very candidly, told the Democratic caucus (and the American people) “this is what I came here to do,” not to simply make health care a government preserve, but to fundamentally change America. Watching all of the back patting taking place following the signing ceremony last Tuesday, it is evident that the President and his administration really believe that America wants him to fundamentally change the country.  As Vice President Biden, whispered to the President (and 300 million other Americans) “this is a big f——deal.”

A Perfect Storm: Deficit Soaring…Debt Soaring…Number Who Pay No Taxes…Soaring

The “Perfect Storm,” described by author Sebastian Junger in his 1997 best-selling novel by the same name, referred to a confluence of weather conditions that produced a monster hurricane off the coast of New England. Today the term is commonly used to describe any combination of circumstances that drastically aggravate any given situation. For example, an exponential increase in the number of retired elderly Americans who require more health care being supported by a declining number of young Americans who provide the funds to cover those health care costs. With over 70 million baby boomers about to retire we, indeed, have the conditions for a perfect storm

The President and Congress seem to have no trouble grasping the logic that the more people who share the cost of health care the less the cost per capita will be. In fact, the very cornerstone of their health care program is that everyone be required to pay into the system with which we manage the nation’s health care. That same logic, however, seems to elude them when it comes to sharing the growing cost of government. They consistently propose that we compensate for the ever-diminishing number of American taxpayers by simply increasing the taxes on those who already pay the most. Their mantra for every expansion of government programs is that the wealthy should pay their fair share. How can you argue with that? Shouldn’t everyone pay his or her fair share, whatever that is?

Unfortunately, the path we have traveled in the past half century in relentlessly increasing so-called “entitlement” expenditures has put us on the horns of a dilemma in which the number of Americans who pay absolutely no taxes is soaring at the very time government spending is producing a voracious federal appetite for tax revenue. The good news is that 142 million tax returns were filed in 2008 (the last year for which data are available). The bad news is that nearly 52 million of those returns, utilizing a potpourri of deductions, exemptions and tax credits, reported zero taxes due. What is even worse is that, in just the last ten years, the number of tax filers reporting zero taxes due has increased by 60 percent. So just how did such a bizarre reality come to be? The answer is simple: politics.

We doubt that anyone would argue with the notion that those who earn more should pay more in taxes. We certainly wouldn’t. But America has been sold on the idea that the rich should not only pay more in taxes (which is only fair) and that they should also be taxed at higher rates than anyone else, but also that they should pay their “fair share” of the taxes from which many of their fellow citizens have been excused.

Who is rich, of course, is in the eye of the beholder. How much of the bill (one’s fair share) for providing government services should be sent to those who are perceived to be rich depends largely on the motivation of those who write our nation’s tax legislation. On one end of the spectrum we have those who are motivated by the politics of envy. On the other end of the spectrum we have those who appreciate the economic need to maintain an environment encouraging risk taking and entrepreneurship. Another motivating factor is, of course, the extent to which our citizens believe that government, in order to maintain a just and orderly society, must supply certain needs and desires that require income to be transferred from one set of citizens to support another set of citizens.

Government has grown tremendously over the last eighty years as politicians have embraced the idea that Washington should be a proxy for family…that we should look to government to provide more and more of what people need or desire rather than depend on our personal and family support systems and our own labor and intelligence. Thus, more and more of what we need or, perhaps, desire are not viewed as goals or objectives to be attained, but more as rights that are conferred upon us by the moral obligation one citizen owes to his or her neighbor …which morphs eventually, but assuredly, into a governmental obligation.
Before the New Deal, the role of government was more limited to services usually provided by states and cities such as police protection, firefighting, emergency ambulance services and public elementary and high schools. The federal government provided for such services as the national defense, foreign relations between nation states, regulation of interstate commerce, national banks and postal service. Basic day-to-day care, feeding and nurturing were individual and family responsibilities with strong support, when needed, from charitable organizations.

At the national level, ever since 1913 when the 16th Amendment to the Constitution was ratified, federal expenditures have been funded largely by income and excise taxes. From its inception our federal income tax system has called for a graduated rate of tax, which means that at each increase in certain stated marginal income levels, the next amount of income is taxed at a higher rate. Although many believe the tax system would work better and fairer if all deductions and exemptions from tax were eliminated and only one rate were applied, there has been widespread support for the notion that those who make more money should pay tax at increasingly higher graduated rates.

At what level of income should the highest rate apply and what should that rate be? President Obama campaigned on the promise that any tax increases proposed by his Administration would be imposed only on the highest five percent of the population and that taxes for the rest of the people would not go up by a dime. His cutoff point is often said to be $250,000 per annum.

Given our annual deficit, now running close to $2 trillion, it is clear that annual income tax collections are not sufficient to support the level of government we have, nor the debt service on the accumulated debt, which we have already incurred. Nor, even with confiscatory tax rates can we plug the gap. (More on that later.)

As we have previously written, we can service our debt and provide government services either by rolling over and expanding the nation’s debt, printing money, thereby cheapening our currency and risking massive inflation, finding more and more sources to tax, thereby taking more money from the private sector, or cutting spending. Sadly, so far the current Administration and Congress, not to mention the Bush Administration and the prior GOP congresses have shown no signs of having any spending discipline. Congress recently passed a program into law, which requires that each new expenditure be accompanied by a corresponding expenditure cut or a new source of revenue. A step in the right direction, you might say. Not more than three weeks later, however, they passed an $80 billion spending bill and waived the pay-as-you-go requirement.

Because the debt problems of the nation have reached such a critical stage, major new programs have become far more contentious. Health care reform, a cap-and-trade environmental law, expansion of college scholarship programs, even if they all were to work as envisioned, will add to the deficit and all Americans know it. The health care bill, which the president says is revenue and expense neutral, will cause a major increase in our deficit. It is neutral only because it includes ten years of taxes and contains only six years of benefits…among other accounting tricks, such as burying the “doc fix” in separate legislation — an action that will add approximately $250 billion over the next ten years.

Since the left sees 2010 as a chance to transform America into a nation almost totally dependent on government, with more and more decision making and personal responsibility taken away from private citizens and managed by Washington, let us see if, as the Pelosi/Reid/Obama axis claims, new programs can be paid for if only the wealthy would pay their fair share.

The National Center for Policy Analysis reports as follows:
• According to data from the IRS, the bottom 50 percent of income earners pay approximately 4 percent of income taxes.
• The top 25 percent of income earners pay nearly 83 percent of the income tax burden, and the top 10 percent pay 65 percent.
• The top 1 percent of income earners pays almost 35 percent of all income taxes.
• The top 400 richest Americans [out of 320 million of us] paid 1.58 percent of total income taxes in 2000.

Empirical evidence also shows that the wealthiest citizens are also paying an ever-increasing proportion of all taxes collected by the federal government. Data from the Congressional Budget Office show not only that taxes on the wealthy have risen over time, but also that the 2001 Bush tax cut barely kept their share of the tax burden from rising further.

• In 1984, after the Reagan tax cut had been fully phased in, the bottom 20 percent of income earners paid an average federal tax rate (individual, payroll, corporate and excise) of 10.2 percent.
• The top 20 percent of earners paid 24.5 percent and the top 1 percent paid 28.2 percent.
• In 2001, after the first Bush tax cut had taken effect, those in the bottom quintile paid average federal income taxes of 5.4 percent, about half of what they did 20 years ago.
• Those in the top five percent saw a slight decline in their federal tax rate (28.6 percent, down from 29.7 percent).
• The top 1 percent, however, saw their overall federal tax burden increase slightly, from 33 to 33.2 percent.
Despite the accusation that it was the very wealthiest who benefited the most from the 2001 tax cut, their federal tax burden stayed level at best and increased at worst.

Catherine Reynolds in the July 20, 2008 online edition of Economix updates those figures further reporting that in 2007 the top one percent of taxpayers paid 40-42 percent of total federal income taxes representing the second year in a row that the wealthiest one percent paid more income taxes than the bottom 95 percent.

What if we were to raise tax rates further? Again there is interesting historical evidence reported by the National Center for Policy Analysis. In the 1920s the top rate fell from 73 to 25 percent but the wealthy went from paying 44 percent of the tax burden to 78 percent during the decade. A similar result occurred when President Kennedy cut the tax rate during his administration. And in the 1980s after the Reagan tax cuts the top one percent saw their share of the income tax burden increase from 17.6 percent to 27.5 percent. Clearly, time and again, raising the marginal tax rate cuts rather than increases the federal “take.”

Conversely, tax increases reduce incentives, drive business to cut costs (read “jobs”), move outside the United States and reduce research and development expenses and innovative risk taking. This country evolved from a standing start in the 18th century with a puny population, to an international economic engine, which lifted millions of people worldwide out of poverty as a result of private effort, private capital and private risk taking. We created industry after industry and millions of jobs, yet the left focuses on anecdotes of the profligate life style of a relatively few wealthy people who publicly flaunt their opulent life style. But truthfully, do we really care if in the course of creating jobs and economic security for the “many” there are a “few” who become very rich?

There is another disincentive, which every now and then gets the public’s attention: the estate tax (or as conservatives call it “the death tax”). Prior to the Bush tax cuts the government taxed (confiscated some might say) 55 percent of a decedent’s taxable estate over $1 million. Under the Bush program the estate tax was to be phased out until there was no such tax in 2010 … only to spring back to life, just like the Bush income tax cuts, in 2011 at the 2001 rate. Everyone believed at the time that over the following ten years a compromise would be reached by Congress, not only to prevent the expiration of the tax in 2010, but also to have a lower rate and a higher exemption amount thereafter. Since Congress rarely misses an opportunity to be irresponsible, that hasn’t happened. This clumsy handling of tax policy regarding residual wealth, net of all taxes paid during someone’s working life, has cost the public billions of dollars in legal fees trying to adjust wills, trusts and marital deductions to this unresolved matter.

But let us return to the disincentive of the death tax. After having one’s income taxed at rates up to 39.6 percent, paying Social Security tax of 6.2% if you are an employee (or 12.4% if you are self employed) on the first $106,800 of earnings, state income taxes of up to 12 percent in some states, Medicare tax of 1.45 percent on total taxable income (2.9% if you are self employed going up to 3.8% on ALL income, including interest, dividends and capital gains, which the left refers to as “unearned income,” under Obamacare), sales taxes up to ten percent in some cities and states, the government under this most hideous of taxes would take 55% of anything you might have left over for the children or grandchildren.

Essentially the United States is heading toward what might be called a tipping point. Increased government takeover of historically private personal obligations initiates a vicious cycle. The more we have a society where substantial numbers of people pay no taxes (now close to 40%), the more we create a voting bloc of citizens who will inevitably support new programs for which they don’t have to pay. Business people have a term for this. They dislike investing money with partners who do not invest even a minimal amount with them. It is called having “skin in the game” another way of saying that we all need to have common incentives.

We have now gone full circle in this essay. Who is wealthy? Is it someone who has any disposable money? How much should they pay? If you are a married couple raising children in Washington, D.C., New York, Los Angeles, Boston or San Francisco, to mention a few costly places, does earning $300,000 make you wealthy so that close to 40% (more if taxes are raised by the Congressional leadership) of every additional dollar earned should go to Uncle Sam? Are you a morally bad person if you do not want to shoulder an ever-increasing government appetite to provide more and more benefits to a segment of the population who view these benefits as if they are birthrights?
In our view the questions answer themselves, but as we said earlier in this essay it is all in the mind of the beholder.

SPECIAL REPORT: FROM THE EDITORS

The Perversion of Honest Law Making
The Slippery Slope that Lies Ahead

As we write this short essay, we are being promised by Nancy Pelosi that the health care bill will today be posted online so that we and those who will “deem” it already to have been enacted can actually read it. This online posting has been repeatedly postponed so that the Congressional Budget Office could score it for its 10-year cost. That exercise, which went on behind closed doors, has been tainted by secret deals, and new stealth taxes slipped in at the last minute without disclosure or debate and are based on assumptions provided by the House leadership which the CBO is required to follow.

Only this weekend will the 535 members of Congress and the American people be given an opportunity to see what is in the surprise package consisting of over 2700 pages of text. They will have 72 hours to read it before they “deem” it to be the law of the land. Presumably, they have completed the Evelyn Woods speed-reading course. We believe that millions of Americans will “deem” those Members of Congress who actually participate in this farce to be unworthy of further service. Of course, they, unlike their Congresspersons, will actually have to vote.

We make no secret about our negative view of this legislation as bad public policy. But something far more important is at work here. We would rather have the House pass the bill in normal fashion even if only by a tiny margin (as they did with their first version in November 2009) and have it properly enacted into law than to use trickery and deceit to get their way.

The Democrats in Congress point at the Republicans and say “they did it before” as if that justifies this kind of corruption of process. Leave aside that no one can cite any previous example of the use of such a combination of trickery and deceit to pass a major piece of legislation; instead let’s focus on where this country is headed. For their part, the Republicans, seem to be enjoying this debacle on the Hill, licking their chops awaiting this fall’s Congressional elections. For what reason? Is it just to get back in power for the purposes of payback?

The whole situation is beyond what commentators call gridlock or extreme partisanship. This is nothing less than a major erosion of the trust in the foundation upon which the American form of government rests. Will we have any bedrock principle of governance left upon which we can rely?

At this very time in history, we can see elsewhere what happens if the rule of law is subjugated to the will of those in control of governing. Look at the never ending cycle of democratic governments giving way to despots in many of the nations of Latin America. Take note of how in an economically successful China, an all-powerful controlling class can, by hiding the truth from its citizenry, keep over a billion people from the enjoyment of personal freedom. What has immunized us from this kind of despotism?

We can point to the genius of our Founders and the experiment in constitutional government they created in Philadelphia. But the Constitutions is only words. Our system has endured because for over two centuries the American people have had faith that their elected representatives understood their obligation to carry out the expressed will of the people. That is what we know as “trust” and that trust is disappearing before our eyes.

Our leaders should pay attention to the words of our 35th president, John F. Kennedy who famously said “We are not afraid to entrust the American people with unpleasant facts, foreign ideas, alien philosophies and competitive values, for a nation that is afraid to let its people judge truth and falsehood in an open market, is a nation that is afraid of its own people.” If we do not follow that advice, we might never get back the precious trust upon which freedom and democracy rest, which is steadily slipping through our fingers. Once it is gone it will be difficult, if not impossible to ever restore.

This week’s regular weekly edition, THE DEAD SEA SCROLLS, can be found below:

THE DEAD SEA SCROLLS

The Debt Sea, that ocean of red ink that threatens to overflow its banks and inundate every nook and cranny in America from Main Street to Wall street, is bordered on the south by the Potomac River, to the east-southeast by the Anacostia River, to the north-northeast by Prince Georges County, Maryland, to the north-northwest by Montgomery County, Maryland and to the immediate west by Georgetown and the historic 175-year-old Chesapeake-and-Ohio Canal. Continue reading

The Reconciliation Process: Reconciling or Tearing the Nation Apart

Washington is abuzz these days with talk of “reconciliation” a word in our usual lexicon that suggests bringing people together. In this case, however, it is a larceny of language. It is divisive and not conciliatory and it is, understandably, creating anguish and outrage among those who understand the subterfuge at play here. Political mischief is about to run amok as this corruption of Senate rules becomes the strategic center piece President Obama and the Democratic majority in Congress will utilize to ram their health care bill into law.

To be sure, the reconciliation process has been used a number of times during the past thirty years, usually without much angst or controversy. It has, essentially, been used in the past to remove legislative stumbling blocks to initiatives with fairly strong bi-partisan support. American tradition as well as old-fashioned common sense has generally dictated that consequential legislation enjoy broad bipartisan consensus and, in fact, the most ambitious reconciliation bills of the past have been, more often than not, popular on both sides of the aisle. In these cases, reconciliation was used for procedural reasons, not to force through a bill that couldn’t get 60 votes. It has, however, never been used to advance legislation that a substantial majority of Americans have said they do not want. Nor should it be.

It was one of the wisest and most respected of Democrats, the late Senator Daniel Patrick Moynihan, who warned his colleagues, “Never pass major legislation that affects most Americans without real bipartisan support. It opens the door to all kinds of political trouble.” It appears that the Administration and the congressional Democrats are, indeed, going to open the door to all kinds of political trouble. To paraphrase Professor Harold Hill who once bellowed in the musical comedy Music Man, “There’s trouble right (there) in River City”…the river now being the Potomac and the city being our nation’s capital, Washington, D.C.

To better understand this, we need to take a quick look at the rules of the United States Senate. Back in 1789 both the House and Senate allowed debate to be ended and a vote taken upon the vote of a simple majority when the question was called. That changed during the Jefferson Administration in 1804 when the Senate dropped the rule opting instead for unlimited debate, a practice that in one form or another has been used in other western democracies. This non-stop talkathon is known as a filibuster. The actual filibuster is no longer required. The declared intent to use it is enough under current Senate rules to stop the advance of contentious legislation.

We can always expect sanctimonious protests from either side of the aisle that “a few are thwarting the will of the majority,” when the proponents of contentious legislation are stymied by the 60-vote rule. In practice, however, the opposite is often true. For instance, what is being stymied by the threat of a filibuster in the current health care debate is an extreme makeover of a major segment of our economy that most Americans have said, repeatedly, they do not want.

In 1917 President Wilson, angry about Congress’ failure to vote on certain war measures, convinced the Senate to adopt a rule cutting off debate by a two-thirds vote. In 1975 the required vote was reduced to three-fifths or sixty percent.

Nevertheless, even with a reduction to a three-fifths vote the Senate also adopted a new process intended to allow consideration of contentious budget bills by a mere majority pursuant to reconciliation instructions in a budget resolution. The process was further refined by adoption of a rule in 1985 (the so-called Byrd Rule) that explains what kind of fiscal bill is subject to reconciliation. Since that time both parties have invoked the reconciliation process over 20 times, but never on anything resembling such a massive change in the relationship between government and private citizens and never without even a modicum of bipartisan support.

Senator Byrd, considered by many to be the dean of parliamentary law and the man who penned the Byrd rule mentioned above, stated in a written opinion at the outset of the healthcare debate, “I oppose using the budget reconciliation process to pass health care reform and climate change legislation. Such a proposal would violate the intent and spirit of the budget process, and do serious injury to the Constitutional role of the Senate.”

Rule changes often push the envelope and test the limits of legislative propriety. In the case of the reconciliation process, who advocates its use depends on whose ox is being gored. Back in 2005 when President Bush’s judicial nominees were being filibustered, making a mockery of the “advise and consent” process, the frustrated GOP majority threatened to invoke reconciliation to get up or down votes on the nominees, a threat which the Democrats named “the nuclear option.” Ironically, the very same Democrats who were so outraged by the Republican threat to use the reconciliation process to allow an up or down vote on judicial nominees now refer to its use as “nothing extraordinary.”

Then Senator Obama said “he [President Bush] hasn’t gotten his way and that is now prompting a change in the Senate rules that really, I think, would change the character of the Senate forever and what I worry about is that you essentially have … two chambers … but you have…absolute power on either side and that’s not what the Founders intended.” No, it certainly wasn’t what the Founders intended, but it does seem to be what President Obama intends now that he is in the White House and not merely in the Senate.

Now comes current Majority Leader Harry Reid, the poster-boy for hypocrisy, who noted back then “the right to extend a debate is never more important than when one party controls both Congress and the White House. The filibuster serves as a check on power [to] preserve our limited government.” Perhaps, someone should remind Senator Reid that limitation on government is particularly important when the people are sending clear messages that they are strongly opposed to what the Congress is doing.

Current Secretary of State, but then Senator, Clinton then called on her GOP colleagues to go to Bush and tell him reconciliation is “a bridge too far” that “you have to restrain yourself Mr. President.” Senator Charles Schumer then spoke of using reconciliation as bringing us to “the precipice of a constitutional crisis” saying to the majority that if “you didn’t get your way 100% of the time [it is like] throwing a temper tantrum.” However, in 2005, a bipartisan group of senators avoided testing the limits of reconciliation by agreeing to an up or down vote on several of the nominees and the issue died down.

Backing away from the brink on health care may prove more difficult. The better part of a year has been devoted to what is seen as President Obama’s signature issue. Moreover, in 2008, the Democrats were handed, by recent historical standards, very significant majorities in Congress. They interpreted this not as a rejection of the exorbitant spending during the Bush Administration or weariness with an unpopular war, but as a mandate to make unprecedented changes to enlarge the role of government in our lives. Then candidate Obama boasted, “We are going to fundamentally transform America.” With regard to health care, the President and the Democratic Congress now propose to take over more than 17% of our economy just at a time when the public has become far more attuned to the enormous danger the country faces as a result of our ever-growing budget deficits and our gargantuan national debt.

Moreover, public opinion polls in the last year, along with several off-year elections, town hall meetings and the growing anti-incumbent sentiment make it clear that the American public does not want the 2,700-page bill now before Congress. In the face of this evidence, however, and because of the election of Scott Brown to the Senate, thereby denying the Democrats a veto proof majority, the majority party proposes to undo over 200 years of Senate procedure to narrowly enact into law a 2.5 trillion dollar measure. It is a proposal of no less importance or long lasting implications to our society than the enactment of Social Security and Medicare…. and it is being pushed down the throats of the American People under the entreaties of the same Democratic politicians who in 2005 railed against expansion of the reconciliation procedure on an issue nowhere near as far reaching. Is it any wonder, Americans have lost faith in their elected leaders?

Leave aside the merits, or lack thereof, of the health care legislation. The use of reconciliation to pass a bill of such magnitude and over the objections of most Americans represents what may be the greatest display of arrogance by Congress in American history. It shows a complete disregard for the Senate’s own rules whenever it suits them. If this process is used, can anyone give us an example of any legislation when it would be improper? Actually, come to think of it we can: whenever Harry Reid, Nancy Pelosi or Barack Obama find it to their partisan advantage. Does anyone see a resemblance, however, faint it might still be, to Hugo Chavez’s brand of democracy? .

To add insult to injury, if the Democrats use reconciliation to advance their health care bill they would also have to engage in other legislative chicanery. The Senate, it seems, would have to pass a new and separate bill containing only amendments to its original bill in order to satisfy the House, which opposes the Senate bill as it stands. The House would then have to pass the Senate amendment bill and send that bill to the president for signature. Then the House would have to pass the first Senate bill and send it to the president for signature. The president would then have to sign the separate amendment into law first and then sign the original bill, in effect enacting into law an amendment to a law that did not yet officially exist. This sleight of hand would cross the eyes of any legitimate parliamentarian. Of course if the Senate Parliamentarian nixes the procedure, Vice President Biden, as the presiding officer of the Senate, can over-rule the Parliamentarian and the proverbial fix would be in.

We would argue that the elites of the liberal left believe they are smarter than everyone else and that the rest of the public simply won’t notice their perversion of acceptable procedure. But, the public does notice and it resents being steamrolled and taken for fools. The entire country ultimately sees and takes into account all the abuses of power that a tyrannical majority tries to get away with no matter who is in power.

Thus, the importance of this arcane little rule may have far more profound consequences than jamming a terrible and unpopular health care bill into law as bad and costly as that may be to the nation. What may very well be far worse is the price we pay in the loss of respect Americans have for their government. For more than two centuries this American experiment has endured, and indeed, strengthened in times of crisis because we trust its basic premise that it is founded on the rule of law. When that trust is stretched to the breaking point, we risk the emergence of even more fringe groups, conspiracy theorists, dangerous demagogues and the emergence of a segment of the population that simply will justify the evasion of what they perceive to be unjust law. Our system, at its core, depends upon the trust of the people. Loss of that trust would free a genie we may never be able to get back in the bottle.

Feeding the Deficit: The Ultimate Obesity

Controlling obesity is all the rage now in America as, indeed, it should be. Feeding the American appetite with too many of the wrong kinds of calories is exacting a terrible toll on the health of Americans of all ages. Obesity, like cigarettes, kills. In recent years, Congress, along with a compliant President Bush and now with an enthusiastic President Obama, has been appeasing another kind of appetite with reckless abandon. The toll this fiscal obesity will exact from America and our people is incalculable and Jenny Craig will be of no help.

Clearly, most Americans do not want to be force fed programs they haven’t asked for and that they know neither they, their children nor their grandchildren can possibly afford. People throughout the country are beginning to dig in their heels and a growing number of congressmen and senators know it. Seventy years ago, Japanese Admiral Isoroku Yamamoto is quoted, following his successful and deadly attack on Pearl Harbor, “I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve.” It appears that the American electorate, long apathetic and used to acquiescing by default to reckless government spending may be awakening from its long slumber. Let’s hope so, for it is the last best hope we have to rein in the destructive behavior of so many of our elected representatives of both parties in Washington and the White House strategists who lead them on.

As we noted in this column two weeks ago, Moody’s has fired the first warning shot over the bow of our ship of state. The international credit-rating agency warned that America’s AAA credit rating would be in jeopardy (given our spiraling debt) if economic growth does not keep pace with the projections made by the Obama Administration. China and Japan, our largest sovereign creditors, fired two more warning shots at last week’s treasury auction when they decreased their purchases of U.S. debt. But is anyone in Washington listening?

Let us stipulate that our concern is not that America is in danger of defaulting on its ever-mounting debt as Greece and, perhaps, Spain, Italy, Ireland and Portugal might very well be. We will always pay our bills: even if we have to print the money with which to meet our obligations when they come due. Should our creditors here in America and those abroad, however, begin to worry that they will be paid back with dollars that are worth a lot less than the dollars they loaned us, they will demand a higher rate of interest to offset that risk. If our creditors, to whom we are more beholden than ever before, were to decide they want a substantially higher rate of return on their money than we currently pay (approximately 3.6% for 10 year maturities and 4.6% for 30 year maturities) every segment of our society could be drastically affected.

Of equal if not greater concern, however, is that the dollar’s continued position as the world’s reserve currency is no longer certain. As our deficit widens and our debt grows nations on whom we depend are beginning to explore alternatives to the dollar as the world’s reserve currency. This should be causing many sleepless nights for those in Washington who are responsible for the health of our economy. The loss of the dollar as the world’s reserve currency would not merely be a loss of prestige. Such an occurrence would cause the dollar’s purchasing power to plunge and affect the standard of living of nearly everyone. A reserve currency is the currency nearly all nations hold in order to transact all international business (such as for commodities) that are priced in the reserve currency of the day. Think oil, gold, copper, etc. In many instances it is the currency nations use to settle their debts as well, and it is also the currency nation’s hold for the proverbial rainy day. A transfer of the world’s reserve currency status from the dollar to, say, the Chinese renminbi would cause a run on the dollar as sovereigns began trading their collective trillions in dollars for renminbis. Loss of reserve currency status could represent a crisis of unimaginable proportions causing a sudden and precipitous drop in the value of the dollar. Far fetched? No, not at all. In fact, there is a serious move among a number of nations, including China, which during this century will become the world’s largest economy, to begin preparing for such a development. Nations on whom we depend for trade, loans and investment are eyeing developments in Washington with alarm. Again, we ask, is anyone in Washington listening?

While few people can really predict when and if such an adverse event might occur, there is no question that the odds go up as our national indebtedness goes up. And it is going up exponentially.

Our total debt is now as large as our entire economy, if we include what we owe here in America (to domestic holders of treasury obligations) and what we owe to China, Japan, the Saudis and an assortment of oil-supported sheikdoms and other smaller foreign creditors as well as what we owe to our own Social Security and Medicare trust funds and our collective state and municipal obligations. Greece, the basket case of Europe, has total debt of 108% of its economy. Our total debt stands at just a fraction under 100% (98.2% to be exact) of our entire economy ($14 trillion of total debt vs. $14.25 trillion of total economic output. While we suppose we can always cancel some (or all) of that portion of our debt that is the result of what our government has borrowed from the so-called Social Security and Medicare trust funds, this is not a pretty picture.

Carmen Reinhart and Kenneth Rogoff, economists at the University of Maryland and Harvard, respectively, in their recent book with the tongue-in-cheek title, “This Time is Different: A Panoramic view of Eight Centuries of Financial Crises,” sound an ominous alarm. They note that every time an economy begins precipitously to run up debt, various, so-called, experts are always there to provide comforting advice that “things are different” and we needn’t be concerned about the debt “this time.” The authors then go on to demonstrate, convincingly we think, that this invariably has been, and continues to be, just plain wrong. They found that, even in a developed economy, once public debt reaches 90 percent of economic output, it begins seriously to stifle economic growth. While we make no pretense of being qualified to attest to the findings of these accomplished economists, we get little comfort from the reassurances of the Obama Administration’s economists that, “this time it’s different.” We fear that it is not. We are spending with abandon and exaggerating (outrageously, we think) what this spending is accomplishing. “Hail Mary” passes rarely work in football and certainly never work as economic policy.

We have now spent (or committed to spend) nearly a trillion dollars to “stimulate” the economy (exclusive of the TARP bailouts and new stimulus proposals) and all we really have to show for it is the fastest increase in our deficit in history. Claims of jobs saved are fatuous. How do we even begin to assess the cost of a trillion dollars being vacuumed out of the capital markets by the government instead of being available for private investment and job creation in the private sector?

Harvard economics professor Robert Barro, writing in the Wall Street Journal last week took serious issue with Christina Romer’s (Chair of President Obama’s Council of Economic Advisors) estimates of the multiplier effect of government stimulus dollars. Professor Barro’s analysis indicates that, over five years, the President’s stimulus package trades $600 billion of public spending for $900 billion of private expenditure. It is, he notes, a bad deal.

Given that 77% of the stimulus money was still sitting in Washington at the end of last year, the notion that the stimulus program was putting people to work (net of jobs that otherwise would emerge in the private sector) in any significant way was patently absurd. As Democratic Senator Evan Bayh, one of the more respected and analytical members of the Senate, said when announcing his decision not to seek re-election, “if I could create one new job by working in the private sector, that would be one more job than Congress has created in the past six months.” Notice how no one mentions, “shovel-ready jobs” anymore. It was an empty sales line a year ago, and it’s an empty sales line now. But this time everyone knows it. We know that roughly 50% of the stimulus money will be directed to existing government agencies such as Health and Human Services and the Department of Education. Again, a tremendous increase in spending to existing government agencies disguised as economic stimulus. Worse yet this added spending will become the baseline for future budgeting.

It would be wrong and unfair to lay this gathering storm at the feet of President Obama. The storm clouds began gathering long before President Obama became president, indeed, long before President Obama was even old enough to vote. But President Obama came to office promising change and has governed, instead, by greatly compounding the errors of his immediate predecessor and most other democratic and republican administrations of recent decades.

It would take a courageous and masterful leader and a magical moment to say to the American people, “the government has made entitlement promises to you that we can’t keep…that we can’t afford, and that we can’t place on the shoulders of our children. We’re going to have to establish a “means test” for Social Security and Medicare and even the age at which our people will be eligible to begin receiving benefits. We’re also going to have to eliminate hundreds, maybe thousands, of programs that are wasteful or redundant or that we can do without. Henceforth, there can be no programs that are ‘untouchable.’”

It seems we will have to wait for such a leader and such a magical moment. We can only hope he or she arrives in time.

The Intelligent Use of Power: American Security in the 21st Century

In the mainstream media, political observers, reporters and politicians who write about foreign policy generally analyze specific current events and often neglect to place those events within the long term historical context which preceded them. Henry Kissinger, in his book, “Does America Need A Foreign Policy…Toward a Diplomacy for the 21st Century,” Simon and Schuster, 2000, warned of the danger of a generation of leaders who will eventually come to power who will have no historical memory of the events with which they must contend. In the vocabulary of the military, this concentrates our minds on short-term tactical thinking rather than long term strategic planning. While a complete historical review of the growth of America as a world power is way beyond the scope of what can be covered in a single essay (even if we were accomplished historians) some discussion of important milestone events of the 20th century would seem to be important as a prelude to setting forth our own thinking on the projection of American power in the years to come.

After America became a nation spanning an entire continent, our economic strength grew geometrically. With vast untapped natural resources and with oceans separating us from Europe and Asia, we could avoid foreign entanglements, particularly in Europe, the home of most of our ancestors and newly minted citizens. However, after the outbreak of World War I and the continuing attacks against our commercial ships, President Wilson, over substantial Congressional opposition consistent with traditional American isolationism, brought America into the war on the side of England, France and the Western allies. This addition of American force turned the tide of war and resulted in an “armistice” — a word that disguised the defeat of Germany and its allies. Wilson also participated in dictating the harsh terms imposed on the defeated nations by the armistice.

The United States thus became a co-architect, together with the other victorious western nations, in shaping post war borders, including: the creation of nation states that previously made up the Ottoman Empire; the enforcement of the Balfour Declaration which recognized the right of Jews to a homeland in a tiny portion of the Middle East; and drawing various European border adjustments which were the consequence of the defeat of the Austro-Hungarian Empire and Kaiser Wilhelm’s Germany. One of Wilson’s most important dreams incorporated in the post war architecture was the establishment of a “League of Nations” which, sadly for him, Congress refused to approve, reflecting a return to our traditional isolationism.

This peace did not hold. Germany resented the conditions imposed on it and the Weimar Republic that replaced the Kaiser collapsed bringing Hitler and his National Socialist movement to power. At the same time, the U.S. and the victorious allies disarmed while Hitler quickly armed Germany to the teeth. War engulfed Europe again in 1939, in what can be considered largely a resumption of the First World War. The American public had no appetite for our involvement in this war, even in the face of President Roosevelt’s understanding that our involvement was a national imperative. However, after a militaristic Japan attacked Pearl Harbor in 1941, and Hitler joined in by declaring war on us, Congress declared war against Germany and Japan. The commitment of our huge industrial base and our considerable manpower to an all-out war effort, saved western Europe again. It also provided the Soviet Union with a second front in the west so it could begin the long offensive through Russia and Eastern Europe to roll back the advances Germany had made almost to the gates of the Kremlin. Within three-and-a-half years of America’s entry into the war, Nazi Germany was reduced to ruin and forced to sue for peace.

After the allied victory in Europe in May 1945 and the surrender by Japan in August 1945 (following the dropping of two atomic bombs), the United States emerged as the World’s mightiest nation, a role our nation achieved but never really sought. Stalin’s Soviet Union, however, never released its grip on, and occupation of, Eastern Europe and by 1948 it was aggressively expanding its reach.

Containment of the Soviet Union, essentially a policy outlined by George F. Kennan, became the new approach to the defense of U.S. interests. Kennan argued “Russia’s historic and traditional sense of insecurity together with Communism’s fanatic desire to expand its power had to be stopped through firm and vigilant containment of Russian expansive tendencies” (U.S. Department of State Diplomacy in Action). Thereafter, for more than forty years, our defense policy was seen through this prism. NATO was created to deter Soviet aggression. The Soviets responded with the creation of the Warsaw Pact, an alliance of the eastern European countries they occupied.

Smaller nations played off this superpower conflict and sought favors and protection under the patronage of either side. The Korean War and the Vietnam War were both a consequence of the desire to prevent expansion by Communist states into areas and countries aligned with the West. An unfortunate consequence of the policy of containment was a perceived need by postwar American presidents of both parties and Congress to embrace alliances with dictators and despots whose principal benefit to us was to keep their countries out of the Soviet sphere.

When the Soviet Union collapsed in the early 1990s ending the Cold War, and the eastern European nations overthrew their communist leaders, the World changed profoundly. The U.S. was now the world’s sole superpower, even though Russia maintained outsized influence because of its nuclear arsenal, well beyond what its influence would have been if economic power were the measure of strength.

The new post-Soviet world order spawned a then widely acclaimed book by Francis Fukuyama, entitled “The End of History.” Fukuyama argued that since the 19th century there has been a clear trend toward political democracies and that individual state national sovereignty and traditional power politics will be transcended by a transnational rule of law. He saw the end of superpower conflict as ending hundreds of years of conflict between nations.

What it seems has happened instead, is a return to traditional pre-twentieth century nation state rivalries. From the Balkans, to the newly independent nations that formerly comprised the Soviet Union, to the nations created by the Western powers to replace the caliphate of the Ottoman Empire, to the newly freed post colonial African nations, old rivalries, long subdued, have reemerged with profound consequences to world peace and order. These take the form of border disputes, ethnic tensions and, of course, religious intolerance principally represented by Islamic fundamentalism. However, these tensions, rivalries, skirmishes and wars have raised their ugly head in a world where science and technology has created more lethal weapons and weapons of mass destruction which are no longer under the sole control of traditional or rational nation states. Ironically the end of Soviet-American conflict ushered in a new and more complicated set of flashpoints.

That brings us to the most important question facing our government. What is America’s national strategy for protecting our people and our vital national interests? Sadly, the post World War II consensus between both our political parties that national defense was bipartisan, and that a strong national defense had to be the cornerstone of our foreign policy has disappeared. Many on the political left have embraced what amounts to cultural pacifism as a national policy and there are, no doubt, those on the political right who still harbor a “bomb them back to the stone-age” mentality. Today, policy seems to be greatly influenced by those who argue that the United States since 1945 has become an aggressive, imperialistic and selfish nation and needs to make amends to the rest of the world.

Thus, the central question: What are the vital interests of America that need to be defended and, how do we most effectively project our power to protect them? Are we embarrassed by our power and its post war usage, do we return to pre World War I isolationism, do we cede some of our sovereignty to international bodies and where do we reserve the right unilaterally to take actions on our own in defense of our people, our national interests and our allies?

In his first year in office, President Obama, feeling his way, has vacillated on his approach.  As our first post baby boomer president and as an intellectual who seems most comfortable among academics, he tilted more toward a collaberative approach which seeks, as a precondition to making  foreign policy decisions, even those  involving our national security, the approval of other nations. This approach was made easier for him given public weariness with the war in Iraq, its unpopularity among our traditional European allies and a perception, among many, that the Bush defense team, particularly Vice President Cheney and Defense Secretary Rumsfeld were arrogant usurpers of power. Thus, the president  saw his first mission as improving America’s  popularity in the world. He embarked on a series of foreign trips apologizing for our past sins and promising both more collaboration with our allies and collective action through world bodies. The President abandoned a previously negotiated missile-defense shield to be based in Eastern Europe in order to placate Russia in exchange for which America has yet received no discernible quid pro quo (although, should Russia join us in imposing sanctions on Iran, that assessment would surely be revised). The new east European NATO members who were victims in the 1930s of the worthless mutual defense promises of England and France could be forgiven if they saw this kowtowing to be a serious equivocation of our commitment to come to their defense when and if needed.

The president, on his first full day in office, committed to close Gitmo (Guantanamo} before his Administration had come up with an alternative plan for holding enemy combatants too dangerous to release. He took steps to treat Islamic terrorists who were acting pursuant  to a Fatwa, or a declaration of war against America, as common criminals, not enemy prisoners of war.   He has treated Israeli leaders as recalcitrant parties to a territorial dispute instead of allies. He sought, and apparently still seeks, “engagement” with Iran, a policy that has not borne fruit, and has been met with scorn by the Iranian government which continues to pursue nuclear warheads. Even the feckless IAEA, when headed by another Nobel Laureate, Mohamed El Baradei, served as a covering shield for the regime. This UN agency has now, however, admitted that the Iranian nuclear pursuit is not intended for peaceful uses.

Being president is, however, a sobering experience and President Obama has acknowledged that his most important responsibility is to keep America safe. He instituted, after a 90-day review of General McChrystal’s recommendations, a surge of forces (albeit with a pre-deployment withdrawal schedule for all our forces) in Afghanistan. He has increased the effective use of drones to eliminate terrorist leaders and, through Vice President Biden, has pronounced our course of action in Iraq as an Obama Administration victory, notwithstanding that it was a policy put in place by the Bush Administration and which he and the Vice President vigorously opposed. But as President Kennedy famously declared, “victory has a thousand fathers and defeat is an orphan.”

Recently, the president seems to be signaling that the decision of Attorney General Holder to try KSM in a civilian court in Manhattan was a mistake. And he has gotten a sobering wakeup call that Guantanamo cannot  easily be closed given the absence of an alternate site to house dangerous war prisoners, and the seeming refusal, even by members of his own party, to appropriate the funds necessary to close that facility and transfer its detainees to prisons in America.  He seems, at last, to be  advocating a program of tougher sanctions on Iran, and, hopefully, even if they are greatly diluted or rejected entirely by the United Nations as a result of Chinese or Russian vetoes, he will continue the effort alone or with willing allies.

We, frankly, could care less if the president fails to acknowledge the correctness of certain policies of his predecessor, or of his late realization that a war is being conducted against us, or that Iran will not be induced to behave by whispering sweet nothings in Ahmadinejad’s ear, so long as he takes a clear and coherent stance, muscular where necessary, to prevail in this most unusual, non-traditional 21st century war.

With regard to many of the trouble spots in the world, it is clear that America, to borrow a cliché from the 1980s, cannot be the world’s policeman. Nor does every upheaval away from our shores have an effect on our security, or on our economic or trade relations. And even in those matters that rise to that level, we have other tools besides our military force to communicate their importance to us. Collective economic action among willing allies (e.g., sanctions, trade restrictions, etc.) can be quite effective. But the best long-term measure of protection for us is to build our policies around patient support throughout the world for the American values of freedom and democracy. People in other nations seeking to replace aggressive regimes should know that America supports them. People who enjoy basic human rights and the right freely to choose their leaders are far less likely to pose a threat to other nations.

Perhaps too, as we said two weeks ago, the President’s comments about supporting free trade with traditional allies like Korea, Columbia and Panama will move him away from the reflexive protectionist position of his union supporters. It is trade, not protectionism, which will move our economy forward, promote economic growth in other nations, and enhance job creation.

We do not underestimate the weight on the shoulders of our president. It is not an overstatement to say that our very existence depends not just on the strength of our military capability, but first and foremost on the clear understanding that the Commander-in-Chief has the wisdom, coupled with sufficient steel in his spine ,to deploy it and  all other means at his disposal to protect this nation. Secretary of State Hillary Clinton, who has been an articulate and reasoned advocate for the intelligent projection of American power, famously asked during her presidential campaign about whether any of her opponents had the experience and the necessary experience and worldview to handle the inevitable 2 AM call to the president. President Obama surely now understands that such a call, if it ever comes, won’t be a call complimenting him on his articulation of a new era of American humility. Rather, the call will be the news of a new challenge, threat or attack either on our homeland or the territory of a vital ally. The best way to make sure he has eight hours of unbroken sleep is  unequivocally to  broadcast that he stands by President Kennedy’s pledge, “that we will bear any burden, pay any price, meet any hardship, support any friend, oppose any foe to secure the survival and the success of liberty.”

Hopefully, the president understands  that evil exists in this world and that nothing other than confronting this cold hard reality offers any chance of protecting our liberty and our survival as a nation.

Democratic Party Policies: Regressive not Progressive

Democrats have now packaged their agenda and the policies that it includes under the term “progressive” to obscure the liberal label, hoping by this camouflage to make their programs more acceptable to the American people. As with most fictitious names this one is designed to obscure reality. True, “progressive” could describe anyone who favors or advocates progress. If, however, the programs and policies our government embraces in the pursuit of progress are based on concepts and ideas that simply return or revert to old, thoroughly tested and failed economic and political schemes of the past, regressive would be a far more accurate soubriquet for today’s Congressional and White House liberals. They campaign and politic under a progressive banner, while committing the nation to vastly increased government control of the economy, an ever-corpulent government payroll and unrestrained spending and debt for which the taxpayers for generations to come will ultimately be responsible.

We were recently reminded by none other than Lech Walesa, the founder of Solidarity (and subsequently the President of Poland), who faced down the old Soviet Union twenty years ago, of just how frightening and regressive the course is on which the Administration and the Congress are taking us. During an interview conducted by blogosphere journalist Andrew Marcus, Walesa lamented America’s current drift toward socialism. He said that while we still lead the world militarily, we are growing weak economically and we have forfeited both political and moral leadership. He went on to warn of the waste inherent in centralized government control and seemed saddened that this was the path the United States was on. We could only think of the profound irony of this former union leader, an electrician from a shipyard in Gdansk, who risked his life to free his country from the socialist policies of the Soviet Union, providing such counsel to the elite ideologues now steering our ship of state.

We are witnessing the emergence of a central government hostile to industry, covetous of the earnings and savings of America’s most productive and most successful citizens, seemingly contemptuous of voters at the state level who are registering their disapproval of Washington in election after election, unrestrained and irresponsible in its willingness to spend money it doesn’t have and incur debt it has little or no way of repaying without printing money or heavily taxing its citizens for generations to come.

Simply stated, we cannot grow the economy and bleed it at the same time, but that is what Washington is attempting to do. To be clear, this type of government muscularity doesn’t emerge in a vacuum. Political opportunists have to have the opportunity to embark on such a course, and the recent financial crisis and the excesses of the past have, sadly, provided just such an opportunity.

We won’t rehash the panoply of government and private sector malfeasances that brought us to this state of affairs. We’ve done that in essay after essay. We feel we must, however, try to focus on what is happening with clarity unencumbered by the spin and misinformation emanating from Washington. Let us recognize that our government is spending with complete abandon, and that the recently announced, so-called, spending freeze which is to go into effect next year is intended as little more than a distraction from the breathtaking increase in spending that is to go into effect this year following a breathtaking increase in spending last year. Washington is proposing a budget that will drive our deficit to $1.6 trillion this year from $1.4 trillion last year. We do impose a statutory limit, or ceiling, on the debt we can incur, but Congress simply raises that limit whenever it decides to spend more than our debt limit would allow.

While this ever-growing debt is unimaginably large, and must be paid for as it comes due for generations to come, its serviceability is rationalized with economic growth projections that are highly speculative and, as they say at the poker table, on the come. If economic growth does not keep pace with these projections, and anticipated tax revenue is, therefore, less than expected, we will have to either tax more, borrow more or print more to keep up with our obligations as a debtor nation. We would not be the first nation to face such a dilemma. Other nations have…generally with disastrous consequences. Now, we recognize that there are well-credentialed economists on opposite ends of the policy spectrum. We also recognize that they can’t all be right at the same time. Milton Friedman and John Maynard Keynes would have rarely agreed with one another. Nor would Paul Krugman or Arthur Laffer.

Nonetheless, while economic theory can be very complex, when it flies in the face of common sense there is more than reasonable cause for alarm. We are reminded of Milton Friedman’s conversation with a high-ranking Chinese official during his first trip to China following the thaw between the People’s Republic and the United States. The famous American economist was taken to a major irrigation project. As he gazed upon the largest irrigation ditch he had ever seen, he noted that there were thousands of workers digging with shovels for as long as the eye could see. Friedman asked his Chinese hosts why they weren’t using modern earth-moving equipment so that they could complete the job more efficiently and much more quickly. His hosts proudly exclaimed in true Keynesian fashion, “Because the way we’re building the ditch we can employ thousands of people.” Friedman is reported to have smiled and responded, “Then why don’t you just give them spoons.”

Assuming Congress approves the President’s proposed budget, America will have to borrow nearly 50 cents for every dollar it spends, and that assumes that the Administration’s economic growth and revenue projections turn out to be on the money. Remember, the debt is real; the anticipated income from which it is to be retired is speculative. Like every borrower, we will be dependent on the goodwill of our primary creditor, in this case, The People’s Republic of China. Yes, we know the standard response of economists from academia; they have to lend us the money if they want to sell us their goods. This logic, we would argue, should provide little comfort and many sleepless nights. Just this week the Chinese government threatened to apply sanctions against any company participating in the Administration’s approved arms sale to Taiwan. They also expressed outrage over the president’s planned meeting with the Dalai Lama. In the future would we retreat from policies we believed are in our national interest if the Chinese refused to keep financing our debt? It is very thin ice on which we skate.

Despite government protests to the contrary, most observers here and abroad (including those to whom we are now, quite formally, indebted) know perfectly well that the so-called $790 billion stimulus program doesn’t seem to have stimulated anything, and they are largely wary of the President’s call for a second so-called stimulus program. Well, it’s not a so-called stimulus program anymore. Now it’s a so-called jobs bill. If the spending program doesn’t work the first time, just change the name and plow ahead. As our creditors watch our debt mount, they are aware that funds available to pay down that debt are instead being replowed back into spending initiatives that will, more than likely, grow and simply increase our debt.

The Administration’s recently announced plans to get Congress to change the law that provided the TARP funds, so that funds that are being repaid (with interest) can be diverted to new spending instead of being returned to the treasury to pay down the very debt TARP caused should be seen as both foreboding and irresponsible. Ivory tower thinking aside, increased spending in the face of decreasing revenue is not generally a good idea. Individuals know this, families know this and most institutions know this. Capital is the life-blood that allows individuals, families and private sector institutions to grow and prosper economically. Drawing that resource away through increased taxes, fees and penalties so that government can plan (and spend) how best to grow and prosper is one of history’s fools’ games. Think Venezuela, think Argentina, think Cuba.

If consumption continues to decline in America, production in China and the income it generates for the Chinese holders of our debt will diminish (income used to lend us the money we need to fund our deficit), making it far more difficult for these very same creditors to continue to lend us the money we desperately need. China and other foreign sovereigns hold an ever-growing portion of America’s debt. They are not happy creditors. They know what profligate government spending combined with soaring debt can do to the value of a national economy. Think Greece, think Spain, think Portugal, think Italy (big spenders all) who have created the current crisis for the European Union. Why do we refuse to think USA?

Just last week, as we were completing this essay, Moody’s, the international debt-rating agency, issued a warning that if the United States were to grow at a slower pace than expected, (the very concern we express in this column) our AAA credit rating could be impaired. Moody’s wasn’t predicting that this would happen, but the rating agency was clearly firing a warning shot over the bow of our ship of state. Were the US to lose its AAA rating, the ramifications would be widespread and immediate, as the cost of servicing our debt would escalate. As we stated earlier in this essay, the economic growth on which the serviceability of our debt is predicated is speculative, a point noted by Moody’s when they reminded sovereign debtors that economic growth is very important to their assessment, or rating, of credit worthiness. This might seem to be a curious warning, coming only six weeks after the agency stated it thought the outlook for the United States was stable. Moody’s “stable outlook” comment, however, was made six weeks before they were privy to the Administration’s plans to vastly increase spending (and the nation’s debt load) in 2010. It must also seem an ominous warning to China, which holds nearly $1 trillion of US paper, which accounts for sixty percent of all of its foreign reserves.

We are not sailing in entirely uncharted waters here. It is not as though there is no history to draw upon when a nation’s spending and debt spiral out of control. In fact, history is replete with examples of economies ruined when growth declines in the face of rising debt, and nations are forced to monetize their debt by turning to their remedy of last resort – the printing press. As Milton Friedman warned in his classic work, “Free to Choose,” a nation’s currency is backed only by the confidence people have in it, and when that confidence is lost the result is an irreversible downward spiral in its value.

So we close with a reminder to our “progressive” friends — Progressive dreams, pursued by regressive means will lead us back to a future we are not apt to like.

The State of the Union Address: “…Meat to Distract the Watchdog of the Mind”

Quote in headline: Marshall McLuhan – “Understanding Media,” 1964

On January 27, President Obama, following long tradition, delivered to a joint session of Congress and the American people his constitutionally mandated report on the state of the union. This report, over time, has become less of a report on the nation’s health than a self congratulatory report on how well each president’s administration is doing and a pep talk to push (some might say coerce) Congress into enacting any given White House’s agenda. Citizens know to take these reports with a grain of salt. But this address, by this President, took the state-of-the-union ritual to a new level of audacity– that word seems to define this president — in the claims of success it made, the facts it misreported, the predictions of improvement that lay ahead and the call for an end to mistrust and cynicism. If there weren’t an atmosphere in the capital of mistrust and cynicism before the speech, Mr. Obama’s report alone would have given birth to it. It was, in many respects, reminiscent of media-guru Marshall McLuhan’s description of media content as “the juicy piece of meat carried by the burglar to distract the watchdog of the mind.”

We thought that waiting almost two weeks and having an opportunity to study the text for cool reflection before publishing an essay on the speech might cast it in a somewhat different light. It did. In our view Mr. Obama’s report to the nation was as close to pure political campaigning as a presidential address can get.

It started, as President Obama always seems to do, with a reminder that he inherited two wars and a financial mess. We know that; he reminds us repeatedly. But he ran on the promise and expectation of improving the state of the union. He claimed at the very start of his report that his Administration’s aggressive actions caused the worst of the storm to pass. Is there anyone in America who can actually believe that claim of cause and effect? The aggressive action that was taken (and which the president, most members of his party and many Republicans deride) was the bank bailout, enacted by the Bush Administration (TARP) aimed at preventing a systemic financial collapse. The “aggressive” action of the current Administration was the nearly $800 billion stimulus bill, which seems not to have stimulated anything except the national debt. There is no proof that any net jobs were saved (in fact, there is compelling evidence that none were) despite the president’s claim to the contrary and unemployment, which the president predicted would drop, has gone from eight percent to nearly ten percent for which the president’s prescription is another stimulus bill, this time in the new wrapper of a “Jobs Bill.”

As proof of his success, the president cited a small business in Phoenix and a window manufacturer in Philadelphia. Surely there are other anecdotal success stories. But job losses as reported by the Labor Department continued every month of 2009. If some jobs were created (or saved) from $800 billion of taxpayer money being tossed about, what was the cost of each job created…and what was the cost of each job lost as money was diverted from one part of the economy (the private sector) to fund employment in another part of the economy (primarily the public sector)?

The only things that stabilized the country and brought us back from the brink were the unprecedented and controversial actions under TARP, which saved the banking system. Much of that money has been repaid by the banks, with interest, in contrast to Freddie Mac or Fannie Mae, the multi billion dollar Congressional candy stores which more than any other institutions were responsible for the housing bubble, the bursting of which literally brought down the economy like a house of cards. For these government-sponsored enterprises, Congress in 2009 greatly increased the liability of the American taxpayer. President Obama and the democratically controlled congress have lifted the loss limit for Fannie Mae and Freddie Mac (actually they erased it altogether) and they now have a blank check from the taxpayer to cover their ever-mounting losses which have turned Fannie and Freddie into penny stocks.

So what does the president do and say? In the wake of losing his Senate supermajority, he begins to breathe fire and smoke at Wall Street, engendering populist wrath at financial institutions. He also proposes to tax them by publicly demanding, “we want our money back.” Surprise Mr. President; we have, so far, gotten over $160 billion of it back. The tax, despite his denial, is all about raising populist ire, never mind how divisive such a tactic is, nor the chilling effect it will have on new investment in any industry in the Administration’s gun sights.

The president showed no recognition that the American people have, at every turn, soundly rejected his idea of healthcare “reform.” He explains away the recent evidence from the Massachusetts senatorial election (not to mention recent routs in New Jersey and Virginia) by asserting that he just has to better explain the legislation. Congress, he suggests, should ignore the unmistakable unpopularity of his proposal with the American people and pass the bill anyway using any possible legislative trickery (changing Senate rules, using the “reconciliation process”, splitting the bill into two separate parts) and get it to him for signature, after which he will in true elitist fashion, explain it to the great unwashed masses.

Could he be more dismissive and condescending of the intelligence of the American people? And does he not understand how much more politically divided this nation will be if the largest entitlement program since Social Security and Medicare becomes law, not only without an overwhelming consensus in favor of it but through legislative artifice.

The president also took note of our unsustainable deficits. He proposed a small first step forward in budgetary control (after taking two steps backwards with 2009 record spending and proposed 2010 record spending) through a freeze on discretionary budget spending. The budget he released on February 1st looks more like the movie Groundhog Day in government spending. It actually increases the annual budget deficit to $1.6 trillion. The line-by-line review he promised with his surgical scalpel in hand is totally absent. As near as we can tell every existing program remains. He even increased non-discretionary spending by making the Pell Grant program a permanent entitlement program. Is this a foreshadowing to making a college education for every student a taxpayer obligation?

Moreover, be vigilant; he also proposed restoring “pay go,” a Congressional device which means that any new program must be paid for by spending cuts elsewhere, or by tax increases. With huge majorities in both houses of Congress anxious to enact every social program on their multi-decade wish list, so that the government can intrude into nearly every aspect of our lives, which alternative (reduced spending or increased taxation) can we expect them or any Commission he appoints to choose? Will they cut pet projects and unnecessary subsidies, or will they increase taxes on the “wealthy”? Sorry, it was just a rhetorical question.

And yet, after making such exaggerated claims and offering no real sign of compromise on his health care reform proposals, which have divided the country since the inception of his presidency, Mr. Obama kept returning to the theme of post partisanship and the terrible tone of our politics. There is no question that he is right and that both sides of the aisle are responsible. As an example, a nasty filibuster demonizing a presidential nominee, which in turn reduces the pool of qualified people willing to take highly important positions for fear of being publicly pilloried, threatens every confirmation vote.

Both parties have used these tactics, justifying them as similar to past actions by the other, and both sides accuse the other of casting the first stone. But, how can the president be taken seriously about bipartisanship after having walked away from his promise to put conference committee negotiations reconciling the health care proposals of both houses of Congress on C Span when, in fact, without a conference committee even being appointed, the negotiations are held behind closed doors with no members of the Republican party invited, where tawdry deals favoring labor unions, or special deals favoring one state over another to buy votes, are cut out of public view and jammed down the throats of the minority?

Well past the halfway point of his address, the president finally gave a nod to the issue which all polls show is the most important one on the minds of Americans, heightened yet again by the Fort Hood attack and the failed Christmas Day airplane bombing: national security. Here is where we were most disturbed by his speech. The Commander-in-Chief stood before the nation and claimed to be filling the gaps in our security revealed by the Christmas Day incident. What exactly is he doing to fill those gaps? He didn’t say. The only thing the public heard so far was the TSA’s announcement (since retracted) that bathroom visits would be barred in the last half hour of every flight. And by the way, why wasn’t there already a coordinated plan after one year in office?

More revealing was his silence about the decision to treat Amur Farouk Abdulmutallab, as a mere common criminal to be dealt with through our criminal justice system. The Justice Department’s decision, to advise this intended mass murderer of his right to remain silent, is frightfully stunning. Not surprisingly, we have since learned, this decision was made without consulting any of our national security agencies. The president’s silence on this misguided judgment is utterly revealing of the place national security has in the Administration’s triage of important issues. Not one word of recognition was uttered which conceivably could give the American public any comfort that he and Attorney General Holder are more interested in doing what is necessary to keep us safe from terrorist attacks than they are in placating the left wing of their party, which has shown itself to be far more concerned about exquisite constitutional protections for our sworn enemies, than in effectively dealing with this mortal threat to our nation.

This mindset is further demonstrated by the Department of Justice’s decision to reopen an investigation, over CIA Director Leon Panetta’s objection, of CIA officers, which had already been thoroughly investigated, or the Justice Department’s public release of the CIA inspector general’s report on our interrogation program. As former CIA Director Michael Hayden stated in an op-ed piece in the January 31, 2010 Washington Post:

“Intelligence officers need to know that someone has their back. After the Justice memos were released in April, CIA officers began to ask whether the people following procedures that were currently authorized would be dragged through this kind of public knothole in five years. No one could guarantee that they would not.” (emphasis added).

Mr. Hayden also noted the peculiarity that while the High Value Detainee Interrogation Group (HIG), the formation of which was announced by the Administration last August to interrogate key Al Qaeda prisoners, was not yet ready to interrogate anyone, the FBI was busy interrogating CIA personnel. The mind reels at the consequences of such a “peculiarity.” If this is the priority of our Justice Department, please bring back Alberto Gonzales. We might even prefer Janet Reno.

We also wondered how the president, with a straight face, could claim progress in forging a better consensus for tougher sanctions on North Korea and Iran. Russia continues to refuse to support strong additional sanctions such as cutting off refined oil products to Iran even after we gave them the “gift” of abandoning a missile shield in Eastern Europe, which was directed to intercept attacks from Iran. China is even more recalcitrant . . . and all of this is in the face of Iranian rejection of, and public contempt for, Mr. Obama’s repeated offers of engagement. As for North Korea, they continue to conduct missile tests and seize innocent Americans and others who allegedly cross their border or enter their territorial waters by a matter of inches.

For a moment in his address, we thought we heard a promising foreign policy shift. The president spoke of the importance of trading with our friends and specifically mentioned South Korea, Panama and Colombia, three  countries where the president’s union supporters have fought free trade agreements that have been bottled up in Congress for years. Both of these treaties are generally recognized to be quite favorable in their terms to the United States. And then, just when the logical next sentence would have been “that is why I will urge the Congress to approve the South Korean and Colombia free trade treaties,” (unless our television cut off for a few seconds, or the text of the speech we read the next day inadvertently omitted that sentence) the president moved to another subject.

As for his dream of a nuclear free world, Mr. Obama is negotiating for a reduction in our arms stockpile and delivery systems to the level of the Russians. They, of course, continue to upgrade their existing weapons while our own Congress, bowing to its anti-war leftist wing, hasn’t been willing to appropriate funds to upgrade the safety and maintenance of our force.

The only military commitment the president clearly made was his pledge to repeal the “don’t ask, don’t tell” law that discriminates against gays in the military. Certainly, this is a policy that, we believe, can and should be readdressed. We wish, however, the President had brought the same passion to the critical matter of protecting the lives of Americans who are so clearly in the crosshairs of Islamic extremists.

All in all, the speech, both when we first heard it and upon rereading and reflection amounted to little more than Washington spin at high gear. The president repackaged all of his failed initiatives in soothing words of compromise and tantalizing hints of bipartisanship, which he promptly took away by explicitly repeating a bottom line, which hasn’t changed. For a leader who won office in an historic election by so effectively being in touch with and hearing the aspirations of the American people only fifteen months ago, the speed with which he has descended into political deafness is absolutely breathtaking to behold.

The First Amendment and Corporations: ——— The Supreme Court Speaks Again

“Congress shall make no law … abridging the freedom of speech or of the press; or the right of the people peacefully to assemble and to petition the Government for a redress of grievance” (First Amendment to the Constitution of the United States).

Those seemingly clear words were not in the U.S. Constitution when it was signed on September 17,1787. Debate on the rights of citizens continued after the signing, and what is now known as the Bill of Rights, the first ten amendments to our original charter were adopted and went into effect in 1791 when the State of Virginia ratified them.

The importance of the protections afforded by the First Amendment is demonstrated by its lead placement in the Bill of Rights. However interpreted in many different situations, it is the central requirement of a free society and a democratic participatory government. Without its free speech provision (there are other protections in the First Amendment as well, i.e., the prohibition on the establishment of a religion, a free press and the right of peaceable assembly) Congress could prohibit criticism of the government and its elected representatives. Our framers knew that elected officials would be tempted, as their European predecessors were, to use the power of the law to suppress even loyal opposition. They recognized that free speech was the underpinning of a society based on the rule of law.

Nevertheless despite the apparent clarity of language which states “Congress shall make no law abridging the freedom of speech, Congress has many times enacted restrictions on some forms of speech and many of these limits have been upheld as Constitutional by the Supreme Court of the United States. On January 23, 2010 the Court issued its latest ruling on speech in the case of Citizens United v Federal Election Commission where it struck down specific provisions of the campaign finance “reform” legislation enacted in 2002 … what is commonly known as the McCain‑Feingold Act. In short, McCain‑Feingold imposed new and stringent regulations on the raising of campaign contributions and the use thereof.

Some quick trip through the history of legislation “abridging” free speech and the Supreme Court’s rulings thereon is appropriate (perhaps essential) to understanding the Citizens United ruling in context. Despite the “shall make no law abridging” language of the First Amendment, the Court has permitted certain exceptions … libel, child pornography, “clear and present danger” rulings, and earlier iterations of congressional enactments dealing with the financing of elections. Free speech cases do not necessarily involve liberal vs. conservative political thinking aligned against one another. Citizens United is no exception. Corporate interests and unions, the ACLU and the National Rifle Association, strange bedfellows indeed, filed amicus (friend of the court) briefs opposing the campaign finance limits imposed by McCain‑Feingold while most major newspapers editorialized in favor of the defendant, the Federal Election Commission. What is apparent is that positions among interest groups and politicians shift on the subject of free speech depending on whose “ox is being gored,” which seems to us to cry out for enforcing unlimited free political speech. Once again, it appears that the Founding Fathers anticipated this very issue and wanted to protect against exceptions to unbridled free speech when political power shifted.

In 1971, prior to McCain‑Feingold, Congress passed the Federal Election Campaign Act and amended it in the aftermath of Watergate in 1974. This Act as amended established the concept of public financing of elections, created various election regulations and created the Federal Election Commission as the enforcement agency. Strict limits on contributions and expenditures were part of this law. However in January 1976, in the case of Buckley v Valeo, the Supreme Court struck down parts of the 1974 law but upheld others. In brief, the Court upheld limits on contributions but ruled against limits on political expenditures.

In 1990, in the case of Austin v Michigan Chamber of Commerce the Court upheld, as not in violation of the First and Fourteenth Amendments, Michigan’s Campaign Finance Act, which prohibited corporations from using treasury money to support or oppose candidates for political office.

Which brings us to the Citizens United case. One of the provisions of McCain‑Feingold bans the use of corporate or union money to pay for “electioneering communication,” which is defined as broadcast advertising that identifies a federal candidate within 60 days of a general election. Prior to the 2008 elections, Citizens United produced a film extremely critical of Hillary Clinton but the Federal Elections Commission ruled that Citizens United could not broadcast the film. The lower courts upheld the FEC. The Supreme Court, however, in its very recent 5 to 4 decision overturned the lower courts and found much of McCain‑Feingold to be unconstitutional. In so doing, it also overturned its prior decision in the Austin case. The breadth of this recent decision will be discussed endlessly and challenged legislatively through attempts by Congress to legislate around this ruling.

Justice Kennedy wrote the majority opinion for the Court, and Chief Justice Roberts and Justice Scalia issued concurring opinions. Justice Kennedy found that “political speech is so ingrained in our culture that speakers find ways to circumvent campaign finance laws.” But the linchpin of the three opinions comprising the majority is that the First Amendment deals with speech and not the speaker. No distinctions are made between individuals or corporations, nor are certain media singled out. Justice Kennedy explained the majority reasoning in stating “no sufficient government interest justifies limits on the political speech of … corporations.”

Justice Scalia challenged the reasoning of Justice Stevens dissenting opinion which was premised on the notion that corporations were despised at the end of the eighteenth century and that therefore the Founders didn’t intend to protect them. Justice Scalia however noted that even if this were true, corporations at that time were granted monopoly privileges. Moreover, there were many small, unincorporated business associations, which, he stated, were the true progenitor of today’s corporations. Also colleges, towns, religious institutions and guilds “had long been organized as corporations at common law. “Surely they weren’t despised. This left, he said, only the question of whether the speech at issue is speech covered by the First Amendment.

Chief Justice Roberts’ concurring opinion seems to answer that question quite succinctly: “A documentary film critical of a potential Presidential candidate’s core political speech and its nature as such, does not change simply because it was funded by a corporation. Nor does the character of that funding produce any reduction whatever in the “inherent worth of the speech” and its capacity “for informing the public.” First Nat. Bank of Boston v. Bellotti, 435 U.S. 765, 777 (1978). “Indeed, to exclude or impede corporate speech is to muzzle the principal agents of the modern free economy. We should celebrate rather than condemn the addition of this speech to the public debate.”

The reaction to Citizens United was swift by both opponents and supporters of the decision. President Obama, in his new full-throated populist mode, called the decision a victory for big oil, Wall Street banks, health insurance companies and other powerful interests. Of course he failed to mention big labor, an interest group so powerful that in the Senate health insurance negotiations he gave union labor an exception from the proposed tax on so called “Cadillac” plans at the expense of the 81 percent of American workers who do not belong to unions. Interestingly, this is also the same Barack Obama who, after pledging to finance his 2008 campaign using public financing, turned away from it when he found that he could raise more money privately. Candidate Obama saw nothing particularly evil about the influence of money contributed to him. Ironically, Senator McCain was forced to rely on public financing to his great detriment.

Various opponents of the Court’s decision have cranked out their obligatory talking points, some of which focus on the fear of foreign intervention in our elections by non-U.S. corporate interests. Even the president played this fear card in his State-of-the Union address last Wednesday night which brought the party automatons to their feet cheering, while the Justices who were there as guests of the Congress sat in shocked silence. It would, at first blush, be a reasonable concern to raise except under existing federal election law which the Court’s decision clearly leaves intact, and which the president would surely have known if the White House counsel had vetted his speech, foreign corporations may not spend any money in U.S. elections whatsoever. This, we assume, is to what Justice Alito’s silent not true referred. Ironically, it was Alito’s incredulous mouthing of “not true” that had the talking heads abuzz rather than the inappropriate, gratuitous and inaccurate depiction of the opinion gliding over the teleprompter and, simultaneously, advanced to the nation by the President.

Most newspapers have also railed against the Citizens United opinion. Of course they would. Congress exempted them and their corporate owners from McCain‑Feingold, thereby vastly increasing their influence. Of course, when their interests are at stake (protection of reporters’ sources, libel laws, etc.) they are major supporters of unlimited free speech. This raises an interesting question. McCain‑Feingold exempted the press from its restrictions, but just what is the press? Do “issue-oriented” print journals enjoy the exemption from McCain‑Feingold? What about electronic messages? Does our weekly essay in “Of Thee I Sing 1776” enjoy “press” status? Where would the line be drawn?

We see any restrictions on contributions or expenditures as arbitrary abridgments of free speech with no discernable public benefit. Money has leaked into political campaigns no matter what restrictions are placed on contributions. Isn’t the real risk of contributed money, the possibility of undisclosed promises of future legislative favor? Wouldn’t it be better, far more effective and clearly more transparent to require that all contributions be posted on the Internet as soon as they are received? More information (the very essence of free speech) assuring immediate public disclosure of the source, the timing and the amount of all contributions strikes us as a far better antidote to political corruption than having Congress enact laws where the only clear result is to provide electoral advantage to their own incumbency.

It is often opined in the process of political discourse, especially on the left, that the framers of the constitution could have never anticipated the complex issues that America would face in the 20th and 21st centuries and, therefore, the courts must be given considerable latitude in their interpretation of constitutional questions. We won’t engage in that debate in this essay. We believe, however, that it would stretch credulity to the extreme to imagine Madison, Hamilton or Jay (those great defenders of the Constitution and the authors of the Federalist Papers) ever postulating that any segment of American society might be denied the absolute and unfettered right to engage in free speech or public political debate.

Year One: Long on Audacity, Short on Hope

The first year of the Obama Administration has not been a very good year for the country. Frequent Flyer Miles aside, the new Administration has been very short on achievement since that cold, crisp winter day one year ago when Barack Obama, newly elected 44th President of the United States, addressed the nation, indeed, the world. His inaugural address was somewhat reminiscent of John F. Kennedy informing the world that the “torch has been passed to a new generation.” It was a time of hope for a nation that was swept up by the rhetoric of the Obama campaign and by an electorate that was fed up with the disappointments of the Bush years. It was also a golden political opportunity for the new Administration, as it was reinforced by the additional gift from the electorate of control of both houses of Congress. So what happened?

Hope, it appears, was quickly overrun by audacity, and the self‑created hubris surrounding the White House team. Over-leveraged citizens were soon to be traumatized by an over-leveraged (and over-reaching) government. As soon as one could say “Seven Hundred Billion Dollar Troubled Asset Relief Program,” with which the Bush Administration bailed out big banks and Wall Street investment bankers, the Obama Administration (not to be outdone) cobbled together a controversial $790 billion stimulus bill, which in hindsight stimulated nothing. Within a matter of weeks the government, in the name of economic rescue, committed a trillion-and- a-half dollars to very questionable effect. Economists and historians will debate the Bush bailout and the Obama stimulus for years to come.

With only half of the bail-out money distributed by the end of President Obama’s first year in office, and with the banking crisis having substantially abated, many now argue that the unspent funds should be returned to the Treasury. Returned to the Treasury? How naïve they must be. Then there’s the matter of the $121 billion that seventy banks have already paid back to the government with interest. Surely those funds would be returned to the Treasury to reduce the burgeoning national deficit as the original Bush enabling legislation required. Returned to the Treasury? How naïve they must be. No, instead, the Obama Administration plans to seize those funds to help pay for a second economic stimulus. One might reasonably ask how successful the first economic stimulus has been to warrant a second stimulus program, especially if TARP payback funds are going to be misdirected for such high purpose and money from the first stimulus remains unspent (remember the term “shovel ready jobs”?). According to a recent Associated Press story, the validity of which was confirmed by a bevy of impartial economists, the $20 billion expended so far for infrastructure projects such as roads and bridges have not produced a single new confirmable job.

As Brian Riedl of the Heritage Foundation recently wrote in the Wall Street Journal,

“Congress cannot create new purchasing power out of thin air. If it funds new spending with taxes, it is simply redistributing existing purchasing power (while decreasing incentives to produce income and output). If Congress instead borrows the money from domestic investors, those investors will have that much less to invest or to spend in the private economy. If they borrow the money from foreigners, the balance of payments will adjust by equally raising net imports, leaving total demand and output unchanged. Every dollar Congress spends must first come from somewhere else. For example, many lawmakers claim that every $1 billion in highway stimulus can create 47,576 new construction jobs. But Congress must first borrow that $1 billion from the private economy, which will then lose at least as many jobs. Highway spending simply transfers jobs and income from one part of the economy to another. As Heritage Foundation economist Ronald Utt has explained, “The only way that $1 billion of new highway spending can create 47,576 new jobs is if the $1 billion appears out of nowhere as if it were manna from heaven.” This statement has been confirmed by the Department of Transportation and the General Accounting Office yet lawmakers continue to base policy on this economic fallacy. Removing water from one end of a swimming pool and pouring it in the other end will not raise the overall water level. Similarly, taking dollars from one part of the economy and distributing it to another part of the economy will not expand the economy.”

Every recession ends and most indications are that the current recession is ending or has ended as well. The Fed and the Obama Administration have made this point repeatedly. Nonetheless, like the man who can’t take “yes” for an answer, the Obama Administration continues to want to spend money we don’t have in a futile effort to create jobs with money it borrows (or taxes) from the private sector at the expense of jobs that that same money would create in the private sector. The only payrolls that are increasing in America are government payrolls. Meanwhile, private sector jobs continue to contract. Is it any wonder?

Having increased spending by a whopping 24% over the last Administration’s already profligate spending during its last full budget year, (and which was a major cause of its electoral defeat) we expect President Obama to soon make some dramatic gesture promising some new spending discipline or a reduction in spending by his Administration. When, and if that happens, we suspect most Americans will see it as mere sophistry because it would likely permit increased spending if taxes were hiked to pay for it. One thing we have learned during the past year is that no spending restraint is a good spending restraint when there is some way to extract more money from the taxpayer, whether through tax increases, so-called fees or revenue enhancers, or the raising of taxes by stealth through a failure to adjust base costs for CPI increases.

Could any campaign promise have engendered more trust than candidate Obama’s constant drum beat that healthcare reform would be an open, participatory process? He explicitly stated that we were going to have the Congressional healthcare reform negotiations on C‑Span. The point, of course, is that he knew perfectly well that the Congressional healthcare negotiations would never be made public, but it sounded good and probably was worth a lot of votes. The silence from the White House has been deafening now that C-Span has publically called on the Administration and Congress to allow (as the president promised) the taxpayer funded TV channel to cover the negotiations that are currently on-going and will involve hundreds of billions of dollars of cost to the taxpaying public. Not only is C‑Span being stiffed, but also in an unprecedented display of arrogance, Congressional leaders haven’t even appointed a Conference Committee to reconcile the House and Senate versions of the legislation. Instead, the leadership is negotiating behind closed doors with the President and union leaders to provide their members with a sweetheart deal at the expense of all other American workers.

The most recent and most audacious decision to exempt union members and local and state government employees (think Obama’s base) from the tax on so-called Cadillac healthcare plans until 2018 (at which time one can bet on an extension of the exemption) is almost too numbing to contemplate. Not that such wheeling and dealing on behalf of a politician’s supporters at the cost of everyone else has, heretofore, been unheard of. Quite the contrary, politicians have engaged in such chicanery from time immemorial. And that, of course, is our very point; nothing has changed. Eighty-seven percent of the workers in America do not belong to unions but those among the non-union workers who enjoy the benefits of so-called Cadillac plans will have their plans severely taxed, while workers who belong to unions get a free ride in return for big Labor’s endorsement of the President’s healthcare plan…or as the old-time politicians used to say, “You scratch my back and I’ll scratch yours.”

We need not dwell on the “cash-for-cloture” deal that sold the Landrieu and Nelson votes to Senate Majority-Leader Reid. Yes, as we said above, there have been deals in return for votes in the past, but never in our memory have we seen such “in-your-face” audacity whereby the citizens of every other state are now expected to fund the largess such as that which Louisiana and Nebraska are to receive. We do not remember a case in which the Attorneys General of various states (nine at last count) have filed suit in federal court to object to such blatant vote buying at the expense of the rest of the country. What is particularly disappointing, but perhaps entirely predictable, is that these political deals are nothing less than a blatant tax increase on the middle class, the very group that Candidate Obama assured would never see a tax increase under his plan for the country.

President Obama’s campaign promise not to raise taxes on the middle class was neither sincere nor realistic. Perhaps, the biggest tax increase for the middle class will, as noted earlier, be tucked into the so-called healthcare reform measures currently being hatched behind closed doors. The Washington Post reported, “The $829 billion cost would be more than offset by reducing spending on Medicare and other federal health programs by about $400 billion over the next decade, and by imposing a series of fees on insurance companies, drug makers, medical device manufacturers and other sectors of the health industry that stand to gain millions of new customers under the legislation.” Every one of these “fees” will be passed onto the public.

A nice and more soothing sounding word: “fees.” Fees of course, are simply a euphemism for taxes. It is axiomatic that businesses don’t pay taxes; they collect them. Only people pay taxes. When corporation are taxed, those taxes ultimately show up in prices, reduced wages and, often, reduced jobs. The government can tax corporations, the means of production, capital gains, dividends (which have already been taxed once) charge special fees and penalties as the Obama Administration plans to do and pretend that only the wealthy are being taxed but the truth is, and has always been, that the workers, consumers, and investors, people who are wage earners and people who are living on fixed income will actually do the paying.

Milton Friedman’s old adage is as true today as it was when he first said it. There is no free lunch. A good example of the Administration’s “free lunch” program is the idea to subsidize medical care for those without insurance because they lack the wherewithal or because they are already sick, and to force everyone to buy polices with expanded “basic coverage” that includes more services, such as “free” preventive care. But, as Friedman taught, there is no such thing as a free lunch. Someone will always have to pay, like those who buy insurance or who have it bought for them by their employers. Insurance premiums for everyone obviously must rise to reflect the newly subsidized demand for care. Of course that means the middle class will pay more, one-way or the other, for their insurance. Whether we call that added cost increased premiums or increased taxes is quite irrelevant. Costs to the middle class will soar. And to add insult to injury, anyone who refuses to buy insurance will be fined. Notwithstanding President Obama’s embarrassing quibbling with George Stephanopoulos over the issue, that fine is a tax.

Any government-imposed cost on the people is a tax. One can call it whatever one wants. It is a tax. Currently insurance companies manage risk by not covering conditions that people already have when they apply for insurance. We can certainly forbid insurance companies, by law, from doing that. And we can forbid them from charging more when they do insure someone who applies with a known illness that will be expensive to treat. It may well be good public policy to enact rules to that effect, but let us make sure that everyone understands that all of us will pay higher premiums. Those government-mandated premiums are simply another tax.

Finally, let us touch, just briefly, upon the subject of last week’s essay – – security. Here we believe the President has hoisted himself on his own petard. Political campaign rhetoric, foolish rhetoric we believe, to placate his antiwar wing, academia, and most foolhardy, the rest of the world on the theory that Guantanamo is a stain on our international reputation, has now obligated President Obama to close the military prison at Guantanamo and to try the most vicious of the terrorists, those who have waged war against us and who have murdered thousands of Americans, as common criminals in criminal court in New York City. Now there is talk of other terrorists’ trials in Washington, D.C. Coming soon to a city near you to make jury duty more varied: terrorist trials. What elitist folly. It provides eloquent meaning to William F. Buckley’s quote a generation ago that he would rather be governed by the first one hundred names in the Manhattan telephone directory than the faculty of Harvard.

The word audacity can be defined as action that is “bold or daring,” presumably the meaning author Obama had in mind. It can also be defined as “effrontery, impudence or shamelessness”, apparently what his Administration has in mind. As we have stated in an earlier essay, we should have read the small print.

Meanwhile, a political super nova (an explosion a million times brighter than the sun) took place in Massachusetts last week that showed we are not alone in our evaluation of the president’s first year in office.  Little-known Republican Scott Brown  defeated the “shoe-in” Democratic candidate Martha Coakley for what, arguably, has been the safest liberal seat in the history of the United States Senate, the seat previously held for nearly fifty years by Ted Kennedy. Even before the polls closed, un-named Administration spinners were attributing their reversal of fortune to “poor campaigning,” “poor polling,” “candidate laziness,” “ignorance of who Red-Sox ace-pitcher Curt Shilling is,” and on and on as though there wasn’t a single person in Massachusetts or the rest of the country who didn’t know that the election had become a referendum on Washington’s reckless, heavy-handed and costly governance, especially regarding President Obama’s healthcare program that fewer and fewer people beyond the beltway want.

The election result was nothing less than the governed telling those who govern that their agenda is not the people’s agenda. The people of Massachusetts seem to be echoing the words of John F. Kennedy when he ran in his first primary election for the U.S. House of Representatives so many years ago, “Sometimes, party loyalty demands too much.”

Ideas and commentary with allegiance to neither the left nor the right, but only to this sweet land of liberty.