Mr. Obama's First Budget

President Obama revealed his 2010 budget this week; it is the latest in the series of government plans to spend incomprehensible amounts of money it does not have.

He proposes $3.6 trillion in spending, which is 71% more than the projected revenues of $2.1 trillion, leaving a deficit of $1.5 trillion. This President’s first budget deficit is bigger than Bill Clinton’s entire first budget. Government spending has doubled in just ten years.

One of my tricks to help people put government spending in perspective is to divide budget numbers by 10,000 to get things down to the size of a modest family budget. The $2.1 trillion of revenue becomes $21,000, what you would earn at $10 per hour.

So imagine a family budget with income of $21,000, spending of $36,000, and running up $15,000 more in debt on your VISA card, which already had a $110,000 balance on it. Does this seem sensible to you? It does to Obama’s team.

The $1.5 trillion deficit is 12% of GDP of the entire nation – unprecedented except during the height of World War II. President Bush was (properly) mauled for running deficits 1/3 this size to finance two wars. The first of these is drawing to a close, so Obama’s deficit spending plan is all the more audacious.

The Obama budget projects massive deficits for each of the next 10 years. In ten years public debt will double to over $22 trillion. In a previous post, I explained why federal debt would soon reach $200,000 per job; the budget confirms that estimate.

In business, a budget like this would not have survived as a first draft, let alone a finished plan. Priorities would be set, decisions would be made, and spending would be cut until deficits were eliminated. In this case, spending would be cut by half. It is no easier to do this in the private sector than in the public sector; the difference is that we actually make the tough choices that the politicians talk incessantly about and never do.

The President’s budget inexplicably repeals the welfare reforms of the 1990s, and puts back in place the failed system that President Clinton and Congress dismantled. Welfare reform is one of the few examples of a government initiative that worked – moving 2/3 of the recipients from welfare to work, and putting the budget in surplus for the first time in several generations.

Taxing the wealthy was supposed to balance the budget; it didn’t. In fact, virtually none of the government’s economic strategies have worked. Trillions have been spent in a series of interventions designed to revive the economy; each has resulted in job losses, a drop in the stock market, and a contraction in GDP. Since candidate Obama became the front runner in the campaign and announced his economic plans, the stock market has dropped 49%.

The laws of economics do not change when administrations do; the forces that guide markets do not recognize bills written by legislatures. Libertarians recognize that the problems caused by too much spending, taxing, and borrowing can not be solved with more spending, taxing, and borrowing.

President Obama, alas, does not.

The Nightmare Continues

Those of you who follow my weekly blog will recall the magic number is 120 million. That is the number of private sector jobs, the source of all national income.

Th ink is barely dry on last week's "stimulus" bill and the Democrats have proposed a plan “to keep people in their homes” that will cost $275 billion; that works out to $2,291 for each job that has to pay for it. If there are two of you working in your home, your tab for keeping someone else in their home is $4,582.

Some us are thinking we would rather invest $4,582 in our own homes. For Libertarians, this bailout is an assault on many of the principles we hold dear - personal responsibility, Constitutional government, sanctity of private contracts, and free markets.

Americans of all political persuasions have instinctively reacted in angry opposition to this bailout of homeowners and banks. We recognize it is fundamentally unfair to penalize the folks who didn’t overextend themselves and to reward the folks who did. It is not right that banks who did not engage in risky lending to unqualified borrowers should not watch their tax dollars given to competitors unwilling to accept the consequences of their risky business decisions.

This plan can be opposed on basic fairness, or it can be opposed on Constitutional grounds, as it gives unelected judges the power to amend private contracts, a surefire way to scare all of the smart money out of this country. But the best reason to oppose it is that it won’t work - we are throwing another $275 billion more down the bailout sink hole. Money that could be put to productive use in the economy.

The guy who makes $50,000 and owes $500,000 can’t be saved, especially if his house is now worth only $300,000. Postponing (notice I did not say avoiding) foreclosure allows the bank holding that mortgage to put off the $200,000 write-down of that asset for now, but it is only a temporary reprieve.

President Obama’s plan is doomed to fail because of two stubborn facts that Congress can not legislate away: a) the dude can’t afford the house, and b) the house has already lost its value.

Foreclosure is not a deadly disease; it is the mechanism by which property is transferred from someone who cannot afford to own it to someone who can. Foreclosure establishes fair market value through the auction process. An owner who can afford the new mortgage can also afford to maintain and improve the property, so foreclosure improves the value of neighboring properties.

We should not seek to avoid foreclosures, we should expedite the process. The sooner we get our housing stock transferred to qualified owners at real market prices, the sooner we can come out of the recession. Supply and demand need to be harmonized through market mechanisms, and this $275 billion mistake just gums up the works and prolongs the recession for a couple more years.

This bill is not about helping homeowners; it is about propping up failed banks who have contributed a boatload of money to Congressional campaigns, and about expanding government power over private contracts. Americans are overwhelmingly opposed, and yet Congress will pass it anyway, probably with another disgusting list of pork attached.

Your share is $2,921 - I thought you would want to know. The nightmare continues.

A Nation of Cowards?

Did he really say that? Wow, I guess he did.

Attorney General Eric Holder called us a nation of cowards because we don't talk about race as much as he thinks we should. Well, I'm not a coward, Mr. Holder, and I don't take kindly to a government official telling me what I should and shouldn't be talking about.

Especially a guy who has only been in his job for a month, and who runs the department of the federal government most responsible for defending my 1st amendment right to think and say whatever I want without it being any of your business. That Constitution you just swore to protect and defend doesn't give me rights, it sets limits for guys like you telling the rest of us what to do.

But ok, just this once we'll have a courageous talk about race, Mr. Holder. Ready? Here we go.

I think we talk about race too much; I think we should quit talking about it. If guys like you talked about it less and thought about more, maybe you could catch up with the rest of us who are living in this century, not the last one. How am I doing? Courageous enough for you?

Each person is unique and valuable; endowed by our Creator with unalienable rights, as the Declaration says. Just about everybody I know gets that now, even old white guys who were brought up to think differently. I will talk all day long about minority rights - the ultimate minority of one.

Do you have the courage to have that conversation, Mr. Holder? I reject the idea of group rights; each of us was endowed with all of our rights when we were born. Government can't add any, it can only take some away, and that's what it does when it invents group entitlements that trump individual sovereignty. That is offensive to me and all people - of all races - who love Liberty.

Throughout history, group identity is the mechanism by which government oppresses minorities. We do not engage in holocaust or apartheid in America; the mechanisms of oppression here are dependency on government and a culture of victimhood. The Big Lie of our time is that people of color are not capable of making it on their own - you won't hear any nonsense like that from me, it's the Democrats who own that franchise.

Politicians and professional race-baiters who insist on framing issues in racial terms are patronizing and demeaning to the people they claim to represent. It is your condescension, Mr. Holder, not my whiteness, that perpetuates the sense of racial inequity that the victimhood industry has profited from. You aren't helping people, you are helping yourselves.

Mr. Holder, the cowards in this world are those who know this to be true but are afraid to call you out on it for fear of being labeled "racist". And don't even think about it. I don't think of President Obama as our first black president - he is our President. That is how far we have come in my lifetime, and quit pretending we haven't.

I don't think of my co-workers' race, ethnicity, gender, sexual orientation, or religious affiliation either - I recognize their individual talents, contributions, limitations, and needs. Each person has worth because they are a person, not because they are a black person, or a white person, or any other color of person. Recognizing the dignity of each person does not make me a coward, and it does not make me a racist.

What kind of courageous conversation about race did you have in mind, Mr. Holder? Did you want to discuss how the the war on drugs decimates black communities? How the welfare state destroys black families? How bi-lingual education retards Hispanic prosperity? How federalizing education is producing a generation of illiterates in our inner cities? How "affordable housing" enriched corrupt politicians, banks, and developers and bankrupted the minority families who trusted you to help them? I didn't think you wanted to talk about that - coward.

Mr. Holder, if your head is stuck in 1950-something and you want to paint millions of individual persons with a single racist brush, then go ahead and talk about it all you want. But you are not going to stuff your hateful ideas into my head, and you are not going to tell me what to talk about.

I hope you feel better now that we have this little chat you wanted so badly, Eric. It will be our last.

200,000 Reasons To Vote For Tim

I'll give you 200,000 reasons to vote for me.

The national debt is now over $11 trillion. The unfunded liability in social security is another $6 trillion. Before it’s over, the current rash of bailouts, guarantees, and "stimulus" will cost upwards of $ 7 trillion.

That is $24 trillion of debt and unfunded obligations. There are 120 million jobs in the private sector, so that means each person that works will have to pay off $200,000 of government debt.

That's right - $200,000 per job. Interest alone will be $10,000 a year per job. It will take 5 generations to pay this debt off. We are stealing money from 3 generations of Americans who haven't even been borne yet. It is unconscionable.

Total government spending - federal, state, local - will be $6.5 trillion this year. Divide by 120 million jobs, and it works out to $54,000 per job.

So every job, in addition to supporting a family, paying off student loans, saving for the future, and giving to charity, must also pay $54,000 to fund government spending, and must pay off a $200,000 debt.

This is what the Democrats and Republicans have done to you over the past 20 years. If you keep sending them to Washington, they will keep sending you up the river.

You don’t have to choose between big government Republicans and bigger government Democrats. You can vote for legislators who will say “no” to more spending, “no” to more borrowing, “no” to more taxes, “no” to more bailouts, “no” to unaffordable military interventions overseas, and “no” to unsound economic interventions at home.

The Libertarian Party has never abandoned the principles of limited government and individual sovereignty that made us a great nation in the first place. Libertarian candidates will say “no’ to more government, and “yes” to more liberty.

The Real Minimum Wage

The real minimum wage is zero.

That's what many more people will be earning soon thanks to the Wisconsin state legislature's vote to increase the state minimum wage by 17%, to $7.60 per hour. You don't ever hear an economist suggest minimum wage increases - they know better.

It is hard to imagine a worse time to increase the minimum wage. Factories are closing, businesses are failing, jobs are leaving the state, home values have plummeted; state government is facing its worst fiscal crisis ever, and these guys take the time to force some more people out of work. Swell.

An increase in minimum wage only helps you if you are still employed. The firm must recover the added cost of the mandated minimum wage increase somewhere. Either raising prices to its customers, or in reducing the wage increases for higher-paid workers, or by eliminating jobs - minimum wage is a zero-sum game.

Raise prices and you lose customers; limit wage increases for your most productive workers and they leave to make more money elsewhere; the default setting is to cut the number of minimum wage jobs. I recently sat next to a fellow on a plane who had to do that when the federal minimum wage was increased this past summer. He was genuinely pained to have to let poor people go, but it was that or close down the business. That's reality.

The minimum wage is essentially a "training wage". Most people who earn minimum wage are young and unskilled, and most quickly earn promotions and increased wages as they gain more experience and job skills. For many people - and I am one of them - the minimum wage job is the first step up the ladder to success. You don't make it easier to climb that ladder by raising the height of the first rung, you make it harder.

You also take away some of the incentive to get training and work harder to climb off the bottom rung and earn more money. Living in a dump and eating peanut butter was a tremendous incentive for me to get job training so I could earn more than $1.15/hr. And I got a second job, and I went back to school. And I kept going back to school and taking new jobs, and I still work my butt off because I hated being broke.

I'm not special - it's my brother that is the smart one. Hang around with successful businesspeople and you will hear stories similar to mine over and over again. In the private sector, self-made is the rule, rather than the exception - the silver spoon kids don't have the grit to make it. The icons of American prosperity are rags-to-riches stories - Henry Ford walked to Detroit with a couple of coins in his pocket, and the kings of high-tech are mostly college dropouts.

Dignity and self-esteem comes from accomplishment, not from entitlement. Dignity, self-esteem, character, discipline, confidence - these are intangible benefits of productive, honest work, and these traits and habits are what propels a person upward. By mandating a wage of $7.60, government has deprived people these benefits of earning it for themselves.

The argument for minimum wage is that corporations must be forced to pay a "living wage" and would not do so voluntarily. That is ridiculous, considering that 95% of jobs pay higher than minimum wage without any legal requirement to do so.

Everyone who works is being paid less than what their employer thinks they are worth, and more than what they think they are worth. If the employer doesn't think your value is more than your pay, you won't have a job; if you don't think you are paid more than your worth, you will change jobs. This is basic economics; perhaps instead of a minimum wage law, we should enact a minimum economics law that would force legislators to take a class or at least read a book.

A law that says a job is worth $7.60 an hour does not make it so. If the job is worth $7.60, it will pay $7.60. If the job is worth less than $7.60, it will disappear. Unfortunately, our legislators just voted to make a lot of jobs disappear. Vote Libertarian.

The Corporate Welfare State

Let’s just call it what it is: the corporate welfare state.

The corporate welfare state is the system of federal preferences, bailouts, subsidies, regulatory advantages, grants, and government programs that prop up companies and industries which can not stand on their own two feet.

We have institutionalized failure and built an entire industry – firms, bureaucrats, lobbyists, lawyers, unions, PACS – around perpetuating corporate dependency on government. It is our only growth industry these days.

I’m calling out the corporate welfare state not as some raving socialist lunatic, but as a businessman and fierce defender of free market capitalism. Truly free markets do not countenance the excess and abuse that arise regularly in dependent or heavily regulated industries.

Today’s welfare queens do not pop out kids to increase their government checks and trundle down to the liquor store in their bathrobes to buy cigarettes with food stamps. Modern corporate welfare queens bankrupt their businesses, trundle to Washington in dark blue suits to get bailouts, and spend the money on spas, Super Bowl parties, and bonuses. Different circumstances, same character defect.

The free enterprise system relies on both profits and losses; losses tell the business when it is time to change products, processes, policies, or managers. Bankruptcy is the way we purge the system of products, processes, policies, and people who can not adjust to the changing needs and desires of consumers.

The fear of losing it all is the only thing that keeps greed in check. Subsidies, guarantees, and bailouts take away the risk of loss, and cause all sorts of bad decisions to be made.

Purging the economy of bad managers and products makes room for new ideas, new products, and new people. The assets of the bankrupt firms do not get launched into outer space; they are purchased and put to better use by their new owners.

Just like weeding a garden improves its overall health, losses and bankruptcy improve the overall health of the economy. Government intervention blocks the processes that weed out the unhealthy firms. Over the past year, government intervention has been unprecedented – both in the size and scope of interference.

There is no “public interest” that is served by propping up firms or industries that are not economically viable on their own; there is only the narrow special interest of the firm in question. The resources used to benefit one firm are resources that would have been put to better uses by others from whom they were taken. The public interest is harmed by corporate welfare.

Trillions of dollars will not make the economy “recover”, when the money goes to the same people who messed it up. It will recover when losses and bankruptcies are allowed to purge the weak sisters and make room for the growth of healthy firms; the best thing government can do is to get out of the way.

The stimulus bill that Congress will pass soon will insure that economic recovery is delayed by at least a couple of years. It is useful to recall that last time something like this was tried, the New Deal of the 1930’s, the depression was extended by nearly 8 years.

We dismantled the apparatus of the social welfare state in the 1990’s; we need to do the same with the corporate welfare state today.

Tammy Baldwin will not reform corporate welfare; she voted for the bailouts and the stimulus bill; she supports protectionism, socialized medicine, and subsidies for politically favored industries; she will vote as Nancy Pelosi tells her to vote – higher taxes, more regulations, more government, less Liberty.

End corporate welfare as we know it. Vote Libertarian. Vote for Tim, not Tammy.

Irony And Hypocrisy

It’s not really news when politicians turn out to be hypocrites, but the irony of the Democrats recent spate of tax problems is too good to pass without comment.

It was Joe Biden who declared that paying taxes (more taxes, even) was patriotic during the election campaign just passed. The same millionaire Joe who gives only $300 a year to charity.

So isn’t it just delicious that Daschle, Killefer, Rev. Wright, Nesbitt, Rangle, Rezko, and Geithner all turn out to be tax cheats? Maybe its worth electing democrats just so they pay up their back taxes when the light shines on them.

Throw in Richardson’s kickback problem and Blogojevich’s auction of the Senate seat, Chris Dood’s sweetheart loans, and Barney Frank’s funding problems and you have quite the parade of scoundrels in the first 30 days of change we can believe in. And these are the people who will be telling us how to live our lives for the next several years.

Say what you will about George W. Bush’s policies, he ran a pretty tight ship in the scandal department. Sandwiched between Clinton’s Arkansas mafia and Obama’s Crook County posse, the Bushies seem downright saintly. Incompetent, but saintly.

Speaking of hypocrites, I haven’t heard Al Gore comment on last month’s report that showed the earth’s temperature holding steady over the last 10 years. Didn’t see that on the news much, did you – it’s one of those pesky inconvenient truths.

Considering those were the 10 highest years of carbon emission increases ever, we would be swimming in Lake Wisconsin this weekend if there was anything to this nonsense. 32,000 earth scientists now believe the evidence does not support a theory of man-made global warming, compared to the 1,500 that got this whole mess started years ago.

Over the past 6 months, the global economic collapse has cut emissions the hard way – and has the temperature dropped? I think you know the answer to that one. More carbon emissions – no change. Less carbon emissions – no change. Pop quiz – do carbon emissions cause climate change. Unfortunately, if you answered this correctly, there is no Nobel Prize for you. And you can't be in President Obama's cabinet, either.

Science be damned, the Democrats are charging ahead with the climate change agenda that will cap emissions, raise energy prices, stop drilling, drive jobs overseas, and reduce our standard of living. This current economic downturn is a good dress rehearsal for the real crash that will happen once the climate change fanatics get their agenda enacted. We have seen what happens to our economy when credit dries up; wait until you see what happens when energy does.

Tammy Baldwin is our representative in Congress, but 80% of her campaign funds come from outside the state, and she will vote however Nancy Pelosi tells her to vote. She voted for the bailouts. She thought Daschle was perfect. She voted for the economic stimulus that is neither economics or a stimulus. She voted against drilling, against refining, and she will vote for cap and trade and all the rest of the green agenda. She will vote to raise taxes, and she will vote to unionize the country. These are all job killers, unless you are a government employee or professional agitator whose funds come from government grants.

Tammy either doesn’t mind voting for your unemployment, or she doesn’t understand economics. Either way, you need to vote for Tim, Not Tammy in 2010.