The Iceberg

Thanks to technological advances like radar and satellite tracking, icebergs aren’t the bane of shipping that they once were, but we can still learn something from them.  Most of the mass of an iceberg is under water, which is why people refer to the “tip” of an iceberg.  Well, the national debt is like an iceberg in some ways.

We see a number, right now over 19 trillion dollars.  That number is so large that nothing in our everyday experience helps us to comprehend it.  It’s almost doubled in less than eight years under the progressive Obama administration and there’s no reason to think that Democrats would curb that growth.  That’s an annual increase of around 9%.  Are your CDs paying that?

What we don’t see is what lurks beneath that number; the impact on our economy and national security.  Like any other debt, the national debt isn’t free; the government must pay interest on that debt to the bondholders.  Interest rates have been at record lows for years but they won’t stay there forever.  As interest rates rise the government will have to pay higher interest on new debt as it’s issued.  This is one part of the debt iceberg we don’t see.  Debt interest is paid from tax revenues, so as the debt rises the government will either have less money to spend on national defense, social programs, and environmental protection or it will have to raise taxes.  A second part of the debt iceberg that’s largely hidden is that the debt eventually has to be repaid as the bonds mature.  This is a huge and growing mortgage on future generations.  Of course that debt can always be refinanced at a higher interest rate but we all know where that leads: bankruptcy.  The third, and least conspicuous hidden part of the debt iceberg is that trillions of dollars in US debt are held by foreign countries.  That gives these countries leverage to demand special treatment and even an economic weapon to use against us in case of a conflict.

Here’s something to think about.  The national debt is now over 105% of the US GDP.  That’s right, it’s higher than the total annual output of our nation.  Anyone who thinks this can go on forever must believe that money grows on trees.

Here’s what we need to bring this situation under control before the iceberg of debt sinks the ship of state:

  1. Responsible elected officials who recognize the problem and are actually willing to do something about it.  This means keeping spending within revenues and actively reducing outstanding debt.
  2. A plan to reduce the outstanding debt.  If we ever get real tax reform (not just more pages of rules) this should be part of it.  For example, under a flat tax we could have Flat+1, where the flat portion covered expenses, 1/2 of the extra 1% goes to debt reduction, and the other 1/2 of the extra 1% goes to upgrading our infrastructure (see “Infrastructure: Circulatory System of a Nation” for more on this issue).
  3. Limits on both the total amount of debt that can be held by foreign countries and the portion of that amount that can be held by any one country.  See “The More You Owe Me the More I Own You” for further discussion of limits on foreign debt.

 

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Tax And Destroy

Everyone has heard the famous quote “the power to tax involves the power to destroy” from Chief Justice John Marshall in an 1819 Supreme Court ruling that states could not tax the Federal government.  What about government use of taxation against the people it’s supposed to be working for?  What is that destroying?

For much of US history, taxes were collected to fund essential government services such as national defense, border security, law enforcement, public infrastructure, education, and resource conservation.  In fact Justice Oliver Wendell Holmes said “taxes are what we pay for civilized society”.  Progressives have changed that through taxation for wealth redistribution and “social engineering”.  Social engineering typically involves the use of punitive taxes to discourage “wrong behavior” as defined by some omniscient Big Brother.  I’ll start with punitive taxation.

Billionaire Mike Bloomberg is pouring millions of dollars into local efforts to impose a punitive tax on sugary sodas.  OK, they’re not particularly healthy, but where does that process end?  Under the influence of UN Agenda 21 Denmark is seriously considering a tax on meat.  Once the USDA includes sustainability in diet recommendations it won’t be long before progressives want taxes on meat, and eventually dairy products.  This is about controlling people, and more control equals less freedom.  Eventually the only choice progressives will allow is for an abortion.  Bloomberg also pours millions into local gun control efforts, some of which include punitive taxes on guns and ammunition.  No ammo tax will ever stop a street gang, psychopath, disgruntled worker, or jihadist from unleashing mayhem.  What it will do is hurt honest shooting sports participants, particularly those involved in competitive target shooting.  It takes thousands of hours and probably close to a million rounds to reach Olympic level competitor status.  It’s those honest achievers who will be hurt, not the criminal who loads a “Saturday night special” to rob a convenience store.

(Hey Mike, why don’t you ever ask for more taxes on billionaires?)

President Obama wants a ten dollar per barrel tax on oil, even though it would raise prices of gas and heating oil and could send the economy into recession.  This is a punitive tax to punish those who insist on using fossil fuels.  As I pointed out in “Alternative Energy: The Missing Link”, however, we don’t have the technology to convert to renewable fuels overnight.  How many cities are 100% powered by renewable energy 24/7?  The answer is none.  How many all-electric vehicles have a 500 mile cruising range, or even a 100 mile range that can recharge during a 5 minute rest stop?  Again the answer is none.  An all-electric vehicle is a great choice for commuting from the suburbs to the city but would you want to set out to “see the USA” in one?  Incidentally if that electric vehicle doesn’t recharge from a renewable source it isn’t fully “green”.  He claims that the tax revenue would be used for research, and while some might be, some of it might also be used for global wealth redistribution.

So, what about wealth redistribution?  Within the US wealth redistribution is accomplished through various welfare programs and a widely abused tax credit program called EITC.  If you read my proposal for the ISIC welfare reform program you’ll know that I’m not opposed to welfare as a hand up for the unfortunate or as assistance for those who are unable to fully support themselves due to disability.  When children are starving in spite of school meal programs, SNAP, and WIC, however, something in the system isn’t working.  When a person who is fully capable of working decides to live off the labor of others and then jokes about it on social media welfare fraud has gone too far and reform is past due.  That’s an insult to every working family that’s struggling to support itself.  I’m also opposed to allowing foreigners to enter the US and immediately land on extended welfare.  Traditionally our immigration policy only admitted honest healthy people who were capable of supporting themselves within a reasonable time frame.  See my “Immigration is a Privilege, not a Right” post for more.  Global wealth redistribution is a recent concept arising from UN Agenda 21.  Third world nations are demanding billions of dollars from developed nations to “go green” under Agenda 21 while having no intent to meet the human rights objectives specified in that agenda.  See my post “UN Agenda 21 vs the Wealthy Wimpy West” for more.  I believe that global wealth redistribution is unconstitutional.  Nothing in our Constitution allows the government to send our tax dollars overseas or be taxed by any foreign entity.

So, what are the socialist progressives destroying with social engineering and Marxist wealth redistribution?  Essentially everything that made the USA exceptional: freedom (choice, not control); individual responsibility (the flip side of the rights/responsibility coin); the value of the family, and national sovereignty.

As many have pointed out, the US will never be conquered from without, it will destroy itself from within..  Progressives/socialists are leading the charge.

2016 Update:  Not unexpected: the UN has advocated for all nations to tax sugary drinks like sodas.

Unexpected: the UN also wants taxes on 100% fruit juices.  Who wants their morning OJ taxed?  It’s past time to tell the UN that we’re a sovereign nation, and while we’ll work with them on international issues, we will not surrender our rights or our freedom to them.

Infrastructure: Circulatory system of a nation.

Once again we’re hearing how our aging infrastructure needs maintenance and upgrading.  We heard it 6 years ago when the “economic stimulus” was launched, but how much infrastructure actually got fixed and how much of that money went to political cronies?  There are very few “shovel ready” projects available at any one time.  We have a gas tax that’s supposed to fund highway maintenance, but does it all really go to that purpose?  Modern, efficient, and secure infrastructure is essential to commerce and national security so why is it neglected except when it becomes politically expedient?

Infrastructure can be categorized in two ways.  The first is as transportation or transmission.  Transportation infrastructure moves people, materials, and goods via roads, bridges, rail lines, seaports, and airports.  Transmission infrastructure moves electricity, communications, water, gas, and oil by wires, fiber optics, towers, and pipelines.  The second categorization is by ownership, either public or private.  While roads, bridges, and municipal water supplies tend to be publicly owned, much of the remaining infrastructure is privately owned, often by more than one company.  It could all be summarized in a matrix

Publicly owned infrastructure shouldn’t be maintained at the whim of political expediency or by pork; it should be an integral part of every budget, with priorities clearly set.  Companies should maintain their infrastructure simply to reliably support their customers.  In some cases tax incentives may be appropriate, while, if national security is being compromised, legislation may be required to force the issue.

Let’s look at a few examples, the first being our electrical grid.  Recent studies have shown that coordinated substation sabotage could black out much of the nation, while some have said that cyber attacks could achieve the same result.  This is a matter of national security that requires correction and coordination between the private owners and the government.  Similarly, a cyber attack on data communications could theoretically cripple our financial institutions.  Municipal water systems are an example of publically owned infrastructure.  Some are nearly a century old and leak as much water as they deliver.  This is a waste of taxpayer dollars and of a valuable resource.  Rail transportation is another example.  Rail is the most fuel-efficient way of moving large cargoes  over land, but, as recent accidents have shown, safety is critical, particularly when transporting hazardous materials.  The rails themselves, bridges, train maintenance, road crossings, and speed limits on curves all enter into safety.  Red-list  bridges are another threat to public safety and commerce.  Seaports are the gateway into the US of most imports, but here security is critical to ensure that WMD’s or illegal drugs aren’t being smuggled in.  There are many more but you get the point.

All major infrastructure projects, such as power plants, shall be built and run by US companies, for three reasons.  One is national security, as a foreign-owned plant could be shut down by a hostile nation during a time of conflict.  Another is to keep US dollars in the US to create and maintain US jobs.  Finally, most people wouldn’t want to be paying their utility bills to China.

Take infrastructure out of the political football stadium and into everyday reality. Establish a temporary joint public/private committee to review the infrastructure matrix, identify needs and obstacles, establish priorities, and present recommendations to Congress and to the states for locally owned services like municipal water supplies. Also reform and simplify the complicated permitting process that delays critical projects for years. This will provide a basis for sound budgeting and legislative action.  Allowing our infrastructure to fail due age, inefficiency, or an attack is not an option for a secure nation.

The long term future of the USA depends on security.

There are three levels of security that determine the future of a nation, physical security, economic security, and emotional security.  Without physical security the others aren’t possible, so I’ll begin there.

Physical security starts with secure borders.  It’s easier to keep the bad guys out than to recover from the damage they can do.  Any immigration reform must include improved border security.

It includes a strong military so that any hostile actions can be overwhelmingly crushed.  It doesn’t mean using the military to be “world police” or to try to impose our political system on countries where it simply wouldn’t work.

It includes law enforcement at Federal, state, and local levels to fight crime and maintain order.  They must communicate with each other.  It doesn’t mean having a “secret police” that can be used to suppress honest citizens.

It includes emergency response agencies that can quickly deliver aid in the event of natural or man-made disasters.  Health responders must have a supply of drugs critical to epidemic control.

It requires a strong, modern, and secure infrastructure that supports reliable  communication and the movement of resources within the country.

It includes a strong manufacturing base and a strategic materials stockpile.  Any total loss of a capability, such as the recent closure of the last lead smelter by the EPA, could become a weakness during a global conflict.  Don’t count on other countries to look out for us.

It requires cities to be prepared for the types of problems they might experience in their area such as flooding along a river and to take actions to mitigate risk before a disaster occurs.

Even a prepared population contributes to physical security.  That doesn’t mean everyone should be a “prepper” but everyone should have the basic emergency preparations we hear about all the time as well as any specific to their region.