State and Federal Budget Crisis Solved: Professional Political Class Finally Provide Value

OPresient Obama leaving Air Force One upon arrival in San Francisco on fundraising tour

"A picture is worth a thousand words." -Fred R. Barnard: Its about the money.

Please bear with me on this article.  in contrast to the best advice for writing, I have not put the conclusion at the start.  I am assuming you are all thinking Americans, and you are willing to make a short journey with me to find your own answers at the end!

Unequivocally, we have developed a professional political class.  We, the people, have created this new ruling class of professional legislators – or at least allowed them to evolve – over the past 72 years.  Like most of our entanglements in modern history, this consequence  was driven by little more than a series of short term decisions that were made to accomplish short term goals with no thought to the long term impacts of these actions.

Why not a national sales tax on all political sales(contributions)?

Up until the early 1900s, politicians were citizens first.  They were regular people, living and working alongside their neighbors.  They had local jobs, farms, or businesses and each and every piece of legislation they passed affected the citizen politician exactly the same way it did their neighbors.  Since the wages and expenses that they derived from their service in state or federal government was both part time and not meant to provide a living wage; their motivations were to be productive members of their localities, emphasis on production in whatever capacity, as it was the best path to wealth and prosperity.

Since these citizen politicians, could not make their livings relying on the payment from government, the various legislatures were part-time with the sessions restricted to just a few months each year. While in session, citizen politicians also made sure they got as much done as possible, and their supporting staffs and expenses were kept well in check because often the governmental stipends did not adequately support them, so the citizen politicians often came out of their own pockets for at least some of their staff. A great way to assure dedicated representation.

As we move through the early 1900s we see a gradual and steady increase in the salaries, perks, and reimbursable expenses that our legislatures received.  Like all of our historical short sited decisions, there was strong rationalization to such increases.  Some of the citizen politicians, living with the constant drain on their personal funds, were susceptible to graft and corruption by the men hanging out in the lobby of the Willard Hotel in Washington, DC (origin of the term lobbyist) – where most stayed during the legislative sessions. Of course, it was argued by the legislators that if they received better wages, more liberal expense budgets, and perquisites in office, they would be less susceptible to corruption.

Commerce (n)

(Business / Commerce) the activity embracing all forms of the purchase and sale of goods and services

[from Latin commercium trade, from commercārī, from mercārī to trade, from merx merchandise]

Collins English Dictionary – Complete and Unabridged

The next step, taken in the middle of the 1900s, was to extend the legislature.  Again, it was rationalized that the part-time legislatures, were critical to the growth and prosperity of the country, or the states, and there was so much work to be done that they needed to increase their time in session.  These arguments, like all of the rationalizations before them, were seen as reasonable and necessary.  As a result, buy the end of the century, we have, with few exception, full-time state and federal legislatures, and most importantly, a full-time, professional political class.  Their livelihoods significantly disconnected from the legislation passed and its effects on their local communities.

While in the past, our citizen politicians life and liberty was supported by their own personal productivity in their local communities as farmers, shop owners, business owners, manufacturers, and professionals like doctors and lawyers; for the most part today’s professional political class trades in votes and legislation for the specific benefit of those who can get them re-elected.

It is an easy statement to say that there is a direct relationship from big corporate money and the payments the professional political class receive, through various means both legitimate and illegitimate.  While corporate interests play a part, the aggregation of small money interests plays at least as significant a role through unions, political action committees, professional organizations, and the strength of the various parties, among others.  Regardless of the source, the money alone is not the focus of the trade – in the end it is about the votes!

Votes themselves are the stock and trade of professional politicians.  All the money paid into the various campaigns is exchanged for this tangible, valuable item – the vote.  Since we no longer have citizen politicians and most of our state and federal legislatures are the full time employers of this new professional political class – who employ by far much more than half of all the people in America, why don’t we recognize this for what it is?  This is nothing more than a commercial enterprise! No different than Google, Linkedin, Facebook, the AARP, or many other national organizations.  It can be argued that the parties themselves as simply franchisors.

“Obama visit nets millions: Next stop – LinkedIn for town hall meeting”
– Contra Costa Times, 9/26/2011

President Obama, arguably the top franchisee of the Democratic party, was in the San Francisco Bay area this weekend selling his wares.  He collected, somewhere between, $3.5 and $5.5 million in back to back fundraisers.  Think about all the money that is being paid for these goods and services sold by our professional political class.  It begins to boggle the mind; does it not?

When we had part-time citizen politicians it was appropriate to call these campaign contributions.  But I think today we can all agree that calling them political sales is more accurate in this day and age.

Perhaps we should have a national sales tax!  But it may not be necessary to assess this tax on all segments of commerce in our economy.  We only need to assess a “National Political Sales Tax” (NPST) on the one segment of the economy that is clearly generating most of the “commerce” in the nation.  We should implement a national sales tax on these political sales.

In the long run we may get some real benefit.  We could see a significant reduction in our state’s and national debts in the short run as the massive amounts of money flow into the various coffers. We may also begin to see the reduction is the constant din of political advertizing, direct marketing and evening phone call solicitations.  If for some reason this benefit does not rise, or rise fast enough, then we could extend the NPST to cover all political purchases as well.  At a 10% tax rate, the purchase of one of those $19.00 muffins would yield $1.90 in revenue to the federal and/or state coffers.  How many muffins do these guys consume in a year?  Looking at Jerrold Nadler, Barney Frank, Chris Christie, Haley Barbour, and many, many others this alone could wipe out lots of debt!

Of course many are just not going to like this idea! No one wants to see their livelihood threatened by taxes.  I would suggest that if they object to the tax then we should demand a return to the citizen politician, and the part time legislatures of the past.  In the long run I think it could be one of the most beneficial changes we could make for our country.

Hey, I’m just asking!

Ad Hominum – Ad Nauseum: Politics needs to start solving and stop dissolving!

Headlines Scream:

  • Romney Attacks Perry on Ponzi Scheme Statement
  • Bachman Goes After Perry on HPV Vaccine
  • Perry and Cain go after Romney for Romney-care
  • Perry says, “We don’t need Obama-lite”
  • Romney says, “Gov. Perry is unelectable”
  • Bachman says, “I got a plan”
  • Cain says, “I got a plan”
  • Romney, Paul, Huntsman,and Santorum all have a plan.
  • Gingrich doesn’t have a plan, he has a contract. Of course he is the only one who has done it before so we need to wait to see…

My biggest problem with all of this is they may or may not have some plans but what they put out are just collectivized talking points. They all just deal with the symptoms for the most part. It seems to me that it is only Ron Paul who even remotely gets part of the root causes of the problem, citing the fundamental issues with the federal reserve, banking, too much conflicting regulation, etc – but let’s face it to most of America he sounds like Chicken Little yelling, “The sky is falling, the sky is falling!” and is not likely electable.

We have perhaps the best governmental system on the planet – that of a constitutional republic. Unfortunately, many of our fellow citizens know not what this means. Ask any newly legal immigrant to the U.S. and they can quote you chapter and verse. Ask the average college graduate, and many post graduates as well, and they will tell you we are a democracy…

Further, most people, including many in the media, refer to our method of government as our political system. If one assumes that our political system is our governmental system then those who want to trade it in for a socialist system would be well justified in viewing it’s inefficiencies and inefficacy. But, thankfully, they are not one and the same.

We no longer seem to understand how our governmental system was constructed. We don’t seem to even begin to understand, or even care, about the many checks and balances that were put in place by the framers. We seem to now consider anything that exists before, as old fashioned, not reflective of how smart we are now, and how we simply all know better…

Such things as: The electoral college, citizen politician, part time legislature, separation of powers, separation of church and state to prevent a national religion, and many others have been sloughed- off as historical flotsam and jetsam as we have traveled carefree down the river of our existence.

Looking historically at the current problems of systems like Health Care, you can trace most, if not all, of the current day problems to ignorance of the reasons for the original design. In looking at all good systems, the system has integral checks and balances that come into play when behaviors get out of balance. Our original system had numbers of these and more were added later. As time has gone on, our ‘we know better attitude’ has driven us to change, ignore or eliminate many of these checks and balances in favor of our own short term objectives. I believe it is our own actions that lie at the root of most of our current crises.

States now are trying to render the electoral college moot by passing legislation that mandates winner take all to their electoral votes. Of course, if enough do this then they effectively circumvent the constitution. Many of the current full-time professional class politicians either don’t care or favor such a circumvention as they see it serving their own self interests so we don’t seem to recognize it as an issue.

We have allowed congress to expand their part-time citizen politician role to that of full-time professional legislature. Why no one sees this as a problem is beyond me, except as a further, and unnecessary, indictment of our educational system.

We have sat here dazed and confused, as the congress and in some cases the courts, have continued to expand the reach and responsibility of the Federal Government far beyond any common sense rational approach. I am still waiting for someone to read my article on the commerce clause and explain what I have wrong about my analysis. In fact, everyone I have spoken to agrees…

We have so bastardized the concept of tolerance, that today I can honestly say the only thing we do tolerate is intolerance. In this complete flip of a basic concept is the root cause of how we now have flipped the goal of our founders, to recognize the need for a higher power in our daily lives, and the recognition that their should be no state of federal endorsement of a specific religion, to the abject indictment of god himself in any form and the rationalization to drive any expression, particularly of religion, from public discourse.

In the end we need less discontent and more discourse. We need more dialog, not diatribe. We need people who want to be our elected leaders to put the job ahead of their ambitions. I would rather have a George Washington serve reluctantly, than an ex-community organizer/activist whose tactics are limited to pitting one group against another in order to extract alms, less for the poor and helpless, and more for the shiftless, the clueless, and the thankless. We need programs for those who can’t. I believe, perhaps naively, that none disagree with this. But we cannot afford to provide to those who won’t. This significantly reduces the willingness and ability of those that can to help those that can’t. I respect the liberal view that everyone should have. I also respect the conservative view that we need checks and balances and real limits.

In the end, it is not this conundrum that is the problem. It is as we have thrown off the rules and guidances from the past we have created our own house of cards, and it is clear to most that a strong wind is coming to blow our cards asunder. We need to demand more of our political system and our politicians. We need to review the historical checks and balances that we allowed changed, and perhaps, bring them back as effective controls.

Finally, we need to demand, real plans. Detailed plans, not collections of talking points. We need to elect the one person who will take on the mantel of leader of this great country  as his sacred duty with as much vigor as they do as a fulfillment of their personal ambition. Maybe then we can begin to see the light at the end of this long dark tunnel.

Please remember to comment,
I do appreciate your point of view.

Our Professional Political Class: An Island Cannot Rule a Continent!

Abigail and John Adams

Recently, I have been reading, “First Family,” by Joseph J. Ellis.  This book, based largely on the letters between John and Abigail Adams shared throughout their lifetimes from shortly after their first meeting, through the American Revolution and continuing into their later years, is an excellent reminder of the insidious nature of tyranny and the tendency of good men and women to accept the status quo regardless of its inherent hardships.

In one passage, I was reminded of something originally written by Thomas Paine,  writer of “Common Sense.”  I agree with Mr. Ellis who states that “Common Sense, was arguably one of the most influential pieces of journalism in American history.  Mr. Paine wrote:

“An island cannot rule a continent!”

Paine’s quote brought to my mind a question.  Is this not the insidious tyrannical situation that is causing our inherent hardships today?  Not from the island of Britain, and the isolated Parliament and King George III, noted by Paine, but the island of Washington DC and the isolated professional political class residing in less than the ideal temporary residence there.

At the beginning of the difficulties with England, John and Abigail Adams were firmly in the camp that reconciliation was not possible.  At the beginning of the first continental congress, John knew that their views were in the minority and considered radical by many of the other delegates.  In his letters to Abigail, it is clear he took the approach to move slowly with patience and tolerance, allowing circumstances to unfold while applying deft and delicate pressure to those who did not share his views.

The dominant view at the early stages of our revolutionary period was that of the moderates, willing to live with the status quo, who viewed England’s transgressions as misguided blunders by disconnected and uninformed policy makers in London and Whitehall.  In contrast, John and Abigail, and at the time a growing group of others, saw King George and Parliament’s  acts as purposeful  subjugation leading to enslavement.  The stark contrast of motives in the end became irrelevant as they yielded the same effect on the population of the colonies.  The effects of the punitive actions by King George, and the ever increasing subjugation of the prosperity of the colonies by England derived the same end point.  Quickly, the divide over the attribution of the motive was replaced by the pragmatic need to solve the problems.  In the end, the results, despite the motives, were the same.

Our nation was founded based on the recognition, as Paine so succinctly put it, that an island could not rule a continent.  It was not the motive that drew this conclusion. but the pragmatic recognition that disconnected, misinformed leadership – not tied to the lot and life of their constituents – could not govern but in the end could only enslave.  Adams, and the rest of the founding fathers, created Washington DC – not as a state – but as an island, an independent locus for our national seat of government giving no advantage to any state.  They felt this island could rule this continent because its leaders would be part-time citizen statesmen, fully connected by family and livelihood to their communities and constituents not as professional inhabitants of this particular island.

Today, few will argue that our full time professional politicians have evolved to a growing often disconnected, uninformed ruling class.  Their fortunes are no longer tied to their successful relationships and local community businesses.  Their current business model is based on votes tied to personal gains.  Increasingly, this full-time professional political class is now often exempted from the rules and laws they so freely and prolifically propagate on the rest of us.

John and his wife often wrote that it was not government that would affect the necessary changes but a united people.  Perhaps, like John and Abigail, we are again at destiny’s doorstep.  Maybe we should review the original decisions of the founding fathers and once again revise the controls on our government and elected leaders.  It is incumbent on all of us to find the changes necessary to again ensure the promise of America.

Perhaps it is time for us to remind ourselves and our leadership that,

An island cannot rule a continent!

Opinion – Image – NYTimes.com: Understanding in Three Steps?

Opinion – Image – NYTimes.com.

Understanding Step 1

This chart from the New York Times, is very interesting.  The data presented is very telling but perhaps not in the way the author intended.

When you look at these charts what do you see?  After you look and answer the question for yourself go to the next step.

Understanding Step 2

See this article for more information: President Obama’s Speech: Critical Question Continued.

What I see when I look at the data is very different from what I think the author’s point is.  We are all tainted by our biases.  We look at data, compose charts and in the end we see what we want and often construct the defense of the reality we want to see.

What I see when I look given the discussion in my prior article is first that Productivity tracks point for point with the increases in currency from 1972 on.  This should not be any surprise.  The way we measure Productivity is directly related to currency.  The question is in this case the old one, “which came first the chicken of the egg?”  In this debate one side will say chicken and the other will say the egg.  One side will be firmly of the mind that the productivity drove the increase in currency according to economic theory,  the other side will say the increases in currency inflated the productivity numbers.  Either may be correct and both are at this point irrelevant.  Which drove what now pales in comparison to the question of is the current net value of the U.S. supportive of the amount of currency (value) we have applied to it.  This is 1/2 of the most important questions.  The other 1/2 is – if not, how do we fix it?

The next thing I see in the charts, is that Wages did not track to the rise in currency nor did the gains of the wealthy.  While you see some trending with the increases in either prosperity or currency, you should expect to see that.  Wealthy people have the ability to derive more of their worth from long-term gains and theoretically should capture more of the currency in the economy.  Again the argument of fair or not fair, while a fun and spirited debate does not change the fact that the trend-line of the data does not correlate to the Currency in circulation chart in the prior article anywhere nearly as closely as Health Care Costs or Housing Costs.  It is these subtle differences that suggest an alternate cause for the increases of prosperity.  Further it is the timing of the trends.

Finally, I see that the debt line that is shown in the chart is not indicative of the true debt but in fact the result of the application of the increased capital to pay off part of the debt that accumulated from 1972 due to the trade imbalances.  We have accumulated over $12 trillion in trade deficits to the world since 1972 when we dropped the gold standard.  If you plot that curve against the Currency in Circulation curve again they are almost a point for point match.  The debt curve reported is not a point for point match.  It is the result of result of the combination of the two.

Understanding Step 3

Remember Mark Twain said, “there are lies, damn lies and statistics!”  All of these numbers need to be suspect – mine included.  But in the end this is not a republican issue nor democrat issue – it is an American issue and it will take all of us to address it.

President Obama’s Speech: Critical Question Continued

In his speech last night president Obama asked a key question.

President Obama asked, “Where would America be if we had not passed Medicare and Medicaid?”

As I said in my post last night, “President Obama’s Critical Question,”  the president’s question should not have been be a feel-good throw-away line, as it is the underpinning of the base argument, that Medicare and Medicaid have been good for us as a people and for the country. Clearly, the president believes that the answer to these questions is in the affirmative. But, what if the answer is not?  These are areas that I think many need to analyze.

Those who have been reading my articles know that I have a strong concern that the underlying issues in our health care system and our economy are systemic and the areas we are focusing on are, in effect, addressing the symptoms of the problems – not the root causes.  In my upcoming book, “The History and Evolution of Health Care in America: The untold back-story of where we’ve been, where we are, and why health care needs more reform!” I look at the relationship between the rising costs of health care and trace in part one cause to the large expansion of government programs like Medicaid and Medicare.  I also found correlations between the rapid increase in the amount of currency we created, after we jettisoned the gold standard in 1972, and the disproportionate allocations of these new monies to health care and other government subsidized programs like housing.

The relationship of the Total Money Supply (M3) to our current economic issues I will cover in a later article, but for now look at the direct, almost point for point, correlation of the rise in the total health care spend in the U.S. and the increase in the money supply.  I think there is no doubt that the significant increase in the amount of currency in circulation and the rapid rise of health care costs run hand in hand.  It is very clear, as Sancho said to his master, Don Quixote de la Mancha,

“Whether the stone hit the pitcher or the pitcher hit the stone – it was going to be bad for the pitcher!”

In this case, we can argue later whether the increase in currency drove the increase in costs or the increase in costs drove the need to increase the currency, it was the expansion of Government programs like Medicaid and Medicare that drove the increase in costs.

Housing also rose in a point for point correlation as well.  Unlike with health care, you can see it was an advance indicator.  This make sense, according to economic theory and the basic premise of fractional reserve banking because our the engine of economic expansion (the creation of new money) is debt.  Most preferably mortgage debt.  If housing prices did not rise and new homes and the resultant mortgages did not happen then the banks would have become rapidly out of covenant if the new money existed before the new mortgages were there to leverage against.

Lastly in this article, I include a chart of a few other cost histories, lest we think that all parts of the economy had the same correlation to the increase in the money supply.  Clearly, wheat corn and eggs did not experience the same effect from the increase in the money supply – nor does it appear they led the need to increase the supply.  I believe that most peoples practical experience is that not all things have risen in value twenty times in the past forty years.  Herein is the potential rub!

I will continue the discussion related to the presidents key question in my next article.  In that I will focus on how the creation of Medicaid and Medicare changed our personal character related to our view of our personal responsibility for our health care and how this change has affected our fiscal habits and our purchasing patterns and trends.

Please feel free to comment on this article or send it to others.  As I have said many times this is not a republican nor democrat issue.  I think this is an American issue.  I am not an economist just someone trying to understand why these things are happening now.  We need pragmatic solutions not demagoguery so lets find out what is the truth and then how we can fix it!

President Obama’s Critical Question

Tonight president Obama asked a very key question. This is one of those great moments where one question that really is one of the key questions was used as a throw-away, feel-good line.

President Obama asked, “Where would America be if we had not passed Medicare and Medicaid?”

This is really a key question, is it not? This question should not be a throw-away line, as it is the underpinning of the base argument, that Medicare and Medicaid have been good for us as a people and for the country. My opinion is this is, in fact, one of the major differences in the grander debate. Clearly, the president believes that the answer to these questions is in the affirmative. But, what if the answer is no? What if the truth is, that Medicare and Medicaid, have driven up our health care costs, disproportionately? What if these programs have fostered an era of unprecedented lack of responsibility? What if these programs have been one of the significant contributors to the base cost of business in America, and are one of the key underlying reasons that America is no longer able to manufacture goods cost-competitively for the rest of the world to purchase from us? What if these programs have so changed the nature of our economy that we now have accumulated a trade deficit in excess of $12 trillion since 1972 and we can’t become a net exporter because our goods are too expensive?

I think these are the key questions that need to be discussed. I submit the president will not like the answer. I also submit neither Presidents Obama nor Bush, nor republicans nor democrats are to blame for the problem. I further submit it is this issue that is the key problem we need to pragmatically solve.

President Obama should get some credit for asking this key question. He should also get some critique for using it as a throw-away feel-good line to rally his base – particularly if the answer is not as he is assuming!

I hope others will help tackle this question in the next few days. I know I will be continuing this dialog in the next few days specifically on this topic. It has been key to my research and understanding on the crisis we have in our health care system, if is one of the core issues discussed in my book and something that I feel we must address.