The reports are in, and home prices continued to slide lower in 2011.  While the dollar amounts vary based on your location, as of September 2011 median home prices have fallen in San Diego to $249,000 from their peak of $484,000 in early 2007.[1] That’s a total drop of 48.5% or $235,000 per home.

Most homeowners feel helpless. As the price drops, many people are put in a situation where they have no equity in their home, cannot refinance, and are stuck “waiting it out” hoping they can personally survive until prices rise again.  The hope of moving out of their existing home without bankruptcy or other extreme measures continues to fade.

The majority of Americans have been left with a deep sense of “unfair.”  Most people instinctively have a good sense of what “fair” is.  Every one of us engages in hundreds of “fair” trades a year in our communities.

Let’s think about this in simple terms.  A homeowner engaged freely in a trade with the lender.  What they got out of the deal was the ability to purchase a home in exchange for monthly mortgage payments.  This system of trading, when done honestly, is Capitalism – an economic system of barter in which the trading partners believe they receive greater or equal value for what they give up.

This helps explain why, as homeowners, we feel so cheated.  We no longer believe we received greater or equal value for what we gave up.  Most of us have a gut sense that things were not done honestly, but we don’t know why.

Where did this horrible situation come from, and when did it begin?

In 1974, Congress and The White House passed the first “Housing and Community Development Act.” The legislation was designed to prevent discrimination and provide block grants (money) to certain poverty areas to support low-income housing.²  Like most legislation, it evolved over time.  In fact, there were additional Community Development Acts in 1977³, 1980⁴, 1987⁵ and 1992.⁶  The most influential and commonly known was the Act passed in 1977 under the Democratic President Jimmy Carter.  This is often called the Community Reinvestment Act (CRA).

These Congressional Acts encouraged lending to people with low incomes and bad credit.  Lenders are banks that provide upfront capital (Mortgage) in exchange for monthly payments that include an interest rate.  Banks earn money through the interest rates they charge.  To protect themselves against “default,” (that is either late or no payments), they charge higher interest rates for borrowers they feel are less likely to be able to make their payments; in other words, sub-prime borrowers.

With the Community Development Acts in place, lenders started making loans to sub-prime borrowers at the same interest rates as a borrower who had a good record of making their payments.  Some of these lenders were forced to make these loans or face possible lawsuits on discrimination charges, so the banks placed the loans.⁷ Keep in mind that the banks were not lending to sub-prime borrowers because they felt the borrowers could reliably make their payments, but rather because the U.S. Government provided certain guarantees on these sub-prime loans.

With the guarantees in place, lenders no longer felt it was a risk to lend to the sub-prime borrowers.  If borrowers did not make their payments, quasi-government agencies like Freddie Mac and Fannie Mae would step in and buy the mortgage off of the lenders’ books.

With the assumed backing of the government, banks and other lenders saw this as a very low risk investment.  The effects, however, were massive. Loans were handed out to very large numbers of people who couldn’t afford them.  As evidence, the loans on Fannie Mae’s books went from $522 billion in 1999 to $2.1 trillion by 2007!

The problem accelerated when the sub-prime loans were bundled up and packaged into securities (investments) that could be sold on Wall Street.  These were called Mortgage Backed Securities.

It doesn’t require even a 5^th grade education to understand that getting people into large mortgages they can’t afford will not work.  As expected, the sub-prime borrowers began defaulting on their payments, and many of them went into foreclosure.

Foreclosure rates rose to record levels, dumping a huge supply of homes on the market.  The oversupply of homes that were not selling drastically lowered home prices for all of us.

Now remember, when done honestly, Capitalism is an economic system in which both parties believe they receive equal or greater value in a trade.  The hidden word here is “believe”.

Just because you believe a trade provides fair value does not mean that it does.  We even have descriptive words for traders who do not provide fair value: “con man,” “grifter,” “thieves,” “Enron,” “Madoff;” you get the idea…

The housing crisis is a classic example of a dishonest trade.

It’s important to know that this dishonest trade is not Capitalism, but is actually a political strategy called Mercantilism.  More appropriately it is Washington Inc., an economic system where politicians get involved in the trade by controlling the behavior of certain private institutions through favors and legislation.  In the case of sub-prime mortgage lending, certain banks were given favors and loan guarantees from politicians in exchange for directing loans to sub-prime borrowers.

The politicians benefited from sub-prime borrowers receiving these loans, as the loan recipients would be more likely to vote for them. It not only built a voting block among people who had not truly “earned” a way to afford a home; it furthered the Democratic Party’s desire to increase the size of government at the expense of private enterprise.

The consequences of politicians trying to control the housing market have been horrid.  Banks had massive regulatory restrictions placed on them, making it difficult (and in some cases impossible) for them to loan money to businesses.  This reduced a major source of income for the banks, because banks rely on interest payments from those who borrow money from them.

Another consequence of the government’s meddling in the housing industry was that many banks suffered financially, but were deemed “Too Big To Fail” and were given significant Federal financial assistance.  Where did the Government get the money it loaned to the banks so they wouldn’t fail?  Well they didn’t actually have the money, so they found ways to generate it that relied on increasing the Federal Debt.

Some of the money the government loaned to failing banks was simply printed, increasing the total number of dollars circulating in our economy.  In other words our government was fabricating money out of thin air!  In other cases, money was not printed but rather “borrowed” back from the banks that the Federal Government was lending the money to in the first place.⁸ 

Like any business, the banks receiving these Federal loans needed to make a profit.  This profit came from the Federal Government paying interest to the banks on the money they were borrowing from these banks.

So let’s sum this up. The Federal Government was paying interest to banks on money they were borrowing from those banks so they could have money to loan to the banks.  Are you following?

* The banks needed the loans because of the financial trouble they were in as a result of sub-prime lending in the housing market.

* The banks lending to sub-prime borrowers occurred because politicians wanted the support and votes of the sub-prime borrowers, so

* The politicians gave the banks “favors” in exchange for the banks giving those sub-prime loans.

No one could make this up!

The debt that the Federal Government created by passing programs to bail out failing banks after the housing “bubble” collapsed has to be repaid. Unfortunately, the size of our national debt is now larger than the value of all of the goods and services produced in our country in one year (GDP),⁹ and even if the IRS took 100% of the taxable income earned by America’s “millionaires and billionaires” in one year, it would still not close the federal budget deficit.^{10 11}

The federal government interfered with the housing industry, and then needed taxpayer “bailout” money to pay for the consequences of their own actions.  To make matters worse, home prices are still dropping and may not have hit rock bottom yet.

When the government manipulates markets, Capitalism is compromised.

It’s time for government to get out of the mortgage business, and for politicians who believe they know what’s best to be removed from office.

You smashed your new car into a telephone pole and realized you forgot to buy collision insurance. No matter, the government just made it illegal to deny insurance coverage or charge higher rates to anyone regardless of a vehicle’s condition. A simple phone call to your insurance agent and that $3,000 repair bill is taken care of! Don’t forget to call your agent and cancel the coverage after you drive away from the body shop. After all, you can obtain coverage whenever you want without penalty. Is this fair? Can it work? How will companies stay in business? What will happen to insurance rates?

A previous ACEF article looked at the new health care reform law known as the Patient Protection and Affordable Care Act (PPACA) or Obamacare, and how these issues will negatively impact our lives and our economy. The complexity of the law and the regulations that it will produce are staggering.

An Avalanche of New Regulations

Let’s look at the law itself. A pdf file of the law takes up 907 pages.[1] Within those 907 pages many new government agencies, boards and commissions are listed. Due to the sheer size and complexity of the law, the exact number of new agencies is “unknowable” according to the Congressional Research Service.[2] Representative Tom Price, in a March 2010 editorial, states the law will create 159 new government offices and programs.[3]

What happens after a law is passed by Congress and signed by the President? There is a nine-step process used by the executive branch to issue regulations. The major steps include:[4]

* Determination that new rules are needed

* Office of Management and Budget (OMB) review

* Publication of preliminary rules

* Public comments regarding the preliminary rules

* A second OMB review

* Publication of the final rule

Every page of the law will go through this process. Each newly created agency and many existing agencies will publish regulations based on Obamacare. The Department of Health and Human Services (HHS) has turned only six pages of the 907-page law into 429 pages of new regulations.[5] Imagine the results when the 159 new government entities start writing rules. A visual of the overwhelming complex nature of Obamacare is available here.

Although most aspects of Obamacare are yet to be implemented, there is sufficient evidence that the law will affect both our pocketbooks and our freedom of choice. These effects include health insurance requirements, insurance costs and the overall cost of medical care.

Insurance Mandates

Should the Supreme Court rule the individual mandate constitutional, the consequences will force people to either buy insurance or pay a penalty. The law even mandates what your insurance must cover. So even if you don’t need obstetric care or substance abuse coverage – it’s required.[6]

The employer mandate requires that companies with 50 or more workers must provide health insurance. If they do not, they pay a fine, no fine for the first 30 workers and $2,000 for each worker above 30. Thus a company employing 100 workers would be assessed a penalty of $2,000 x 70 workers.[7] This will lead to tens of thousands of dollars in fines for small businesses. In a letter to Speaker Pelosi, the Congressional Budget Office (CBO) Director estimated that businesses would pay $52 billion in penalties beginning in 2014 through 2019.[8] You, the consumer, will ultimately pay this cost as the price of goods and services increase!

Health Insurance Industry Effects

As damaging as these mandates are from an economic standpoint, guaranteed coverage, the medical loss ratio (explained below) and the effect on existing employer sponsored plans will have wide ranging affects on the insurance industry and individuals.

Guaranteed coverage means that insurance must be issued regardless of preexisting conditions. In addition, the insurance company must charge everyone the same rate.[9] Are you having chest pain? Call a health insurance company on the way to the hospital and you can have your bypass surgery with little financial worry. You could even cancel your insurance and buy it again if your chest pain returns!

Insurance rates must go up and it’s the young and healthy who will pay with increased premiums. Although estimates vary widely, their health insurance premiums would triple in some states.[10] Assuming a young person pays $2,000 a year for health insurance, a 50% increase in rates would cost an additional $1,000 a year.

The medical loss ratio (MLR) requires insurance companies spend a certain percentage of premium dollars on medical care – 80 or 85% depending on the type of health insurance. Excess premium dollars must be returned to policyholders.[11] Heritage Foundation senior fellow Edmund Haislmaier, in testimony to Congress, believes that MLR will reduce competition by making it more difficult to start a new health insurance company and push existing insurers out of less profitable markets. He also sees the MLR as an invitation for fraud as fraudulent payments to providers are counted as actual care given.[12]

Haislmaier also testified that the MLR will lead to higher premiums since insurers will be forced to refund overpayments with no way to make up for losses should they underestimate claims for a given year. Better to charge too much, triggering a refund, than lose money that is unrecoverable since the MLR will not allow the insurer to keep more revenue the next year to make up for that loss.[13]

Medical Costs

With government regulations comes the cost of complying with those regulations. Health care is the most regulated segment of our economy.[14] Christopher Conover of the Cato Institute calculated, in an extensive study of regulatory costs and benefits for the year 2002, that regulations imposed a $339.2 billion cost to the health care industry. His calculations indicated that $170.1 billion of that cost was considered beneficial, leaving $169 billion in unnecessary regulatory costs.[15] While there are no studies calculating recent regulatory costs, it is safe to assume these costs will grow with the increasing regulation of Obamacare. It’s you, the consumer of health care, who pays for these added costs!

November 2012 Solutions are on the Horizon

What are the real solutions for the health care crisis?

* First and foremost Obamacare must be repealed. This will allow implementation of real reform that will put the consumer in charge of his or her own health care choices.

* Equal tax treatment for all forms of health insurance whether they are employer provided or purchased individually.

* Reconnect the health care consumer to the cost of the choices he or she makes.[16] Currently, health care consumers control only 26% of our $2.5 trillion health care system.[17]

* Expand the use of Health Savings Accounts (HSA) and high deductable health insurance plans thereby increasing competition by making health care consumers cost sensitive.[18]

* Reform Medicaid. In the current system, the Federal Government sends matching funds to the states; meaning the more a state spends the more Federal dollars they receive. There is little incentive at the state level to control costs. A more realistic system gives the states a set amount to fund a voucher system; which allows the Medicaid recipient to purchase private insurance and caps the government’s expenses.[19]

* Reform Medicare. The current Medicare system pays based on services provided; Part A for hospital care and Part B for outpatient care. The more services provided, the greater the cost to the government. There is no incentive for patient’s to limit health care visits.[20] Premium support for private health insurance, full support for a basic plan with options for seniors to buy greater coverage, will help control government costs.[21]

* Form high-risk pools at the state level. There will always be a small number of people with medical conditions that make them uninsurable in the private market. Separating them from the general health insurance market will preserve the private market[22] rather than distorting it, as seen above with Obamacare.

* Repeal or streamline unnecessary regulations currently on the books.[23]

* Improve competition between health insurers by allowing interstate sale of health insurance.[24]

* Medical malpractice reform.[25]

As this series of articles continues, we will look further into the problems of Obamacare and expand on solutions that increase, rather than limit, our economic freedom.

In the upcoming election, we must reject candidates who believe that government is the answer. They will only increase regulation, decrease freedom, increase costs and eventually destroy our country.

We need leaders who understand how capitalism can save our health care system, the greatest health care system in the world. By electing true reformers, costs will come down, the health care consumer will again be in charge of his or her care, and the uninsurable, the poor and the elderly will be taken care of!

If we are to maintain our freedom of choice in health care and avoid a government takeover of this important aspect of our lives, we all must take an active role to elect and hold accountable candidates who will pursue these reforms.

Did you know the U.S. is in a race? We are now racing France to increase taxes on jobs producers. France is also in the Presidential election process this year and there is a striking difference between the French Presidential Candidates regarding the taxation of the “rich.” Sound familiar? Will this tactic really work or will it shatter our economy and destroy the jobs future for all American’s?

France

In France’s election, Socialist nominee Francois Hollande is running against current President Nicolas Sarkozy on a “tax the rich” platform. Sarkozy has been a leader of reform in France and his moderately conservative approach to spending has not been popular with Socialists or many of the unions in France.  This “tax the rich” plan proposed by Mr. Hollande may have some excited, but at what cost to France?

In early March 2012, Mr. Hollande announced he wants to raise France’s top income tax rate to 75% from its current peak of 41%. Hollande said “patriotism” and “justice” should convince French citizens to support his candidacy and his tax hike. What is this new tax proposal? The new tax rate would apply to those making more than €1,000,000 per year (about $1,300,000). Those making more than €150,000 ($200,000) would face a new tax rate of 45%.[1]

Let’s do the math for the top taxpayers in France and see the impact on economic growth.[2]

The current top income tax rate is 41%. For each euro a worker in this tax bracket spends, he is only able to spend 59 cents. When this money is spent, a (VAT) value added tax of 19.6% is taxed. What does this mean? For every euro spent, the French government gets 52.6 cents and the earner of that euro gets 47.4 cents!

Now the proposed income tax for those making more than €1,000,000 per year would be 75%. The same VAT would be applied to any spending, meaning the government would get 79.9 cents of every euro and the earner “gets” to keep 20.1 cents!

How excited will the top producers be to live under these huge tax burdens and keep 20 cents from each Euro they earned? Will the top taxpayers and job creators stay in France, or leave to use their skills in another country where the tax burden is not so punishing? Will they be forced to close their businesses and lay off people under this extraordinary tax burden?

Taxing the Rich in America

The United States is quickly moving towards France’s aggressive tax system.

Here are some statements from President Obama:

* President Obama made a defiant call for $1.5 trillion in new taxes in a plan to find $3.2 trillion in budget savings over the next decade. Obama adopted a posture that cedes far less ground in cutting the nation’s social safety net and demands much more in terms of new levies on millionaires, other wealthy Americans and some industries.[3]

* “You can call this class warfare all you want,” Obama said. “But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.“[4]

* In his most recent budget, Obama for the first time proposed raising the tax rate on dividends, from 15% to as much as 39.6%, for households making more than $250,000 a year.[5]

What happens in the private sector when taxes increase? There is less money to spend, and the rate that money is spent decreases rapidly due to taxation. The solution is not higher taxation on the rich or producers; the solution is in the velocity of money.

Velocity of Money

The velocity of money is the speed that money moves between consumers, businesses, manufacturers and suppliers of raw materials.  If I buy a suit, I pay the merchant, the merchant pays the manufacturer, the manufacturer pays the suppliers for the fabric, etc. At all those points of purchase or payment, taxes are paid. The greater the frequency of this spending by consumers and merchants, the more taxes are collected for use by government for necessary programs such as national defense. This spending is good for the economy, as businesses grow when consumers spend money for the goods and services being sold.

The tax regulations from this government, and those proposed by Obama to tax the rich, will have a crippling effect on the private economy. More productive people will have less money to feel confident in spending which will reduce the velocity of money and taxes. Consumer confidence is destroyed when you believe your taxes will be increased. The result is people spend less and our economy can grind to a halt; this is bad for job creation in the private sector.

The decrease in the velocity of money also affects small business owners heavily. They won’t hire workers if their sales decline and consequently they will not buy as much from their suppliers due to decreased demand. Tax revenue will actually decline by this slowing of the velocity of money.  The only winners are the bureaucrats and politicians who take and spend our money to retain their power through what they spend on pet projects like bridges to nowhere or entitlement programs whose recipients become “indebted” voters to the politicians. In fact, the increased taxes on the rich are not large enough to cover the $1.2 trillion deficit[6] in the President’s most recent budget proposal, and the politicians know it.

Facts on Taxing the Rich

So how would increasing taxes affect the “ultra-rich”? I went to the Forbes 400 most wealthy in the world for some answers. The total net wealth of 1,226 billionaires globally is $4.6 trillion, averaging $3.7 billion per person. In the 2012 Forbes study, the U.S. is home to more than 425 billionaires.[7]

If this “ultra-rich” group had all of their money taken by the U.S. government, not just taxed, we could pay for the President’s proposed $3.8 trillion 2013 budget entirely and have approximately $800 billion to pay for the 2014 budget.  This is outlandish! What if America was like France and taxed these billionaires at 75%? The taxes collected would be about $3.45 trillion and would not cover the proposed Obama 2013 budget.

But wait…almost 2/3 of the world’s billionaires are not Americans and the U.S. can’t take their money!  What’s scarier is thinking if these billionaires, who are job creators, had all their money confiscated, what would happen to their companies and employees?

“It’s the Economy (and Spending) Stupid!”

Isn’t our real problem spending?  Isn’t it a problem that in an election year the President is pointing at job creators and successful people and saying they are greedy and harmful to other American’s?

You can’t blame the rich for the doubling of oil prices since Obama took office.  You can’t blame the rich for the exploding number of costly regulations from Washington. You can’t blame the rich for increasing governmental spending on programs like Obamacare, and the list goes on. The responsibility lies in the White House.

Principles for Action in 2012

The solution is to stop this President from inflicting further economic disaster on America.

1. We must demand now that we have a budget that does not shackle job creators and successful people in this economy.

2. We must demand now that the out of control spending and regulations in Washington stop.

3. We must live within our economic means and we can’t cripple, through taxation, the job creators.

These principles are critical in America. All will be lost if we slip into the ranks of Greece, Italy and France, where fiscal mismanagement and high taxation lives.  Any candidate running for office who does not adopt and defend these core principles should not get your vote. Any elected official who does not adhere to these clear principles must be held accountable by all of us.

You have a voice, through our grassroots efforts and powerful message of economic freedom; you don’t have to be a billionaire to be heard. Join us at American Citizens for Economic Freedom, with a simple $10 per month contribution, so we can tell Washington that the average person will be heard in November 2012. If Washington doesn’t listen, those candidates, bureaucrats and politicians must not represent us in Washington anymore!

While we were bombarded daily with the exploits of Occupy Wall Street, I was reminded of a story I heard recently.

The story went something like this: A young woman went to college and became convinced that her father should give away most of his hard-earned money to people who had much less. Her father ignored her comments about money, and asked his daughter how she was doing in school. She replied that she was studying really hard and getting straight A’s. Her father then asked her about her roommate and her grades. The daughter replied that her friend rarely studied and got Cs and Ds in her classes. The father asked, “Why don’t you meet with the Dean and offer to lower your grades so that your friend can raise hers?”  The daughter became extremely upset and explained that she worked very hard while her roommate did very little.

Do the members of Occupy Wall Street (OWS) resemble the young woman in the story above? Do their antics pass along a mentality of “giving away” that doesn’t appear to have any real consequences for themselves?

Most of us have an innate drive to lead a productive life in an economic system, capitalism, where we fulfill who we are and hopefully succeed and provide for our families and realize many of our dreams. We profit from hard work. We are not given things freely, but we earn them.

This seems to be quite different from the OWS crowd. Let’s look at a few of their demands, and you can draw your own conclusions:

* Raise minimum wage to $20 an hour

* Guaranteed living wage income regardless of employment

* Free college education

* $1 trillion spent on infrastructure – water, sewer, rail, bridges and electrical grid

* $1 trillion spent on ecological restoration – planting forests, wetlands, etc.

* Open boarders – go where you want, live where you want

* Immediate debt forgiveness for all – includes sovereign debt, commercial loans, home mortgages, home equity loans, credit card debt, student loans, and personal loans

* Institute a universal single-payer healthcare system[1]

This is just a short list of OWS demands. Each demand, whether listed here or in their more extensive list, requires vast sums of money. Each idea implies that they are entitled to something: healthcare, debt forgiveness, free college, guaranteed living wage, and open boarders, etc.

How did we actually get to this entitlement thinking? Merriam Webster defines entitlement as the belief that one is deserving of or entitled to certain privileges.[2]

Our country was founded on the belief that people take responsibility for their lives. Our constitution declares that we are entitled to life, liberty, and the pursuit of happiness. It doesn’t say life, liberty, college, a house, and a guaranteed job.

It once was considered shameful to rely on others, except in times of great hardship. President Franklin D. Roosevelt changed this thinking when he addressed the nation in one of his famous “Fireside Chats” on the evening of January 11, 1944. Cass Sunstein, a prominent liberal law professor at the University of Chicago, called it “the most important speech of the century” because it was the first speech that endorsed legitimizing the welfare state.[3]

Are you willing to let go of our once strong, independent nation and let our federal government have more and more control by people becoming more dependent? This process of redistributing everyone’s wealth so we might all become equal is a slow, evil process. Are we on the verge of becoming like Greece – a country filled with entitled people and a collapsed government?

Elect candidates in 2012 who will provide strong leadership and fiscal responsibility, who will lead us back to the independent vital nation we once were – a nation who chooses to embrace and endure rather than be entitled.

Our national debt has now climbed to its highest level since World War II spending; however it was an economic boom that brought us out of the Great Depression.  Compare this to our situation now; we have the high spending, high debts, with no economic boom in sight.[1]  What is causing our national debt to rise?

In July 2011, President Obama and Congress agreed to authorize another increase in the debt ceiling.[2]  Congress sets this debt limit and determines how much money the federal government can borrow.

What exactly are these increases paying for?  Tax money and increases in debt are used to: secure our borders, fund bureaucracies including EPA and HUD, make payments through “entitlement” programs including social security, Medicare, and guaranteed student loans.  Additionally, massive new spending was approved to stimulate the economy; remember Solyndra and Beacon Power?

In May 2011, the debt ceiling was at $14.3 trillion.[3]  A “deal” was made by Washington power brokers to add over $2 trillion to the debt ceiling.[4]  Since May 2011, there have been three installments in the debt “deal.”  The most recent was approved in January 2012 for $1.2 trillion, bringing the debt ceiling to a whopping $16.4 trillion.[5]  This is an increase of over 22%!  Is this record increase in the federal debt essential for the good of the country, or is it Washington recklessness?

The “deal” was that any increase in debt had to be offset by paying only some of it down in the future over the next 10 years.

A special commission was assigned to find spending cuts that will lead to a reduction of about $1 trillion in future spending.[6]  Part of the “deal” was that if Congress did not enact a deficit reduction plan by December 2011, automatic cuts in defense spending (50%) and social programs (50%) would be made.[7]

The federal government ran out of money and needed more.

So what did they do?  They authorized more money.

Where does the money come from?  It is borrowed.

Who assures the debt will be paid?  The American people do, including our children, who will someday own this debt.

Who did the White House and the Congress hold accountable for finding the future spending cuts?  They appointed a special commission, not Congress.

So what was the result of the special commission? They did not reach an agreement on spending cuts.[8]  They did no better than Congress, who appointed them!

The deck is looking stacked in one direction: Government debt is now at an all-time high water mark, and the boat is leaking.  We are sinking in debt, and Washington politicians are not taking the steps needed to fix the problem.

Do the American people have a right to challenge Washington politicians for leaving us in such a dangerous place with more debt?  Without a doubt, we do, but this is more of the same pattern.  Washington politicians used income taxes and government debt to finance Social Security and other new social programs in the 1930s.  The federal debt grew 15 times larger from 1930 through 1950 to $257 million![9]  Washington politicians convinced the American people that because of the Depression, the government can take care of the “welfare” of the people – but they cannot.

In reality, the government also took things away from us as a nation that are instinctive in all of us individually: We know we have the right to buy, sell, trade, and hopefully, make a profit.  Most importantly, they were intruding onto the ability to live within our own means for our own safety and security.  Then, and only then, can we look after the needs of family and those close by.

Being in charge of the purse strings is a critical responsibility.  “Let the good times roll,” is a shameful lack of that responsibility.  I am beginning to believe the phrase started in Washington.

The American people reduced credit card debt by 19% between September 2008 (the worst of the recession) and April 2011.[10]  Americans are tightening their belts.  Are Washington progressives, bureaucrats, and politicians doing the same?  It is sad to think it is unlikely they will.  The federal government cannot continue to make promises, spend other people’s money, and refuse to take action to reduce the federal budget.

It is time to send a message to the Washington “out of control” spenders: Lead, Follow, or Get Out of the Way.  We can all play a role in rebuilding the economy and shortening the purse strings by limiting control of Washington.

Start by contacting your congressman to make sure they vote to wisely cut government spending and give our economy a chance.  Then find and support the candidates who will hold the line on reduced government spending and a significant reform of entitlements. Get the word to your friends and neighbors on the mortgaging of your financial future.

Let’s give the power – economic power – back to the people.

While the unemployed American workers continue to look for a beacon of hope in this abysmal economy, another Solyndra like corporation, Beacon Power Corporation, has filed for bankruptcy. Both of these companies have received taxpayer money in the form of federal loans, $535 million by Solyndra and $43 million by Beacon Power.[1]  Not only are the taxpayers saddled with this huge loss, but also hundreds of employees from these two companies have either been laid off or are at risk of joining the ranks of the unemployed.

In the midst of an economy where most individuals and businesses are having to drastically cut expenses just to survive, one must ask:  Are federal loans given to corporations by politicians the best use of our taxpayer money? The inherent problem with the above arrangement, is the susceptibility of all humans to corruption, especially where money and power is concerned.

Our Founding Fathers had lived first hand under economic oppression where the ruling class, King George and the English Parliament, was favoring some businesses over others. To ensure this wouldn’t happen again, they created a new government built under an amazing, negotiated document: The United States Constitution.

The Three Branches of Government were structured for a very simple reason; a brilliant set of checks and balances were created to protect citizens, as much as possible, from the corruptions of power that were sure to happen.  The Constitution also made a regular habit of elections, so that reform could be relentless without potential crippling effects of extreme rapid changes coming from complete turnover of the government in a single election cycle.

In simple terms, the United States of America was formed to prevent the government from taking the hard earned money of it’s citizens and dispersing it to select businesses of their choice, who in turn guarantee future votes to that politician and that politician’s position of power.

While on the surface it may seem beneficial for the government to loan taxpayer money to get a business up and running, the reality is this gives an unfair advantage to one company or industry over another. As citizens, we have lost the right to choose, and as people who build businesses, we have lost the ability to fairly compete unless we are corrupting ourselves with “Washington Inc.”

Since we were small children we have all used the phrase “that’s not fair”.  As we get older, it is still true in today’s Washington.  After all, true Capitalism is an economic system of barter (trade), in which all trading partners believe they receive equal or greater value in exchange for what they give up,” the very thing our founding fathers and the citizen/soldiers fought for in the American Revolution.

Now it is our turn to fight, not on a bloody battlefield with guns and ammunition, but with our votes in the November 2012 election.  We must remove from office those politicians who think “they know better than we” to make the choices that build our personal lives, families, communities and the nation.  Make sure you vote into office those individuals who understand the true definition of Capitalism and who are willing to fight for the equal opportunity it brings.

When I was a high school senior I was blessed to have an economics teacher that made us read The Wealth of Nations by Adam Smith.  The book is set in the 1700’s and through reading it I learned the basics of the free market, capitalism, and the concept that self-interest drove the rancher to raise pigs in order to trade meat with the baker for bread to feed his family.  That same self-interest incented the rancher to raise enough chickens to barter with the blacksmith to shoe his horse, and to exchange for wood with the woodcutter to build a house for his family.  Each of these parties instinctively participated in capitalism, as they believe they received equal or greater value in exchange for what they gave up.

Instinctive economic self-interest, not selfishness, drove all members of the community to create wealth by building and providing to each other goods and services.  This is the foundation of all economic growth.

Fast-forward a few years during the summer of my junior year in college at the University of Minnesota. That summer I was fortunate enough to land a great job as a temporary driver at a local Coca-Cola bottling plant.  During the summer months when the regular route drivers took vacations, they needed temporary drivers like myself to fill in and drive a different route each week.  Each morning I would arrive by 5:15 A.M. at the plant; my truck was fully stocked with bottles and cans of Coca-Cola products and I was given my manifest and delivery schedule for the day.  I was on the road by 6:00 A.M. to deliver bottles or cans to dozens of grocery stores, gas stations and convenience stores.  For my efforts, I was paid a very good hourly wage while I was delivering product on my route.

Of course being a 20 year old college student meant that I had other interests besides driving a delivery truck all day long.  I was courting a beautiful young woman who would one day become my wife, enjoying the lakes of Minnesota, playing softball and of course enjoying a malted beverage or two.

Given I had many other interests, I taught myself how to be as efficient as I could in driving the route, unloading products, stocking shelves and getting the appropriate paperwork signed by each customer.  As a result, within a couple of weeks I was finishing my route earlier each day so I could attend to my other interests.  By the third week I was really flying and getting back to the plant by about 2:00 P.M. each day and was proud of the fact that I was the first driver back each day.

Then after a few days of being the first driver back, I started to ask myself how could a rookie driver be back first?  As a 20 year old temp I had a new route everyday while all of the veteran drivers had been doing the same job on the same routes for years.  It didn’t make any sense to me.  If I could be done by 2:00 P.M., on an unfamiliar route why were all the experienced drivers getting back hours later?

During the 4^th week I found out why.

I was walking across the parking lot to my car one day around 2:00 P.M., a man walked up to me and shouted; “What are you doing!”  I recognized the man who was dressed in the same uniform as mine, but I couldn’t quite place his role other than he seemed to be some type of head of the drivers.  I replied “done for the day, going to see my girlfriend.”  He stepped up his pace towards me and within seconds was inches from my face.

“What’s your name son?” he snapped.  “Tom” I said, a little bit intimidated.  “Well Tom we need to talk” he belted, “You see, that is not how we in the union operate here.  You don’t get to leave early just because you are done with your route.  You will make the rest of the guys look bad.”  I immediately sensed where this was going.

“But I am done with my route,” I said.  “Everyone in the union needs to stick together and work the same amount, otherwise some of the drivers will look lazy or unproductive.    We got a good thing going here and don’t need some young hot shot ruining it for us.  So from now on you just take your time and get back here after 4:00 P.M. each day and you and I won’t have this conversation again.  Understood?”  Now being the wise-ass 20 year old I was at the time, I replied, “and what if I do come back before 4:00?”  He then took his very fat finger and jammed it onto my chest and said “you won’t like the consequences son, trust me.”  And he walked away.

Taking his advice, and not wanting to lose my job (or worse), I never returned before 4:00 P.M. the rest of the summer.  I took my time on my route.  I hung out and made small talk with shop managers after I had made my delivery, and sometimes just sat in the parking lot down the road from the plant listening to the radio.  After all, I was getting paid by the hour, so I might as well take my sweet time!

Capitalism is an economic system of trade in which all trading partners believe they receive equal or greater value in exchange for what they give up.  Coca-Cola was the trading partner with me (I got money and they got labor).  But, the bottling plant did not receive an even or better exchange by paying me to sit in the parking lot down the street.  This was not an equitable exchange, and was not capitalism.  The result of course, was that the bottling plant over paid me for my services (as well as all of the other drivers).   And who do you think paid those inflated delivery costs?  Well if you drink Coca-Cola or Sprite, probably you!

My experience 30 years ago with the union boss has had a profound impact on my business career, my view on capitalism, and free enterprise.  Although I never worked in a unionized environment again, I have witnessed, as a consumer, the effects of unions on certain industries.  Have you?

Has one of your children ever had a really bad teacher, but neither you nor the local school board had the ability to correct the problem because the teacher was protected under the union contract?   Have you ever manned a booth at a trade show in New York City and been told you couldn’t plug your computer into the electrical outlet yourself and that only a union electrician at $135 an hour was allowed to?  Have you ever waited on the airport tarmac for more than an hour for a union mechanic to replace a light bulb in the bathroom because the flight attendant couldn’t replace it, as that wasn’t their job?

Back in 1906 Upton Sinclair published the shocking book The Jungle, which depicted the terrible working conditions at Chicago meatpacking houses.  This book is credited by many as being the catalyst for union success in the USA.  Organizing labor at that time was a great thing for the workers, and even the business itself.  In those days the Federal Government was miniscule compared to today and there was no one to watch over and regulate the food and other industries.  There was no OSHA, no USDA inspectors, no child labor laws, no minimum wage and so on.  Now that we have hundreds of Federal, State and Local government agencies watching out for workers by enforcing thousands of laws and regulations, are unions still necessary?

From my experience the original, admirable purpose of unions in the U.S. has been replaced with a system run by highly paid union bosses focused on artificially driving up labor costs, and of course lining the leaders’ pockets with the members’ dues.  Look at the U.S. automobile industry as a classic case.  Higher than market wages, golden health care plans, resistance to automation, and outrageous pensions demanded by the unions, have resulted in the crippling of one of our greatest industries.

As you watch the recall activities in Wisconsin in the coming months, ask yourself if the people behind the recall efforts are supporting capitalism and economic freedom.  Or is there something else behind their motivation…

Now is the time to examine the motives of unions, and their political supporters at both the federal and state levels.  Ask tough questions, dig deep, and follow the money trail.  Most of all, follow the lead of Wisconsin voters in their last election, and put into office Candidates who will end the crippling effect of union coercion on our government.

Today’s news is filled with stories about groups of people around the country talking about themselves as the 99%, and expressing their feelings about the 1% who “control” the economy and the capital.  I asked, “Which am I?  Am I really one of the 99%, and are the people Occupying Streets representative of me?”  My conclusion is “No” to both, but am I alone in my thinking?

I had to apply some critical thinking to discover where this entire movement got its roots and foundations.  I found that this “movement” has its roots in Progressivism and in the halls of Congress today.  Politicians created the dialogue of the “haves” and the “have-nots” to divide people and to gain votes and power for themselves.  Are there facts to support this?  Let’s see…

The progressive movement began with Teddy Roosevelt, and was supported by a growing list of intellectuals focused on order, stability and social justice; things that the industrial society had started to change.[1]  His platform focused on social and political reform.  His movement was the birthplace for what we know today as a National Health Service, Medicare and Medicaid, OSHA, Inheritance Taxes, the Environmental Protection Agency and The Department of Education.  This was the start of a “Big Government” strategy that would touch every American’s life through government regulations and entitlements.  It also gave power to career politicians who viewed government as the solution to social injustice and unequal incomes.

Other politicians adopted and expanded the progressive movement, along with its costs and regulatory programs.  Presidents such as Franklin D. Roosevelt, Lyndon Johnson and Jimmy Carter supported and expanded the movement into bigger, more costly social programs like the New Deal, the Great Society and the Departments of Energy and Education.  All of these programs and departments increased the size of government and the role government plays in how we live and what we earn.

With the increased size of our government came the need for people to enforce and oversee these programs.  Departments full of non-elected bureaucrats grew, as regulations were written with requirements to check on the enforcement of the regulations.  Do you get the feeling that progressivism means there are more people looking over your shoulder and into your home?

So how big are these progressive programs today, and how many people are involved in supporting these programs, agencies and departments?

Health and Human Services – in budget year 2011, they had a total budget authority of nearly $902 billion, and over 72,900 (full-time equivalent) employees[2]

Department of Energy – in 2011 had over 116,000 employees and contractors’ total liabilities of $371 billion, including $30.3 billion in pension and related liabilities[3]

Department of Education – in 2011 spent $69.9 billion[4]

Environmental Protection Agency – has over 17,000 employees at a cost of $320 million[5]

According to a USA Today article from 2010, the government spent in 2008 about $224 billion on salaries for about 2 million civilian employees.  The article also stated that in a wide range of jobs, federal employees earn higher average salaries than private sector workers doing the same job.[6]

Do you think these costs have gone up since 2008?  Have your wages and benefits gone up by the same amount?

Remember, government does not grow crops, raise cattle, build small businesses or build factories.  They do, however, pay their workers more and have better benefits and pensions than private sector companies…and WE pay for this.

When people “occupy” the streets of cities, shouldn’t they really be in front of the Capital and the White House in Washington demanding a return of our freedom and a shrinking of the number of workers who don’t actually produce anything?  Big business is nothing compared to big government: at least private business is producing something of economic value that can be sold or traded when both parties believe they each receive equal or greater value in the trade – True Capitalism.

This is no longer “big” government; this is “HUGE” government.  The “haves” are the government employees and politicians. Who are the “have-nots”?  They’re us, the citizens.

We have the right and the might to change this in 2012.  We don’t need more politicians and more HUGE government; we need candidates who respect the constitution and the freedom for all to pursue prosperity without over-regulation at HUGE cost.

I recently read a poster that said, Government: If You Think The Problems We Create Are Bad, Just Wait Until You See Our Solutions.[7]

Your vote matters:  We must change our government leadership in 2012 to stop oppressive policies and regulations so the 99% can get back to providing the best means for ALL of us to prosper.

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“Today I have a message…to the children, the students, the workers, the masses, and to the bloodsuckers, the parasites, the vampires who are the capitalists of the world.” [1]  So reads a passage from a textbook used in the ethnic studies curriculum in Tucson, Arizona’s public schools.

That’s right, a reference to capitalist “parasites and vampires” in a public school textbook!

Students as young as 3^rd grade have been using this book in their Hispanic culture and history classes.  A poem in the same textbook says, “We have to destroy capitalism…The Declaration of Independence states that we the people have the right to revolution.”

In May 2011, angry parents confronted the Tucson school board about why their children were being taught from this anti-capitalist, anti-American textbook. [2]

One issue here is the confusion around the word “Capitalism.”  It has often been used incorrectly to describe systems of trade that are corrupt and unfair.  The true definition of Capitalism is a system of trade in which both parties believe they receive something of equal or greater value for what they gave up.

When it is truly capitalism, all trading partners are satisfied with the trade.  True Capitalism is not something that people must be taught; it is instinctive!  Throughout history people have been trading goods with each other. Even kids figure out that they can get something they want in a trade by giving up something that they have.

For the Hispanic students in Tucson, is it going to help or hurt them when their textbooks speak strongly against capitalism?  After all, the system of true capitalistic trade and the prosperity it brought to America is what drew many Hispanics here in the first place.

Adding to the controversy in Arizona, the Tucson school district is currently being challenged for violating an Arizona law banning classes that promote ethnic resentment.  While sitting in on a Chicano literature class, the superintendent of Arizona’s public schools noticed a picture of Marxist revolutionary Che Guevara on the wall, heard Benjamin Franklin being cast as a racist, and listened while the teacher taught the students from a textbook called “Pedagogy (Teaching) of the Oppressed.”

After the superintendent’s visit to the classroom his conclusion was, “These kids got it. They understood the framework that was being laid out — that Hispanics are the oppressed and Caucasians are the oppressors. That’s very troubling.” [3]

Hispanic students taking Mexican-American studies in Tucson’s public schools are being taught not only to hate capitalism, but also to view themselves as oppressed.  Instead of being taught to think independently, and to develop real critical thinking skills that would one day help them to succeed in a profession, they’re being conditioned to think of themselves as part of an oppressed group.

Critical thinking is a process that spells out the problem, checks assumptions, evaluates evidence, avoids guessing, and tests conclusions. [4]

A supporter of the ethnic studies program in Tucson accused those challenging the program of being “anti-intellectual.” [5]  However, his defense of the program reveals the core flaw with the ethnic studies classes – the students aren’t learning how to think critically!  The author points out that the students are learning “self-empowerment,” and that they regularly recite a poem in class that teaches, “I love you because I love myself.”

Also, while noting the importance of young Latinos “thinking critically,” the writer holds up as evidence of the impact of the ethnic studies classes the words of a current student, whose message is that we need to “learn to love each other.”  Does this sound like a student learning how to think or learning how to feel?

People truly become “empowered” when they develop their own unique abilities, learn how to solve problems, and can use these skills to provide for themselves and pursue their passions.  Is being conditioned to view yourself as a member of an oppressed group going to prepare you to become independent, self-reliant and productive?

The impact of this type of curriculum on students goes way beyond the classroom.  By encouraging students to think like an oppressed group that must fight the capitalistic system in our country, what results is a “nationwide nursery of government-dependent adults from which [progressive leaders] draw lifelong votes and income.” [6]

Since the 1960s American’s dependence on the government for their daily needs like housing, food and health care has grown steadily.  In 2010, 64.3 million people (20.9 percent of the total U.S. population) were receiving some level of government assistance. [7]

If our schools don’t prepare students with the skills needed to think for themselves and lead independent, productive adult lives, how many more will be added to the ranks of the government-dependent?

Our public schools play a powerful role in the intellectual and personal development of our children.  When it’s time to vote in 2012, remember that the future of our country as a strong and independent nation depends on future generations being creative problem solvers and strong leaders.  Support the candidates who will fight for excellence in education!