More Liberty - Less Government

The Panacea of Economic Growth

November 1, 2014January 28, 2016 George Noga

By: George Noga – November 1, 2014

Throughout its 238 years, the US economy has grown by over 3.0% annually, although data for the early years are problematic. For the 60 years from 1940 to 2000, the US economy grew at a rate of 3.6%. For the following 14 years from 2001 to the present, GDP grew by 1.8%, exactly half that rate. If growth remains tepid, Americans will not recover the ground they lost and their children and grandchildren will, for the first time, be worse off than the previous generation.

America has transmogrified into Europe which is in permanent recession due to its failed economic policies. Even stalwart Germany is beginning to stagnate. France is destroying its economy in a fit of socialistic angst. Italy has a lower GDP per capita than it had 15 years ago. Meanwhile in Brussels, Jean-Claude Junker continues to strangle EU countries with bureaucrats and regulations. In Europe a 2% growth rate is seen as optimistic, 1.5% as acceptable and no growth as possible. The average European in one generation fell 25% behind the average American due solely to differences in GDP growth. As I wrote last month, just in the past 5 years, the average American has been impoverished by 17% due to the low growth rates coming out of the recession compared to the historic growth rates in similar times. In short, we already have become like Europe although Europe continues to plumb ever new depths. We are well along in suffering a lost decade on the path to a lost generation; our progeny, like Europeans today, will lead lives of quiet desperation.

“Failure to grow America’s economy is a choice; decline is not inevitable.”

Failure to grow our economy is a choice; decline is not inevitable. It is a choice made by our political leaders solely because they prefer to demagogue inequality, class warfare and corporate profit for perceived electoral gain. It is a choice made by the media because they are lazy, economically illiterate and prefer to flog dead camels. It also has been a choice made by ordinary Americans in the voting booth for all of the aforementioned reasons advanced by politicians and the media. There are strong signals however that ordinary Americans now are beginning to want economic growth.

Economic Growth as the Panacea

As trumpeted by the headline of this blog post, economic growth is a panacea; indeed, it is the only solution for every problem (real and perceived) that we face today and for the coming generation. It is apropos that Panacea is the Greek Goddess of healing because strong economic growth will heal everything; to wit:

The crisis of spending, debt and deficits: A sustained period of strong economic growth (combined with some spending restraint) will enable the US to restore fiscal balance and to stabilize its debt thereby gradually lowering the Debt/GDP ratio to its long-term historical level of around 30%.
Climate change and environment: If in the distant future climate change causes some issues, the best antidote is a vibrant economy that will easily enable us to spend whatever is needed to mitigate any such problems. Only countries with strong economies can afford to spend copiously on the environment.
National security: The single greatest asset (weapon) we possess for our national security is a growing, resilient economy. This enables us to spend whatever is necessary to deter any possible adversaries and to defend ourselves should that be necessary. Weakness invites aggression and fosters terrorism.
Jobs, poverty and inequality: It is economic growth, not government, that creates jobs. It is sustained growth that fulfills the American dream and eliminates poverty; moreover, growth is the great equalizer.
Unfunded mandates: The USA is facing $350 trillion (over one-third of a quadrillion) in unfunded commitments in the next 50 years for Social Security, Medicare, government pensions, Obamacare and other programs. Absent a high rate of growth, these promises not only cannot be kept but will require drastic reductions in programs.

Recipe for Economic Growth

Okay, so economic growth is the panacea; what must we do to achieve it? The answer is straightforward and attainable. If we do the following we will achieve vigorous, long-lasting economic growth.

Political consensus: Probably the single most difficult hurdle for achieving growth is reaching a political consensus. Politicians and the media must agree to pursue policies that maximize growth and agree to stick with such policies for the long term. They can continue to argue over how to divide the wealth that results; that is what politics is about. Absent some consensus however, achieving sustained growth becomes problematic.
Tax and fiscal policy: Taxes (personal and corporate) must be reduced, simplified and stable. People and businesses must be able to plan ahead and certainty about taxation is indispensable to investment and job creation. In the same vein, spending needs to be restrained.
Eliminate uncertainty: Business hates uncertainty; it stifles planning and results in gridlock. There needs to be a broad and sustained political understanding about taxes, regulations and new initiatives.
Sound money: The Fed should focus only on maintaining sound money and fighting inflation. A strong, stable and sound dollar are indispensable for a vibrant economy.
Regulation: The economy is being strangled by regulation and litigation. We need to have a moratorium on new regulations while we gradually reform and roll back existing ones. Our tort system needs to be reformed.
Energy: We should develop every possible energy source including ANWR, offshore and shale and natural gas on federal and state lands. We should export LNG immediately from many terminals and, of course, construct the Keystone XL Pipeline. Such a policy will create jobs, make us energy independent, stimulate the economy and, importantly, prove to be a potent weapon in keeping Putin and Russia in check.
School choice: I include this because educated, trained workers are a potent economic resource. Further, school choice will bring about more equality and reduce poverty. It also is a panacea.

The choice is ours. We can continue on our present slow growth trajectory which will condemn future generations to a downward spiraling economy and reduced living standards; they will experience untold miseries as the crisis of spending, debt and deficits culminates in a meltdown. They will inhabit a Clockwork Orange nation drowning in taxes, regulation and uncertainty. They will have part time jobs for low wages. At best they will collect 65% of the present Social Security benefits deferred until they are age 70; Medicare and Obamacare (also age 70) will be busted; health care rationed and long waits common for poor treatment. They will inherit a volatile, dangerous world where nuclear weapons proliferate, a revanchist, aggressive Putin-led Russia and all without the resources for adequate national defense.

Or, we can make a different choice; we can choose to reject decline and to embrace high-growth policies. This would lead to a virtuous circle of better education, abundant and cheap energy, and to a far safer and more secure nation and world. It would result in fixing the debt crisis and funding all the promises we have made for the future. Most of all, it would help ordinary Americans. As year after year of high growth enriches America, the politicians can fight over how to best divide up this cornucopia – including addressing any inequality issues.

Firstoff however, we must make the right choice. This gets us right back to the heart of Alexander Hamilton’s question: “Whether societies of men are really capable or not of establishing good government from reflection and choice, or whether they are forever destined to depend on accident and force.” Is America today still capable of putting politics aside when self preservation is at stake? Or, do we heed the Siren song of politicians advocating failed ideologies, searching for Utopias and demagoguing political correctness, class warfare and inequality?

What You Should Know about Tax Inversions

October 24, 2014January 28, 2016 George Noga

By: George Noga – October 24, 2014

I had not planned a posting about corporate tax inversions but I am working this in because I believe you will read a perspective herein not to be found anywhere else and, as a CPA, I don’t need to invest a lot of time in research. To begin, a tax inversion is the relocation of a US corporation’s headquarters to a lower tax nation so that it “inverts“, i.e. becomes a foreign corporation for US tax purposes. The US, unique among developed nations, imposes taxes on income earned abroad by American corporations – but the tax is not payable until the income (cash) is repatriated, i.e. returned to the US from abroad. Although there often are crucial non-tax considerations involved in inversions, the main driver usually is avoidance of US tax on income earned abroad and the ability to repatriate such funds.

Because US taxes are not due until the foreign-earned profits are repatriated, US corporations with foreign operations keep the money offshore. For perspective, 75% of US corporations’ cash is kept outside the US – about $2.1 trillion currently. For example, Microsoft has $70 billion but less than $10 billion is in the US. Money held outside the US can’t be used for investment in plant, equipment or training in the US or to hire Americans; instead, it stays abroad.

The Obama administration rails against inversions because they assert it reduces the amount of corporate income tax collected. Bear in mind that most companies currently do not pay the tax anyway – that’s why they keep the $2.1 trillion overseas. Following an inversion however, profits (cash) can be brought back into the US without tax and be used to invest within the US to create new American jobs. The increased productivity from this added investment in capital goods, job training and hiring of new workers helps all Americans and increases their standard of living. Arguably, inversions are a net blessing to America in the long run even if corporate tax collections suffer in the short run.

I return to tax inversions and repatriation infra, but inversions do not exist in a vacuum. They are but one part – and a rather small one at that – of the overall US tax scheme. To put inversions into a proper framework, we must step back, understand what is really going on and look at US tax policy from 30,000 feet.

Getting the Most Feathers from the Geese with the Least Amount of Hissing

As described in the above aphorism from Louis XIV’s finance minister, Jean-Baptiste Colbert, politicians approach taxation as an art form in which they pluck the geese (taxpayers) to get the most feathers with the least hissing. The main alternatives (cutting spending or raising taxes directly) are anathema. Politicians always enact or raise taxes to make everything as opaque as possible to taxpayers. This, of course, is diametrically opposed to the best interests of taxpayers who should want all taxes to be as transparent and direct as possible. The best tax for taxpayers would be a tax on consumption or a flat tax on income with no deductions or exemptions whatsoever.

“Don’t tax me; don’t tax thee; tax the man behind the tree.”

Let’s postulate the US had a flat consumption tax of 19% with no other federal taxes, exemptions, or deductions whatsoever and that 19% tax represented 100% of the revenue to the government. If politicians wanted to increase spending, the only alternative would be to raise the tax rate to 20% or higher. Such a tax increase would be 100% transparent to every American every time he/she purchased anything. Citizens would know the true cost of government and everyone would have an interest in keeping spending under control. The reason we have a corporate income tax (and are now discussing tax inversions) is because it is a tax that takes many feathers from the geese without the geese ever being aware they are missing feathers. This is an important concept and is explained below.

Corporations Never Pay Taxes – Only People Pay Taxes

Wouldn’t it be nice if no homo sapiens ever again paid tax? Only artificial constructs like corporations, with no heartbeat or pulse, would be taxed. This is like the mythical Germanic kingdom where candy grew on trees, lemonade flowed in rivers and the fattest, ugliest and stupidest man was king. Alas, non humans paying tax can’t happen even though politicians would like you to believe it. All taxes always are paid by real, living, breathing people; corporations never have, do not now and never will pay a penny of tax. If the government increases the tax on a company by “say” $1 gazillion, there are three, and only three, possibilities for bearing the burden of the tax.

It is true that businesses may remit tax revenue to the government, but it is not their money; they are simply transmitting funds to the government they have collected from other people. If the business chooses to pay the tax by reducing its profits by $1 gazillion, the owners (stockholders) pay the tax via lower dividends and/or a lower stock price. Most stockholders are ordinary thinking, feeling Americans investing through mutual funds, IRAs or 401(k) plans. Second, the company can cut its costs $1 gazillion; this of course means firing employees – again, very much alive ordinary Americans. Third, the company can increase its prices by $1 gazillion (and this is what happens 90% of the time) meaning consumers, again scient, feeling ordinary Americans, are paying the tax in the form of higher prices.

In reality, unlike in the mythical German kingdom, corporations don’t pay income taxes; there are only real-life human beings paying taxes; but politicians want to beguile you into believing fat-cat corporations are somehow not paying their fair share. Politicians want you to buy into their class warfare canard and they are counting on keeping you ignorant. In reality, the issue of tax inversions is moot and is a contrived tempest-in-a-teapot. Moreover, as observed supra, inversions in the long run may be a net benefit to ordinary Americans as it enables more money to be repatriated which can be used in America for capital investment to increase productivity and to employ more Americans.

Now that we all understand just how inconsequential inversions are, we still are faced with a political issue searching for a solution. The US corporate tax rate is the highest in the world at 35% federal and 6% state for a total of 41%. Everyone, including President Obama, agrees it should be lowered. Everyone also agrees the $2.1 trillion being kept abroad should be repatriated. A reasonable compromise would be to lower the US tax rate to 20% for a combined federal/state rate of 26% even though this still is higher than many countries that are between 12.5% and 20%. This should be combined with a tax holiday for companies to bring home the $2.1 trillion being held offshore by paying a nominal one-time tax. This was done in 2004 and 800 companies participated, repatriating over $300 billion in overseas profits.

In any other time with any other president, a compromise would be easy. However, President Obama, is intransigent; he will only compromise to lower the tax rate and to repatriate the funds if new and highly punitive corporate tax measures are part of the deal. Consequently, nothing will happen while Obama remains president. Inversions will continue; trillions of dollars will remain offshore; and ordinary Americans will suffer the consequences. Obama is banking that these same ordinary Americans will succumb to his anti-business, class warfare narrative that corporations pay tax and that inversions are a manifestation of corporate greed. In short, he is demagoguing the issue to death.

The New Age of Unreason

October 17, 2014January 28, 2016 George Noga

By: George Noga – October 17, 2014

Fluoridation, pesticide dangers, Laetrile, overpopulation, global cooling, organic food benefits, electromagnetic transmission lines and electromagnetic fields, acid rain, the ozone hole, Alar, silicon breast implants, falling sperm counts, killer bees, GMOs, vaccines and autism, global warming, swordfish overfishing, Mad Cow, SARS, landfill shortage, vaccines causing harm, Avian Flu, Thimerosal, Swine Flu, dioxin, PCBs, BPA, pink slime, manmade climate change, paper consumption harming the environment, cell phones and brain cancer, spousal abuse peaking during the Superbowl, anti-packaging paranoia, harm from saccharine and artificial sweeteners, fracking and the water supply, evils of plastic, acrylamide, ethanol and bioenergy, US infant mortality being worse than in Cuba and the Keystone Pipeline.

“The gestalt is that we are entering into a new age of unreason.”

The preceding list has at least two things in common. Every item is junk science and has been shown to be either grossly exaggerated or, in nearly all cases, wrong and thoroughly debunked. Second, progressives bought hook, line and sinker into each and every one. What’s even worse is that liberals continue to cling to most of them despite overwhelming evidence to the contrary. Last year the citizens of Portland, Oregon, caught up in a time warp, voted 60% against adding fluoride to the drinking water. The uncritical acceptance of junk science on such a massive scale is due mainly to liberal dogma and political correctness. The gestalt is that we are entering into a new age of unreason.

Space limitations preclude addressing many of these exemplars of junk science; therefore, I will focus on only two of the most widespread, egregious and enduring myths, i.e. manmade global warming and organic foods. Alas, this is my parting shot at these topics – two of my favorite whipping boys over the many years of writing this blog.

Manmade Global Warming

This remains a religion to its acolytes – all the mounting evidence and logic opposing it notwithstanding. To be clear, I always have acknowledged there has been a solar-caused secular warming trend for about 150 years. I also will aver there is a possibility that mankind, in some small and insignificant way, may be contributing as it is impossible to prove a negative. The evidence against a meaningful role for mankind can be summarized as follows:

There has been observed warming by NASA on our moon, Earth, Mars, Jupiter, Saturn, Neptune, Triton, Pluto, Titan, Dysnomia, Eris, Enceladus and elsewhere in our solar system. There is no instance of observed temperature decrease anywhere in our solar system. Moreover, the measured warming is in lockstep with that on Earth. Clearly, these measurements prove to anyone but a Luddite that warming is a solar phenomenon.
There has been no observed warming for at least 17 years and up to 25 years depending on which measure is used. This defies all computer models. Warmists can only dissemble; the best they can come up with is that the warming is hidden deep in the oceans – a proposition which, of course, can neither be proven nor disproven.
Virtually all other claims made by warmists have failed to materialize. The shrinking of the Arctic icecap (which they tout) has been far more than offset by the increase in the Antarctic icecap, which is 10 times larger than the Arctic icecap. Recently, the Arctic icecap has begun to increase. There have been no major hurricanes to hit the US since forever and there has been no more extreme weather than in the past.

Even if, a arguendo, anthropogenic global warming existed, the warmists still are dead wrong about how to deal with it. Firstoff, moderate warming is a net benefit to mankind as has been acknowledged even by the UN-IPCC; if warming helps mankind, where’s the problem? Second, any actions taken by the USA and western world are meaningless without participation from China, India, Russia and Africa; how can you tell 25% of the population in India and China they can’t have electricity? Finally, the best way to deal with warming is to maximize economic growth so that we will have the ability in the future (should it be needed) to mitigate its effects. The warmists are wrong about every aspect of global warming; what they advocate will cause great harm to mankind.

Organic Foods

Not only are proponents of organic food wrong at every level, their actions, if left unchecked, will wreak havoc on the planet and without any benefits whatsoever to consumers of organic foods; consider:

There is absolutely no difference in taste between organically grown food and conventionally grown food. Every independent, scientific taste test has shown people cannot tell the difference. I will put up $10,000 to back the claim that there is no statistically significant difference in a scientifically conducted taste test.
Organic foods have no added benefits for vitamins or minerals, i.e. they are not more healthful in any way.
Both organic and conventionally grown foods use pesticides; the difference is organic uses so-called natural pesticides in massive quantities and it leaches into the groundwater causing grave environmental harm.
Organic requires 40% more land, is more labor intensive, has 20% to 50% lower yields and costs up to 300% more. If adopted on a large scale, it would result is clearing millions of acres and destroying critical habitat.

Organic is a lie; it is the holy eucharist in the church of progressivism! Organic food tastes the same, is not more healthful, uses pesticides and harms the environment; moreover, it is not sustainable if expanded to a larger scale and it is not local as 25% comes from China. Much organic food is fraudulent and has false organic certificates which are readily attainable. Organic even uses GMOs, the only difference being it won’t use GMOs resulting from gene splicing. Only liberals eat organic foods, a fact well understood by Whole Foods which locates its stores only in progressive enclaves that also have strong anti-vaccine movements and where Obama got 81% of the vote. How do you spell g-u-l-l-i-b-l-e?

The New Age of Unreason – Scientists versus Witch Doctors

Scientists use logic, experiment, replication and the scientific method; true science is never settled. Scientists deduce conclusions from objective data; they have made breathtaking progress and have created a cornucopia of marvels. Space travel is commonplace; medicine routinely performs miracles; and personal electronics are mind boggling. Technology improves in quantum leaps and every measure of human and environmental well-being is the best it has been in 50-75 years and continues to get better all the time. Thanks to scientists, we inhabit a world of scientific and technical marvels.

“Unreason flourishes because progressive dogma is antithetical to objective reality.”

Despite all the progress noted supra, we are now in a new age of unreason and it promises to get even darker. Unreason flourishes because modern progressive dogma doesn’t square with, and is antithetical to, objective reality. Liberals eschew science in favor of dogma, mythology and vapid political correctness. They are akin to modern day witch doctors; they screech in unison like imps and banshees believing that the more often and louder they repeat their pallid screeds and mantras and attack the real scientists somehow will make them right.

Like witch doctors, they shriek incantations, bring out leeches, administer arsenic and bleed the patient. For maskirovkaand misdirection, they use euphonic names like class equity, moral equivalence, internationalism, fairness, environmentalism, and disparity of outcome. Many are former communists who have transmogrified into green commies and hijacked the environmental movement. Metastasizing liberalism has spawned and midwifed an endless sea of banalities and inanities interspersed with downright lies. It truly is nothing less than twenty-first century witchcraft!

In the first paragraph I listed over 40 specific instances where progressives took the side of unreason. For about 25 of these issues (by my reckoning) they continue to believe in thoroughly discredited canards, continue to embrace feel-good fallacies and continue to sin against logic. Science has become politicized and spawned an epidemic of misinformation. It really all comes down to liberal politics trumping science and reason because liberalism is based on myths and lies that are antithetical to objective reality; given this choice, liberals would rather embrace witchcraft than the real world.

Jury Nullification – Closing Argument to Jury

October 10, 2014January 13, 2016 George Noga

By: George Noga – October 10, 2014

Of all I learned writing this blog, nothing is more crucial to achieving more liberty and less government than the issue of jury nullification, i.e. the idea that juries are sovereign and have the absolute right to vote to acquit for any reason. The right to a jury trial was enshrined in the Constitution and Bill of Rights not solely for the defendant, but for the jury. Nullification is not to be used lightly; but following are 10 specific examples where it may apply.

Laws have proliferated such that honest citizens acting in good faith unknowingly violate laws they never knew, or reasonably should have known, existed or that were so vague as to be meaningless;
The accused never intended to commit a crime and did not have a mens rea – or guilty mind – which formerly was a requirement for charging or convicting citizens;
Victimless crimes;
Laws that shouldn’t exist like Wisconsin’s making it a crime for a farmer to provide raw milk to the owner of the cows he boards even though consuming raw milk is perfectly legal;
Crimes for which the probable sentence (or minimum sentence) is out of proportion;
Disagreement with the law or the way it is being applied; laws only seldom or selectively enforced;
Abuse by police or prosecutors and/or charges that are political in nature;
Overzealous enforcement or profiling – one third of all adults have been arrested as have 40% of males before age 23 – 50% for black males under age 23. This is prima facie unreasonable;
Instances where justice is not being served; and
Matters of conscience.

Although widely sanctioned and practiced in the early years of our republic, today defense attorneys seldom are permitted to raise jury nullification at a trial. It should be permitted throughout our land. Following is the closing argument I would address to a jury if I were the defense attorney in a case that cried out for jury nullification.

Closing Speech to Jury from Defense Attorney

Ladies and gentlemen of the jury: Under our Constitution and common law you, when sitting as a jury, are sovereign. This means you can vote to acquit and thereby nullify the charges against my client for any reason or even for no reason and not be held to account or even asked to explain. You have absolute power including the right to ignore your juror’s oath and the judge’s instructions. This is a sacred right with a lengthy and honorable provenance.

In 1670 William Penn was tried in London for the putative crime of preaching Quakerism. The judge wanted him convicted but the jury refused. The judge then jailed the jury for four days without food, water or toilet facilities; they still refused to convict Penn. Ultimately England’s highest court ruled that a juror’s right to reject law and to vote conscience is traceable to the Magna Carta signed nearly exactly 800 years ago in 1215. Our laws are based on and incorporate English common law which, of course, traces back to Magna Carta and even earlier.

In America, a juror’s right to vote conscience emanates from the Constitution and Bill of Rights. The Constitution provides five separate sources with effective veto power before any law can be used to punish an offender; these are: (1) house of representatives; (2) senate; (3) president; (4) judiciary; and (5) jury. Even Congress passes a law, the president signs it and the courts allow it, the law will not stand if juries such as this one refuse to convict under it.

The right of juries to nullify was well understood by our founding fathers. President John Adams said: “It is not only the juror’s right, but his duty, to find the verdict according to his own best understanding, judgment and conscience, though in direct opposition to the direction of the court.” President Thomas Jefferson said: “Trial by jury is the only anchor by which a government can be held to the principles of its constitution.” The first chief justice, John Jay, stated: “The jury has the right to determine both the law and the facts.” I could continue for a long time with other similar quotes from great Americans, but I believe you already understand.

Jury nullification has a long and glorious history in America; let me tell you about just a few of the many instances where valiant juries have voted their conscience.

The Salem witch trials in 1692 ended for one reason and one reason only: jury nullification. Beginning in 1693 there were 52 consecutive hung juries and/or acquittals and prosecutors ceased bringing new cases.
In the 1760s juries refused to enforce forfeitures under the Navigation Acts. England then restricted jury trials as part of the Intolerable Acts which led directly to the American Revolution.
In the 1850s northern juries began acquitting abolitionists under the Fugitive Slave Laws.
In the 1890s corporations began losing jury verdicts in cases involving the organization of labor unions and strikes resulting in workers winning the right to organize.
Jury nullification played a big role in ending prohibition in the 1930s.
During the Vietnam War, juries acquitted protesters when informed of their sovereign power.
Juries refused to convict admitted consensual sex among adult gays under sodomy laws.
In 2012 an Iowa jury acquitted an “occupy” protester who admittedly violated curfew and trespass laws to remain on the grounds of the statehouse to peacefully protest. Immediately thereafter, 15 others accused under the same laws demanded jury trials.

Ladies and gentlemen of the jury, this case cries out for you to nullify an unjust law. Use your independent life experience, concept of justice, wisdom and beliefs; do not mindlessly follow the judge, other jurors or a bad law. You can and must hang a jury, by yourself if necessary, if your conscience so dictates; you must resist all pressure from other jurors to compromise. Ignore the cost of a retrial. It is your right and your duty.

“A majority is one person with courage.”

History shines upon courageous juries. Remember what your valiant ancestors did for peaceable Quakers, accused witches, fugitive slaves, workers’ rights, war protestors and persecuted homosexuals and do your duty as a sovereign jury. By doing so, other juries will follow suit; even one solitary American citizen voting his or her conscience can overturn an unjust law for a nation of 315 million. Finally, always remember that a majority is one person with courage!

MLLG State of the Union Address

October 1, 2014January 28, 2016 George Noga

By: George Noga – October 1, 2014

My fellow Americans: I begin with first principles. Governments are instituted among men to protect their rights which include life, liberty, property and the pursuit of happiness. Indeed, this is the only legitimate purpose for government. Experience has shown that legally sanctioned force, i.e. government is necessary to secure our rights including defense against foreign threats, protection from domestic violence and enforcement of contracts. Government therefore is a necessary, albeit evil, force that must be tightly controlled and used only for the carefully circumscribed purposes noted supra and then only to the absolute minimum extent necessary.

All of human experience demonstrates free people, free trade and free markets result in the greatest prosperity for all. Government is inherently coercive; it is not about logic, reason or persuasion; it is about brute force including the threat of force. In contrast, civil society is always voluntary and cooperative. No company, no matter how big or powerful, can compel you to buy its product or service. A consumer armed with a free choice is the most powerful force on earth.

The principles identified supra lead to twelve major initiatives I now announce. There is much more to be done; however, this is where we must begin to restore our Constitutional Republic.

The Constitutional Box: We are a government of laws and not men. The identity of those who hold executive, legislative or judicial offices should be of little consequence to citizens provided they act within the confines of the Constitution, i.e. stay inside the Constitutional box. This means shrinking government to its core responsibility of securing our rights and, to a very limited extent, providing infrastructure. Accordingly, we will scale the federal government back to 15% of GDP, a level which empirically is demonstrated to result in the maximum rate of economic growth and hence the maximum well-being for all our citizens.
Free Trade: Wealth and prosperity are created by trade among peoples. Traders take substantial risks and can accrue riches; however, their wealth ultimately depends on improving the lives of their customers. If they fail to make you better off, they do not prosper. Free and unfettered trade is universally good – always and everywhere. For that reason I announce the United States unilaterally will eliminate all tariffs and trade barriers – even if other countries do not reciprocate. We will be better off for that action and those who do not follow will be worse off.
Sound Money: The Federal Reserve will have one mission only: to maintain sound money. This means purchasing power will be maintained, inflation eliminated, and increases in the money supply subject to strict constraints. The Fed will be audited regularly and we will take a hard look at reestablishing a gold standard.
Taxation: As we scale government back to 15% of GDP, taxes can be slashed. I am asking for repeal of the 16th amendment to eliminate the income tax. We also will eliminate the death tax and Social Security/Medicare payroll taxes. These will be replaced by a consumption tax at the lowest rate possible – likely in a single digit. The 60% of Americans who currently pay no income tax (net of credits) will begin to enjoy the dignity that comes with being a taxpayer. Moreover, they will have a personal stake in controlling spending and holding taxes to the absolute minimum. The crisis of spending, debt and deficits will end instantaneously.
Defense and Foreign Affairs: We will follow the admonition of President John Quincy Adams that “America is a friend of freedom everywhere, but a custodian only of our own.” Simultaneously, we will observe George Washington’s advice that “The best way to keep the peace is to be prepared for war.” We will strengthen and then consistently maintain the military for the long term at such a high level as to deter any possibly adversary.
War on Drugs: The war on drugs is over. As we learned with prohibition, the drug war is unwinnable and never should have been fought. Henceforth, all drugs will be legal but regulated, taxed and discouraged just as with tobacco. Drug taxes collected will go solely for rehabilitation of those who continue to abuse them. We immediately will realize benefits including: (a) releasing non-violent drug offenders; (b) ending drug related crime; (c) putting drug cartels out of business; (d) reducing police corruption; (e) refocusing our foreign policy; (f) ensuring safety of drugs; and (g) eliminating drug dealers as role models.
Regulation: All regulations will automatically sunset ratably every 10 years. Congress must enact any that need to be replaced. Any regulations promulgated by bureaucrats that have an economic impact of over $25 million must be voted on and approved by Congress before taking effect.
Role of Juries: Henceforth, defendants (and their attorneys) will have the right to explain to juries that juries are sovereign and, as intended by our nation’s founders, have the final say about the legality and enforcement of all laws. The grand jury system will be reformed to stop prosecutorial abuse and to allow citizen grand juries.
War on Poverty: The war on poverty is finished. The percentage of Americans who, by their own reports, lack a healthy level of food, shelter, clothing or medical care is 2%-3%. This cohort is identical to the 2% to 3% of Americans with very low mental acuity, i.e. those who struggle to fill out a simple form. We will therefore refocus our attention and also our solutions to better deal with the real problem. Even though the percentage in poverty is low, it still equates to 7-8 million of our countrymen to whom we pledge a strong safety net.
Entitlements: Obamacare is to be repealed and replaced with free market solutions. Entitlements will be placed on budget. Social Security gradually and voluntarily will be privatized. In the interim, benefits will be maintained by changing indexing and lengthening eligibility ages. Medicare benefits will be maintained by gradually lengthening eligibility ages and changing to a premium support model; also, medical costs will moderate given real prices. Medicaid will be block granted to the states to administer as they see fit without interference.
Energy/Climate: The Keystone Pipeline will be built and natural gas exported. We will drill and frack in ANWR, offshore and on federal lands – all ASAP. Our national delusion about manmade global warming is over. Warming is a solar phenomenon to which man’s contribution is minimal. We will continue to develop alternative fuels for the future while eliminating subsidies for wind, solar and biofuels. The EPA’s mission will be refocused.
Education: School choice is the civil rights issue of our time. We will move with all deliberate speed to universal school vouchers. We will bring education into the 21st century with technology and by furthering alternatives such as online and home schooling and by creating entirely new paradigms.

Thank you and may God bless the United States of America.

Into the Eye of the Debt Hurricane

September 20, 2014January 28, 2016 George Noga

Update on the Crisis of Spending, Debt and Deficits
By: George Noga – September 20, 2014

By some metrics the debt storm has abated. Compared to earlier deficit projections published herein, the USA is slightly better off, with the difference due entirely to the massive Obama tax increases. The deficit this FY ending September 30 is $500 billion, equal to 3% of GDP; meanwhile GDP is increasing around 2%, meaning the deficit is growing only slightly faster than the economy, a marked improvement. However, great damage already has been done; moreover, we are merely in the eye of the debt hurricane – it may appear sunnier at the moment, but the deficit storm will soon resume with even more ferocity and we will all be blown away.

The Seen and the Unseen

The US economy already has sustained massive body blows. The reason we don’t clearly see the damage is due to the difference between the seen and unseen – or, more to the point, the difference between the reported and unreported.

In past recoveries following major recessions, the US economy has grown by an average of 5% for the subsequent 5 years; this results in a compound growth rate of 27.6%. Instead, we have experienced 2% compound growth yielding only 10.4%. The difference of 17.2% is the growth deficit. Simply, the average American today is 17% worse off than he/she should be; but we don’t see what should be; we only see what is. Nevertheless, the reality is that every American has been impoverished by 17% just during the past 5 years.
We see the increase in federal tax revenue and the concomitant reduction in the deficit. Unseen are the massive tax hikes that produced the revenue. Individual tax brackets increased with the top rate going to 39.6 % – a 13% increase. Investment related taxes were savaged with capital gains rates going from 15% to 23.8% (59% increase) and dividends from 15% to 43.4% (289% increase). Medicare taxes increased 62% and the upper limit was removed. There was a new surtax on investments of 3.8% and the death tax went from zero to 40%. New individual and employer Obamacare taxes took effect along with scores of other Obama tax hikes. The 35% corporate tax rate (world’s highest) is responsible for shifting jobs and investment abroad and businesses keeping $2 trillion overseas. The unseen effects of these massive tax increases will hobble the economy until abnegated.
We can see the reduction in the official unemployment rate; what is unseen is the jobs disaster that is America today. There are 12 million out of work, 12 million on disability and nearly 50 million (one in 5 households) in breadlines – err, on food stamps. The labor force participation rate hit a 35 year low. All (net) jobs being created are part time; there are legions of 29ers and 49ers. The true rate of unemployment is 15%, not the 6.2% reported.
We see Social Security and Medicare meeting their current obligations but we do not see the demographic time bomb looming for both programs. There is nothing on earth as certain as demographics; 77 million more boomers will retire (10,000 every day) and begin Social Security and Medicare. Spending on both these programs will grow by 8% compounded – doubling every 9 years. Within 10 years we will spend our entire budget on entitlements and interest on the debt leaving nothing left over for defense or for the rest of the government.
We see interest rates on federal debt hovering around record lows costing only $225 billion currently. We blissfully do not see what the interest would cost given a return to average interest rates, i.e. interest cost would increase $500 billion per year to $725 billion, or triple today’s cost. And that’s the rosy scenario. This is a no-win situation: keep rates low and the economy is grotesquely distorted and savings and investment are savaged or raise rates where they should be and the budget deficit goes thermonuclear.
We see government regulation exploding, uncertainty rampant and the scepter of Obamacare hanging over all of us like the sword of Damocles. We do not see the stultifying effects of all these on job creation and the economy.

Looking at the gestalt paints a funereal picture. Average Americans already are 17% poorer over the last 5 years than they would have been in a normal economic recovery – and they will continue to get relatively poorer and poorer each year without any end in sight. The tax and regulatory burden, particularly on investment, has skyrocketed, halting new investment and job creation. Behind the “official” 6.2% unemployment rate lays a dystopian jobs nightmare; we are turning into a country of part time workers. We are reaping a demographic whirlwind still in its early stage. We are living on the razor’s edge regarding interest rates; we have a Hobson’s choice: ballooning interest costs or maintaining negative real interest rates. Finally, all this exists within a milieu of hyper-regulation, vast uncertainty and, of course, Obamacare.

Current CBO Projections for Spending, Debt and the Deficit

Recently (July) the CBO released its latest forecast. The CBO alternate baseline forecast (its most realistic) assumed the average middle class family’s tax burden doubles over the coming generation; it also assumed no more recessions, wars, terrorist attacks, natural disasters and that interest rates remain low perpetually. Despite these horrific (taxes doubling) and grossly unrealistic assumptions, the results are disastrous. The deficit increases by over $100 trillion and the CBO stops forecasting because it can’t conceive of a functioning economy under those circumstances. And all this, dear readers, is based on an uber-optimistic forecast; the reality is much, much worse!

We have been grazing on the fiscal commons for a long time; the pasture is about to give out and the spring lambs are doomed to a life of quiet desperation. We can muddle through for a few – perhaps several – years with temporizing and half measures. Soon enough time will run out and the ineluctable tipping point (Minsky Moment) will be reached. It will get ugly for an extended period, i.e. a lost generation., Eventually, when we emerge from the rubble, we may get it right again – only because there are no other choices – and America will again enjoy more liberty and less government!

Why I Write This Blog?

September 10, 2014January 28, 2016 George Noga

By: George Noga – September 10, 2014

This posting marks the beginning of the end. Between now and mid-December I will publish the final MLLG posts. I often have been asked why I have taken the trouble. Why have I spent 1,000 hours writing 300 posts filling 900 pages containing 500,000 words since November 2007? Why have I written fact-based and principled tracts about public policy even though I am unenamored with politics and politicians? This post answers the question: why. In the Federalist, Alexander Hamilton questioned and challenged his fellow Americans thusly:

“Whether societies of men are really capable or not of establishing good government from reflection and choice, or whether they are forever destined to depend on accident and force.”

If any society of men fails to get its politics right, it affects every aspect of life and life itself. Get politics right and we live our lives in freedom, prosperity and pursuit of our dreams. Get politics wrong and liberty, happiness and property are forfeit and life itself is nasty, brutal and brief. Politics, grubby as it is, is the sine qua non to having a life worth living.

Examples abound of those who got their politics wrong: Hitler’s Germany, Mussolini’s Italy, Imperial Japan, Mao’s China, Pol Pot’s Cambodia and Stalin’s USSR were all black holes where life and liberty were trampled. Today we have,inter alia, Putin’s Russia, the Jongs’ North Korea, the Castro brothers’ Cuba and Mugabe’s Zimbabwe. And don’t forget the entire Arab world, nearly all of Central and South America, Africa and any place ending in “stan”.

If you believe the western world is exempt, think again. WWI was a senseless slaughter with 40 million casualties; its politically inept conclusion led to WWII with its 150 million casualties. This was due to a failure of politics in Europe and also in the USA. In the past century and continuing to the present, “civilized” Europe has experienced 100 genocides, pogroms and ethnic cleansings. Vietnam was a colossal failure of American politics to get it right; it cost 58,220 American lives and 303,644 more wounded. Nor have we learned; we continue to get it wrong right up to this day.

If we don’t get our politics right, our children and our children’s children will live in an Orwellian torpor with their lives, liberty and property constantly at risk because of obeisance to failed ideologies, fantasies, vote buying, political correctness and the never ending and fruitless search for Utopias. Politics is inherently personal. Following are but some of the ways I have been directly harmed throughout my life by our failure to get politics right.

I had no father at home for 4 years during WWII which resulted from government ineptitude in fighting and ending WWI. Father was in Korea, also the result of political blunder, for another year during my childhood.
I received an execrable, pathetic non education in government schools from age 5 to 18.
The Federal Reserve created economic conditions that resulted in severe cycles, bubbles, panics, meltdowns and deep recessions throughout my life continuing to the present.
I was subject to income taxes of over 90%, creating perverse, uneconomic incentives.
It now requires $15,000 to buy what cost $1,000 when I was born due to government currency debasement.
Regulation run amok made owning my business onerous. The regulations, all in the guise of protecting consumers, in actuality, caused them (and me) great harm.
The politically micromanaged Vietnam War disrupted my life for the 6 years I served in the military.
The Fed has brutally devalued a lifetime of hard work via chronic negative real interest rates intended to protect a feckless government from the consequences of its ongoing debt binge.
A torpid, Europesque economy has been imposed, dooming me to economic stagnation instead of robust growth.
The current crisis of spending, debt and deficits ultimately will result in a lost generation.
Our government has recklessly created and/or exacerbated dangerous situations throughout the world by weakening our military and appeasing tyrants. An existential crisis likely will result.
Obamacare death panels will ration and deny medical care and ultimately could kill me.

Due entirely to failed politics I was fatherless for five years and lucky I wasn’t orphaned into a life of poverty. I survived utterly wretched government schools, incessant and severe economic cycles, debilitating inflation, astronomical tax rates and hyper regulation. Vietnam discombobulated my life. And all this was because of a government most consider one of the best extant. And all because we failed to get our politics right.

Now, in my eighth decade of life, our once vibrant economy is riven by government-created anemia. America has transmogrified into sclerotic Europe where men lead lives of quiet desperation. Government has created a crisis of spending, debt and deficits, one consequence being sustained negative real interest rates that savage my decades of prudence. My final indignity is Obamacare; its rationing and death panels may end my life prematurely.

Unfortunately, it doesn’t end with me. Our children and our children’s children are doomed to a much poorer and more dangerous future; they will be a lost generation. They will pay for our debt binge and generational theft with vastly reduced opportunity. They will inhabit a Clockwork Orange world where nuclear arms proliferate in places committed to our destruction and solely because we weakened our defense and kowtowed to tyrants. Our weakness invites terror and slaughter for which they will pay dearly, perhaps with their lives. And all this from a government most consider one of the best extant. And all because we failed to get our politics right.

“The correct answer to Alexander Hamilton’s question may be in the negative.”

As you can see, if we don’t get our politics right, our lives are vastly diminished and trivialized in countless ways; we condemn our progeny to economic stagnation and loss of freedom. Their lives and liberty are at grave risk because we failed to get our politics right. It appears the correct answer to Alexander Hamilton’s question may be in the negative.

I have tried mightily through this blog to show that the answer lies in more liberty and less government. Hopefully, my efforts have given our children’s children that infinitesimally better chance for liberty. And that is my answer to the question: why I write this blog.

Note to readers: I am striving to make the final postings between now and mid-December special as I seek to end my MLLG blog on a high note. I hope you enjoy them.

Reviving the Citizen Grand Jury

June 20, 2014January 13, 2016 George Noga

By: George Noga – June 20, 2014

Grand juries trace their inception back to 12th century England. King Henry had problems with the pope’s ecclesiastical courts which, in Henry’s view, failed to charge or indict to his satisfaction. King Henry therefore instituted a citizens grand jury. Fast forward to the USA. The Bill of Rights (5th Amendment) states: “No person shall be held to answer for a capital, or otherwise infamous, crime unless on the presentment or indictment of a Grand Jury.” The Bill of Rights introduces grand juries although they are never mentioned in the main body of the Constitution. Hence, grand juries are a constitutional construct in their own right. The founders intended them as a fourth branch of government that belongs solely to the American people and serves as a buffer between the people and the government.

“Any citizen could bring a matter directly before a grand jury.”

In the decades immediately following ratification of the Constitution, grand juries played a major role in public life. Any citizen or layman could bring a matter directly before a grand jury including complaints about the conduct of public officials. Grand juries then could (and did) conduct their own independent investigations; if they found sufficient evidence to bring charges and if the act was a crime under law, the grand jury would return an indictment. Of course, the grand jury also screened out charges which were unfounded or of malicious inspiration.

“A prosecutor can get a grand jury to indict a ham sandwich.”

It was not until the second half of the nineteenth century that the current paradigm emerged in which prosecutors control grand juries. Today there is so much abuse of grand juries by prosecutors with an agenda that it has given rise to a now-famous bon mot linking grand juries and ham sandwiches. The origin of this aphorism can be traced to comments made by Supreme Court Justice Robert Jackson in 1940. However, many attribute it to Judge Saul Wachtler who stated: “A prosecutor can get a grand jury to indict a ham sandwich.” Once empanelled however, grand juries have independence and great power; they occasionally go off on their own – thus giving rise to the term “runaway jury“.

Movement to Return Grand Juries to Citizens

The widespread abuse by politicians of the grand jury system has led to a growing movement to return grand juries to ordinary citizens – much as they functioned in the first half century of our republic. In fact, six states currently allow citizen (or common law) grand juries in one form or another. These function in different ways. In Oklahoma citizens can petition to request a county grand jury to convene. Montana law allows judges to call grand juries. In other states, citizen grand juries can report their findings to prosecutors or to regularly empanelled grand juries.

Current state laws do not go near far enough for many. There is a powerful movement afoot to revive the citizen grand juries of the 19th century – not under the control of prosecutors. In recent years a number of such self-styled citizen grand juries have been formed – including at least one in (Ocala) Florida. One case in Gallatin County, Colorado garnered much attention with over 30 law enforcement officers representing 10 agencies on hand for one proceeding. In Montana different groups are forming advisory grand juries to report findings to judges and also to publish them for the record.

There are a number of organizations competing to revive the common law grand jury in the USA. They range from the serious and well organized to some with marginal (at best) credibility. For the time being however, citizen grand juries are limited to advisory and public relations roles. Although it is unlikely grand juries will return to their 19th century roots anytime soon, it is not hard to discern that some major changes – such as the following – may come in the years ahead.

The beauty of our federal system is that there are 50 states and citizen grand juries may need to catch on only in one or two states to spread like wildfire. Also there are over 3,000 counties and since most grand juries operate at the county level, it is possible significant changes could even originate at the county level.
The movement could inspire more and more regularly convened grand juries to become runaway juries.
Significant marginal changes are possible. At one time ordinary citizens were allowed to pass information directly to a sitting grand jury. Bringing back this feature could really shake up politicians prone to abuse their power.
It is easy to foresee rapid growth in citizen grand juries with an advisory role, i.e. they could report their findings to a regular grand jury and/or independently publish their findings – similar to the present situation in Montana.

At bottom, the movement to resurrect citizen grand juries is a manifestation of a much broader and more significant reaction by a growing number of Americans against the size, power and arrogance of government. As such it is a welcome trend and could play a significant role in bringing about more liberty and less government in America.

America’s Greatest Threats

June 10, 2014January 20, 2016 George Noga

Power Grid, EMP Attack, Coronal Mass Ejection

By: George Noga – June 10, 2014

Weakness, not strength, invites conflict and war – a truth known throughout human history and included in George Washington’s farewell address when he said: “The best way to keep the peace is to be prepared for war“. It is a lesson which America forgets regularly. We (along with Europe) forgot it is the 1920s and 1930s; we had amnesia again under Carter in the 1970s. We deeply regretted it both times. Now under President Obama we have not only forgotten but we fail to take even inexpensive measures that could stave off disasters with potentially 100+ million American casualties.

Obama displays weakness and appeasement at every possible opportunity. He cancelled our missile defense in Europe to the chagrin of our allies and received nothing in exchange. He manifested weakness in Libya, North Korea, Egypt, Iran, Syria, Crimea, Ukraine and the Middle East. He has savaged the defense budget and made unilateral reductions in our strategic forces. Everything he (and his acolytes Clinton and Kerry) do and say signals weakness. He refuses to recognize the attacks in Benghazi, Ft. Hood and San Jose (power grid) as terrorism.

Alexandr Solzhenitsyn understands; he said the following when accepting his Nobel Prize. “The spirit of Munich has by no means retreated into the past; it was not merely a brief episode. The timid civilized world has found nothing with which to oppose the onslaught of a sudden revival of barefaced barbarity other than concessions and smiles. The spirit of Munich is a sickness of the will of successful people; it is the daily condition of those who have given themselves up to the thirst after prosperity at any price, to material well-being as the chief goal of earthly existence. Such people – and there are many in today’s world – elect passivity and retreat, just so as their accustomed life might drag on a bit longer, just so as not to step over the threshold today – and tomorrow you’ll see, it will be all right. But it never will be all right! The price of cowardice will only be more evil.” Solzhenitsyn preternaturally was describing Obama.

Protecting the Power Grid Against Terrorism and Natural Phenomena

This post (space limitations) deals only with EMP and power grid threats, but it is: (1) one of the greatest threats in terms of possible casualties, i.e. 100+ million; (2) the most likely to happen sooner or later; (3) the most imminent; (4) accomplishable on a low budget with existing technology; and (5) difficult to trace the source. One threat is an attack on our electrical power grid. Such an attack can be carried out exactly by doing what was done in San Jose on a larger scale; it also can be carried out via an EMP (Electro-Magnetic Pulse) attack involving only one low-grade nuclear device. Shockingly, the same damage can result from a coronal mass ejection or “CME” – more about this infra.

April 16, 2013 at 1:00 AM near San Jose, California, a group of 2 to 6 terrorists attacked and knocked out a major electrical transmission substation. The terrorists first cut underground fiber optic cables, cut communications and disabled security systems. All skilled marksmen, they commenced a highly disciplined, coordinated attack with high power rifles knowing precisely where to aim. When police arrived 50 minutes later, the terrorists were long gone, left no evidence and never have been found. This likely was a rehearsal for a broader attack that could knock out America’s entire power grid.

It would require fewer than 10 such teams of terrorists (20 to 60 people in total) under 30 minutes to kill 100 million Americans. Because of the interconnectivity of America’s power grid, knocking out a small number of facilites would shut down the entire country. It took several months to repair the damage in San Jose as key components are manufactured in Korea and not readily available. In that amount of time a broader attack could have killed 100 million. Note: You may have missed the San Jose incident in the news because it happened the same time as the Boston Marathon bombing.

The same effect can be achieved via an EMP attack by detonating a single low power nuclear device at the right altitude; it would create an EMP that would knock out power in America except for Alaska and Hawaii. Moreover, it recently has been understood that a massive solar storm (CME) could also knock out much of the power grid. Such storms occur every 150 to 300 years and there has not been one since the advent of electricity. Scientists believe we are due for a CME; in fact, one just missed Earth in July 2013. Lloyds of London estimated a CME would affect 20-40 million Americans for up to two years.

Some readers may be wondering how there could be 100+ million casualties from an attack (either EMP or San Jose style) on the power grid that knocked out power for months – and that is how long it would take to restore power. Without electricity, the US can provide for less than 10% of Americans; the other 270 million are out of luck. Virtually nothing would work; there would be no food and water; nuclear power plants would melt down because they require power for cooling. Most deaths would come from starvation. Society, civil authority and the rule of law would disappear.

The Good News

The good news is that it is possible to attain a high degree of protection from all three of these perils at low cost. The quickest, easiest and cheapest is protection from terrorist attacks against our power grid. All that is required is to build high enough fences around our principal power transmission stations that would preclude snipers from knocking them out San Jose style. We also shock stockpile and store all critical spare parts near each facility. This could be accomplished in less than one year at a cost of under $1 billion.

Protection could be achieved against a CME by hardening our power grid; this also could be accomplished quickly and for under $1 billion. There is a bill now in Congress, the SHIELD Act, which stands for Secure High-Voltage Infrastructure from Lethal Damage. Finally, deterrence and defense against an EMP attack can be accomplished via missile defense which is well within America’s current capability. Potential adversaries contemplating an EMP attack and knowing we had effective missile defense would decide not to pursue such an attack, and if they did, we likely could prevent it as it would be only one missile. Note: An EMP attack could be launched via balloon from within the USA; for that reason we need to harden the grid as a backup and also in case missile defense fails.

The Bad News

President Obama refuses to spend the money to protect America’s power transmission stations against terrorist attack – even though it is a shovel ready project. Heck, he won’t even call San Jose a terrorist attack because it goes against his political narrative that terrorism is receding – the same reason he falsely attributed the story about an internet video being responsible for the Benghazi attack. Obama refuses to spend money on missile defense because he considers it destabilizing and would rather spend the money to buy votes. Congress also needs to pass the SHIELD Act which currently is stuck in committee, although there is no reason to believe Obama would sign it.

“Obama won’t call Benghazi or San Jose terrorism; he won’t invest in missile defense; and he refuses to spend even one day’s borrowing to protect 100 million American lives.”

The USA borrows $2 billion each and every day to fund a massive government deficit but we won’t spend one day’s borrowing to protect America against the most imminent, likely and deadly threat we face by building walls around our key power stations, stockpiling spare parts and hardening our transmission infrastructure. The most important function of government, and one with which all agree, is to protect America against outside threats. Obama refuses to do this – he won’t even spend $1 billion to possibly save 100 million lives – that works out to a paltry $10 per American life. How would you feel, while watching your family dying an agonizing death from lack of food and water, to know that $10 per person could have prevented it and our president refused to spend it and for all the wrong reasons?

MLLG Special Posting – The VA Scandal

June 3, 2014January 20, 2016 George Noga

By: George Noga – June 3, 2014

The MLLG blog, usually written far in advance of distribution, has never devoted an entire post to a current, breaking news story. The Veterans Administration (“VA”) scandal is the exception because it is the perfect storm: (1) it is the poster child for public choice economics – a frequent topic of MLLG posts; (2) the VA is a sacred cow beloved by liberals; and (3) the scandal provides a stark preview of ObamaCare. Finally, the VA issue fits MLLG’s forte, placing a complex issue in perspective through fact-based and principled analysis – and all in about 1,000 words.

“The VA is a government jobs program that incidentally provides health care.”

To be fair, the problems with the VA go way back – preceding the Omar Bradley Commission of 1955-1956. There have been 18 reports warning of the wait time problems just since 2005 – of which 70% occurred during the Obama Administration. Although Obama did not create the problems, his ineptitude and obeisance to public unions raised them to a new level. Also to be fair, the VA is not uniformly dismal and enjoys support among many vets – not altogether unsurprising from an agency that has $154 billion to dispense and which often certifies routine aging problems (heart disease) as service related and certifies maladies of dubious provenance as eligible for tax-free disability pensions.

“The real scandal is that the VA considers a 14 day wait to be very satisfactory. Throughout the private sector, wait times are measured in hours and not in days.”

The VA problems have nothing to do with money. The VA budget has gone from $49 billion in 2001 to $154 billion in 2014. Just since 2003 the VA budget is up 106%, while the number of vets increased 30%. The government tends to throw money at the problem; but, just as with failing schools, no amount of money can ever fix the problem.

Real Causes of the VA Problems

The cause of the VA mess is easily and fully explained by pubic choice economics which teaches that people respond to personal (not public) objectives. An illustration from the Soviet Union is instructive. Glass manufacturers in the USSR made windows too thin and they tended to break easily; they did this because they were evaluated based on the number of square feet of glass produced. To fix this problem, the erudite commissars changed the evaluations from square feet to pounds of glass produced. Thereafter, the factories began to produce uber thick windows with limited translucence.

We can chuckle at the clueless Soviets, but the VA is no different. They were evaluated based on patient wait times and they responded in accordance with public choice theory – they rigged the system for their personal benefit. This is no different in principle from changing the thickness of glass due to different incentives. No one should be surprised. Of course, private sector workers also respond to personal incentives; however, business does a much better job of aligning personal incentives with those of the organization. Hence, it would be rare in the corporate world for endemic problems like those at the VA not to be immediately reported up the chain of command where action would be swift and where the failure to report negative information also would carry swift and strong personal disincentives.

Following are some other more salient causes of the VA problems, although all are readily explainable by the theories of public choice economics.

In some VA clinics physicians see only one-eighth (12.5%) as many patients per day as in private practice. Each day the operating rooms are shut down by 3:00 PM. The VA is essentially a government jobs program that just happens to provide some health care – after patients wait 145 days and provided it is before 3:00 PM.
The VA is 70% unionized with over 200,000 unionized workers. Obama and the Democrats put the wellbeing of unions above veterans. Public sector unions have hijacked the VA for their own aggrandizement.
Union work rules and seniority cause serious problems as, inter alia, unions have squelched outsourcing VA patients to reduce the backlog because outsourcing is a direct threat to union jobs.
VA scheduling software uses a DOS operating system – found only in museums – and 1990s era computers.
As to be expected, waste, fraud and abuse are endemic given the vast amount of funds and no accountability.
The wait time (Phoenix) to see a physician was 145 days from when a patient requested an appointment; much longer counting the entire process. The real scandal is that the targeted wait time (considered satisfactory) was 14 days. In much of the private sector, wait time is measured in hours, not days. In the early 1990s Kaiser Permanente had a 55 day wait but changed to same day scheduling. Within a year they reduced the wait time to one day.

Real Solutions to the VA Problems

The near term future is as predictable as a Kabuki. First, liberals will claim the Shinseki resignation brings closure to the problem. His resignation was forced not by Republicans but by Democrats up for reelection who desire to make precisely that argument. Second, there will be some short term patient outsourcing but it will end just as soon as the problem fades from view – the public sector unions will see to that. Third, government will throw some more money at the problem and they will claim victory. These raison d’etat actions will succeed in getting the issue off the radar screens of the toothless media watchdogs (and the public) until well after the next election.

“Worst of all, the VA is a precise microcosm and road map for ObamaCare. What is harming 25 million veterans today soon will afflict all 315 million Americans. Some, perhaps many, of us will die while waiting 145 days or more for an appointment.”

The real solution, dear readers, will never happen. There is little or no raison d’etre to have a separate health care system for veterans; this makes no more sense than having a separate medical system for any other profession or line of work. To the limited extent veterans may need certain highly specialized care (such as for prosthetics), this could be accomplished via a small number of – preferably private – facilities. Care of veterans should be integrated into the civil health care system much the same as Medicare. At the very minimum, all acute care shoud be privatized and voucherized, with the VA maintaining only rehabilitation and long term care facilities. Following are the main takeaways:

There is no logic for a separate VA health care system; it must be completely or mostly integrated into the private economy – especially the acute care portion.
The VA problems can never (and will never) be fixed because government is incapable of such fixes.
Liberals and Democrats never fix anything – real fixes are not important; all that counts to them are intentions.
Everything is predictable and explainable by reference to public choice economics.

Worst of all, the VA system is a precise microcosm and road map for ObamaCare. Each and every problem identified in this post will be multiplied in spades for ObamaCare. The disaster that now is preventing veterans from getting care and, in some cases, has killed them, will be inflicted on all 315 million Americans. It is only a matter of time until ObamaCare makes all Americans wait 145 days (and likely more) to get an appointment and many will die waiting.