The Free Market Project

Elizabeth Warren is an economic idiot… Or a brilliant politician… From Yahoo! news:

Should the minimum wage be $22 an hour? That’s what Sen. Elizabeth Warren (D) of Massachusetts suggested at a recent hearing of the Senate Committee on Health, Education, Labor and Pensions.

Here’s her logic: If you took the minimum wage from 1960 and indexed it for workers’ gains in productivity, it would be $22 an hour today. And why shouldn’t employees reap the benefits of their own improved labor practices?, she asked at the hearing, rhetorically. Today, the actual minimum wage is $7.25 an hour.

“What happened to the other $14.75? It sure didn’t go to the worker,” Senator Warren said.

Those gains went to corporate and top-executive profits, said a witness at the hearing, Arindrajit Dube, an economist from the University of Massachusetts, Amherst. That’s simply more evidence of how income inequality has grown in America, he said.

“It is quite remarkable that had the minimum wage kept up with overall productivity, it would have been $22 per hour in 2011,” Dr. Dube said in his prepared remarks. “Had it kept up with the growth in income going to the top 1 percent, it would have been even higher, at $24 per hour; and the wage would have exceeded $33 per hour at its peak in 2007.”

Ummm… This is so stupid  I can’t believe it. First of all, the people who were making minimum wage in 1960 ARE NOT THE SAME PEOPLE making minimum wage today. The wages (for unskilled workers, who are the people making minimum wage) that they made  when they were unskilled, less productive workers DID increase greatly. Probably, for one hell of a lot of them, they became the people that are now at the top of the earnings ladder. Do you really think that no one who had a minimum wage job in 1960 is not now a successful 1 percenter?

Elizabeth Warren wants us to think that the SAME PEOPLE who start out at minimum wage are stuck with minimum wage their entire life and the only  raise they get is when the government gives them one. Do you think that’s true? Have any of you held minimum wage jobs? Is your current  salary closer to your minimum wage salary, or to the $33/hr figure?

Secondly, the really productive people in the economy (since  we are talking about productivity increases) are not minimum wage workers. This is particularly true in an information economy. Businesses aren’t built on the productivity of their lowest paid employees. And, when the lowest paid employees prove themselves to be productive, they don’t stay the lowest paid employees.

Third, what about the wealth created? There have been productivity gains, so there should be a rise in minimum wage, Warren seems to argue. So should we tailor it all to the times? What would someone in 1960 have paid for a cell phone? Oh… that’s right… There were no cell phones. How about cable TV, or a flat screen? That’s right… those things didn’t exist. The 1960 equivalent of Bill Gates couldn’t have purchased one at any price. Now, the minimum wage recipient probably lives in a house with a microwave, central air conditioning, and they have a cell phone, iPod, game console, and a big TV to play it on. In 1960 they wouldn’t have had any of that stuff. Perhaps THAT is where the “$14 went”.

Is this the kind of economic thinking we get out of Washington? Or at our universities? My 16 year-old son will get his first job this year, probably for minimum wage. He will NOT be productive. The contribution he will make to whatever business hires him will be that he can learn to do simple things for the business and do them well. Once he proves that, he’ll probably get a raise. Why in the world would he be worth $22 per hour just because productivity has increased overall in the country? He didn’t increase it. He is already benefiting from it, with his cell phone, iPod, X-box, etc. But HIS productivity will not be worth more than minimum wage when he starts. I’m very much hoping that he’ll get a resume’ going (along with an education) and that he’ll put minimum wage jobs far in his review as his knowledge, skill, and work ethic allow him ever higher earning potential… Because he’ll be productive!

I hear things like this and shake my head in wonder. The problem is, many  people will hear Elizabeth Warren and say, “Damn right! It isn’t fair!” Of my three simple points on what Elizabeth Warren said, how many do you think the “Damn right” people would have any clue about? How many do you think Elizabeth Warren has any clue about? How many MORE could you give?

I wonder… Is the natural state of human beings to be ruled by someone else?

I’m reading A Game of Thrones (actually, it’s a series and I’m onto the second book called A Clash Of Kings) which is about a fictional kingdom. Obviously, there are similarities between historical feudal times and the depiction in the books.

What is very noticeable is the nature of life and liberty when ruled by monarch, and especially what happens to the concept of upward mobility. Life and liberty for anyone who is not royal (kings and queens, lords and ladies) is at the whim of the monarch, even when that person is semi-decent. The point is keeping the rabble in line and working for the benefit of the realm. Upward mobility is impossible for the rabble, except by proper amounts of bowing and scraping and service to a ranking Lord, and then you get only what you’re given, and if you try to take too much, you find out how cheap your life is. Even the Lords and Ladies must bow and scrape before the monarch and be of use or their position is troubled.

Does this remind you of anything? It’s cronyism writ large. Big, powerful government, controlling the population. Lickspittles who serve the government can do well. Everyone else can move up  only so far. Bureaucrats wield unearned power as people have to submit  to their will. Only by putting coin in the pockets of the powerful can the “lords” of business (obviously, big business because small business doesn’t have the coin to spare)  retain their position.

You can just hear the conversation about a rebel start-up company, “Why… He’s trying to start a new business without so much as a ‘by your leave’ from us. We must make an example of him.”

There has been much made recently of  a video about the disparity in income between the wealthy and the rest of us. First of all, if you read your Thomas Sowell, you know that the initial folly in the presentation is that it looks at static percentiles, rather than people over time. In other words, the person in the bottom quintile of earners when they enter the workforce is actually unlikely to remain their throughout their working life, and a large number will obtain solid middle class, upper class, or even wealth. The bottom quintile will always be low earning, but the people in that bottom quintile at any snapshot in time will not be the same people (for the most part) over time.

However, there is a huge disparity at the highest end of the scale. Who are those guys? Increasingly, one could argue, they are the cronies. How much of the upper middle class is made up of bureaucrats (non-wealth producers)? How much of the upper crust is made up of people who got their status, or retained their status through favorable treatment by the government, bought and paid for with lobbying money?

The huge, controlling state, admired so by the Left, is not an antidote to wealth disparity. It is a cause. Just like in feudal times, it keeps people stuck in their “birth bracket.” They’ll get just enough, but they can’t do better for themselves. The only way to rise is to serve the government by becoming a bureaucrat, and even then you can rise only so far, because you are not high-born. You are an example of the good that can come from serving your masters well, living in a better house and having more to eat, but still bowing and scraping in the presence of your betters. The “lords of business” have their own “keeps”, and with their keeps, their riches, but they pay tribute to the government or they too will be crushed.

The American idea was a land where the government served the people, and the people did with their lives all they could do. There was no class, and certainly no “birth bracket” you could never escape. Upward mobility was the norm, the expectation. If you could generate a way of providing a good or service that others wanted, even if that was simply your own labor, you could move ever upward as far as your creativity and work could take you. No one could tell you that you couldn’t. The only barriers before you were the barriers of fair competition, not a government that told you what you could and couldn’t do.

In a crony system we are well on our way to developing, we are back to bowing and scraping before our betters. We can do only what they allow. The more we have already attained, and it has to be a LOT, the more likely we are to be useful to our lords (paying them tribute in the form of lobbying money) so that they will let us retain our standing.

Income  disparity is not such a big deal. Some people will always do better than others because they have better ideas and/or they work harder or smarter. Indeed, income disparity means very little when snapshots in time show people over time rising in great numbers to higher income levels. However, when it starts to become codified through cronyism, when you find yourself in a “birth bracket” and held there by a government that stands in your way and its cronies who are locked in their positions, we have a very large problem. I fear that that is what we are seeing. And, worse, I fear that people do not see that the actual cause is the very thing that they think is the solution: more government.

There’s an interesting conversation taking place in Washington DC. They (the White House and the Democrats in Congress, mostly) are saying that the Sequester is going to hurt the economy.

It’s interesting to me how they link government spending and the overall economy. The thrust of their anti-Sequester argument is that reducing government spending hurts the economy.

It was the anniversary of the Rick Santelli’s speech that is credited with starting the Tea Party a few days ago and I heard a snippet of what he said, and he made a good point (paraphrasing): If the multiplier on government spending is greater than one, why doesn’t the government spend infinitely and drive us to incredible prosperity?

Has the stimulus (four years of it now, by the freeking way! It’s the baseline now) stimulated anything? Not so’s you’d notice. Why not? Clearly government spending drives the economy. Are you saying maybe it’s something else?

How would you practically guarantee anemic growth? Here’s what I would do: First, I’d hamstring the private sector with regulations, taxes, and general uncertainty. Make entrepreneurial activity harder, and make investment more risky. Keep everybody off balance all the time. Then, I’d expand the welfare state, so that there are hoards of people who only get paid with money taken from someone else, passed through bureaucrats’ hands, and given to them without them having to produce so much as a bowel movement (though with food stamps in high supply, we’re going to get those, but the money won’t even be tied to something that productive). I’d look at growth of government as the driver of the economy (given the private sector isn’t getting the job done). I’d increase the welfare state, and I’d also increase the bureaucracy, hiring thousands of people to administer the leviathan state and I’d pay them really well, despite the fact that their wages are a net wealth sump. Once you get enough of them, shrinking the government and throwing a bunch of people out of work–despite the fact that they are engaged in unproductive, non-wealth producing activit–becomes unthinkable. You can show real pain if anyone dares to mention that government is too big. My God, man… Janitors in the halls of Congress may be furloughed. Those are real people with families!

If one successfully pulled this off, what you’d have is prosperity that seemed inextricably tied to the spending in Washington DC. Cut the budget, you cut the GDP, and hence prosperity. The trade-off is that you could only grow GDP by approximately the same amount as you’re expanding government.

It’s guaranteed economic anemia, but with a built in bias for more government spending. You accomplish it by first neutering the private sector. Mission darned near accomplished.

Imagine for a moment that you own a business, or are CEO of a business. Either at start-up, or during an expansion, your business borrowed money and you were lucky enough to get an interest only payment schedule. Now things are humming along and the revenue stream is stable, perhaps expanding slightly. What do you do about the debt? You’ve been paying the interest all along, but the debt is still there. You look at your expenditures, cut whatever fat you need to cut, keeping in mind what your revenues are, and you pay off the principle. Correct? You don’t cut anything essential, but you find where money is wasted, or where things can be done more efficiently.

Why can’t the government do that? Part of it is the difference between an enterprise in the private sector, which has only the money it can earn through voluntary exchanges with customers (perceived as beneficial to both parties), and has a motive of profit, and a government which has the money it can seize from the people through involuntary taxes, has political interest in accruing power through redistribution from unorganized masses to powerful constituencies, and whose services people must utilize no matter how poorly they are delivered or how unwanted they may be. Businesses operate through a mutually satisfying voluntary exchange and government operates by coercion. Let’s forget that for a moment, though.

The problem now is that government never has to look for inefficiencies, duplications of effort, or even reasons to justify expenditures. Why? Baseline budgeting.

Baseline budgeting assumes that every nickel spent is spent wisely, thus spending the same amount, plus X% is justified. Justified by what? By baseline budgeting. Does the money allotted to some department have to be actually useful in addressing the problem or concern that department was created to address? No. As long as they spent their money this year, next year they’ll automatically get the same amount this year, plus X%.

X% was originally supposed to be last year’s expenditure. Then it became last year’s budget plus inflation. Then, it became last year’s budget, plus inflation, plus 3%. Now the baseline is last year’s budget, plus inflation, plus 7%.*

This turns prudent financial management on its head. In prudent financial management, you spend as little as you can in order to get the job done. You look for efficiency increases, finding out how you can do more with less money. You seek to manage your enterprise to get the biggest possible “bang for your buck” knowing that every buck you don’t spend is better so long as you are actually accomplishing your enterprise’s purpose.

With baseline budgeting, as a manager your goal is to always appear not to have enough money to accomplish your purpose. Your goal is to spend every penny of your budget, no matter how inefficiently or ineffectively. You have a built-in excuse that you could have accomplished more if only you’d gotten more money, like the 7% increase coming next year. Without that money, the enterprise will certainly fail. It sets up the ultimate perversity in management, where you actually try to be as inefficient and ineffective as possible so that you can continue to get increases in funding.

You know that no one is going to look to see if you accomplished anything. If you spent the money, you must have been doing your job. Your job is obviously important or the Congress or whichever entity created your department wouldn’t have created it in the first place. Your test is not going to be results achieved, or satisfied customers, or the efficiency with which you accomplished your task. Your test is going to be whether or not you spent the money.

John Hayward points up an absurdity today, which involves what I think is a near miracle:

But even though the government continue to grow, certain individual agencies and programs will see  actual cuts.  The White House Office of Management and Budget long ago prepared a list of them.  For example, there’s the National Drug Intelligence Agency, which is losing $2 million out of a $20 million budget.

A 10 percent reduction might not really be “draconian,” but it’ll certainly be felt in the halls of the National Drug Intelligence Agency!  Or at least it would… if the agency had not ceased to exist, three months before the OMB report was prepared in September 2012, according to Mike Riggs at Reason.

So President Obama is galloping around the country and insisting that an overall 2.3 percent trim will prove fatal to a $3.6 trillion government that can’t even keep track of which agencies are still in business.  No surprises there.  This is the same Leviathan State that subsidizes pizza advertising at the same time it’s spending millions to hector Americans about the fat in their diets.  And those were two different initiatives of the same agency.

The near miracle is that an agency actually ceased to exist (no doubt actually being absorbed into another agency). The non-miracle, typical Washington DC aspect, it had a $20 million budget and (horror of horrors) was slated for a $2 million dollar cut, which you know damned well somebody in the White House would have: A) claimed was a calamity that will result in some terrible thing happening that otherwise would have been prevented if the National Drug Intelligence Agency would have only kept that $2 million dollars. B) Will simultaneously claim both the $2 million dollar cut, and the $20 million dollar savings for getting rid of the agency, for a total of $22 million in budget savings. (You know I’m right!)

I left Hayward’s last paragraph in there just to pile on the absurdity.

Here are my questions: How can we ever expect to get deficit reduction with baseline budgeting in place? How can we ever know what programs, agencies, or departments should be done away with entirely with baseline budgeting? When no one has to prove up their usefulness in order to get more money, how do you know what to cut?

Baseline budgeting has made even the language of budgeting obtuse and obscured reality from the general public. A “cut” is a reduction in the percentage of growth based on the baseline. It’s not an actual cut where next year they have to spend less than this year. A “cut” is now where you get more next year than you had this year, but not as much more as you wanted, because you wanted the whole 7% whether you needed it or not.

Baseline budgeting has also obscured how analysis of the effectiveness of government is calculated. It is so far off from what takes place in the real, non-government, world that I doubt most people can even fathom what the reality of it is. Most people probably think that government is run like a business, and if something isn’t working, if the goal is not being achieved and achieved in the most efficient manner, changes would be made. When they ask for more money, they must need it. But it’s not that way at all. In government there is no incentive for success, there is only incentive to spend the taxpayers’ money so that you get more next year.

People can talk all they want about balanced budget acts, or whatever else. The thing that could make a big difference right now would be the end of the scheme that keeps government growing, removes management responsibility, and obscures every budget conversation: baseline budgeting.

*From Wikipedia: “The Deficit Control Act of 1985 provided the first legal definition of baseline. For the most part, the act defined the baseline in conformity with previous usage. If appropriations had not been enacted for the upcoming fiscal year, the baseline was to assume the previous year’s level without any adjustment for inflation. In 1987, however, the Congress amended the definition of the baseline so that discretionary appropriations would be adjusted to keep pace with inflation. Other technical changes, annual increase of now approximately 3% plus inflation, to the definition of the baseline were enacted in 1990, 1993, and 1997. Presently, the [automatic annual] Baseline Budgeting increase is about 7%.”

There is a phrase that is bothering me, or is it a way of thinking, a perspective that people seem to have taken… It is anything to do with “the government creating jobs.” From the Democrats this perspective seems to be that only government does this, through its “investment” in education, research, and new technologies (which are actually old and failed technologies at this point for the most part). But Republicans do it too: we need to cut taxes to create jobs. They rarely specify that which has to be very specific, which is that we need less government interference with the private sector so that the private sector can create jobs. What sticks in the “low information voter’s” mind is the connection “government = jobs.” Government is somehow at the source of jobs.

Job growth is stalled because of government interference. More government interference does not create more jobs. It might create more government jobs, but government jobs are, by definition, not wealth producing. Some people may think that “a job is a job” and that a fully employed and overpaid bureaucrat’s job is no different than an engineer’s job, or any job in the private sector. But this is not true. The bureaucrat is non-wealth producing. The bureaucrat, depending on his function, may even be wealth destroying if that bureaucrat’s job is placing additional burdens on private sector businesses. Even in the best case scenario, however, the bureaucrat is only paid if money is taken out of someone else’s pocket. In the private sector, you are basically paid because you have produced a good or done a service that someone else has found has enough value that they voluntarily pay you. Not so with the bureaucrat. The bureaucrat is paid with money that could be said to have been “confiscated at the point of a gun” (you pay your taxes or you go to jail). The bureaucrat is paid with money that is not voluntarily paid because of the perceived value of the bureaucrat’s service, he’s paid with money that could have been used to purchase goods or services that someone values, or that could have been saved (whereupon it could have been loaned by a bank to someone else) or that could have been invested. Government jobs are a net sump for wealth creation (yes, the government  worker spends the money, but they are spending money the original person would have spent, saved, or invested anyway, so that is a wash at best). The bureaucrat has not had to produce wealth, or something of value to someone else, in order to get paid.

The conversation regarding the sequester has a lot of “harm to the economy” in it, as though government spending is the driver of our economy. Even the Republicans refer to the harm it will do, but at least they are generally referring to the harm it will do to the military, one of the few things the government does anymore that really is within its purview. What happens when the government is the driver of the economy? Obviously, or maybe not so obviously based on the way people talk about it, we are depending on something that is not wealth producing to lead us to prosperity. It’s like depending on the hole in the dam to keep the water behind he dam. A little bit insane, isn’t it? It’s like putting a heat sink behind your fireplace (instead of a reflector) and then wondering why the house doesn’t get as warm.

The other result of government “investment” driving the economy is cronyism. Winners and losers are picked by the government instead of by the market. This almost sounds as though it might work, with some wise person making the decisions so we can settle on something. But reality rears it’s ugly head when you take into account how much information in terms of needs, desires, pricing signals, innovation, etc. is absent for the government wise man, that is present within the network of communications in the free market. Nobody can have the information necessary to make decisions as accurately as the organic decisions made by innumerable people with discrete bits of knowledge in the private sector. Cronyism cuts off all but one choice and gives unearned power to certain companies or industries, which then repay that power by helping the politician retain his power  so he can continue to help them. In the meantime, competition is stifled, innovation is crippled, and the signals to investors and suppliers are altered. How is this a recipe for economic growth or innovation?

Democrats, particularly the progressives we have in government now, believe that every dime the government can spend is precious. Whether they believe it or not, they seem to believe that government is the driver of the economy, it is the wealth producer if you listen to their rhetoric. Republicans sometimes seem to get it, but they hash their message at times like these when they talk about “creating jobs” as though the government does that actively. The government’s only role in creating wealth producing jobs, or a better phrase would be “prosperity producing jobs” is to become more passive. To get out of the way. To remove barriers rather than enforce them and create more.

I’d love to see the next budget the House passes be labeled “The get the government the fuck out of the way act of 2013.” (sorry for the language, but sometimes a good curse makes the point better than italics). $1.75 trillion dollars is spent on regulatory compliance. $3.6 trillion dollars (40% of which is borrowed in our name and has to be paid back out of our checking accounts) of taxpayer dollars is spent on a net-sump of wealth (making the hole in the dam bigger in order to keep the water behind the dam) called the Federal Government. God only knows what state government adds to that figure. The question should be: How much prosperity could be created by that money returning to the private sector, except that money which is necessary for government functions as actually outlined in the Constitution?

As I watch the goings on in Washington DC I can’t help but wonder if people are insane, stupid, or evil. I’m not even sure which way I lean on the question.

For example: the Sequester. It’s very well established by now (to anyone who pays attention) that the Sequester was the Obama administration’s idea. Specifically, Jack Lew came up with it and Obama signed off on it. A year ago, Obama said that if Congress tried to get around making those cuts, he’d veto the bill. Now, Obama is telling us all how terrible all of those cuts will be. Of course the things that must be cut will be all of the people and things people actually like: national parks will be closed, air traffic controllers won’t be on the job (apparently planes will be crashing all over the place), and naturally (it’s always these people) teachers, firefighters, and police will be cut (I will never understand when teachers, firefighters, and police became federally paid employees, but I guess they are since any cut always includes them). It’ll be a freakin’ disaster! He’s suddenly blaming Republicans for the cuts… The cuts that were an idea from his administration.

That one seems to me to be evil depending upon stupidity. Obama is the perpetual campaigner, the man who brings everything to the brink because he doesn’t lead or administer the Executive Branch of government, the Chicago politician who will say anything and twist anything and hide his true intentions behind rhetoric that is the opposite of both the truth and his real agenda. The stupidity comes from the media and those who can’t seem to bring themselves to see through this guy. I mean, come on… The Sequester idea came from his administration and now it’s unthinkable and horrible and, of course, someone else’s fault. People can’t pause for a minute and put that math together? We have a man with no integrity in the White House.

The Sequester itself is really nothing. In typical Washington math, what we are talking about is not actually cutting anything. We’re cutting the rate of growth. Somehow, all these services will disappear if we don’t spend more on them next year than we spent on them this year… How the hell did we do it this year? It’s a reduction of the baseline growth that we are talking about. At a time when inflation (according to the government) is near zero, the shit hits the fan if we don’t grow the government by some number some people made up.

Even if it were a real cut, like anyone in business would have to make, or anyone might make in their home budget to save some money, it’s a lousy 2.3%. Are you telling me that all discretionary and military spending is so tightly controlled that nobody can find a way to cut 2.3% without catastrophic damage? The military can’t cut 5% without rendering us helpless in the face of our enemies? We are talking about $85 billion out of a $3.6 trillion dollar budget. “But,” you say, “62% of government spending is on entitlements, so it’s really $85 billion out of $1.368 trillion.” OK… We can’t cut 6% without catastrophic consequences? The government is that lean and mean? Apparently all good things the government does are on a budget so razor thin that 6% causes a virtual collapse of government services and institutions. Is this insane, stupid, or evil? It’s certainly nonsense. And, remember, we’re not talking about “cuts” in the real sense, we’re talking about Washington math, where a cut is actually a decrease in the rate of increase.

The other thing that makes me  wonder if there is rampant insanity, stupidity, or evil is related to this, but is more general. Why would anyone think that more government makes things better? That’s what we’re sold all the time. Politicians and bureaucrats are problem solvers that make life better. There’s no evidence for it, though. While there is plenty of evidence that politicians and bureaucrats are inept, wasteful, and hamper people in creating prosperity.

For example, exactly what about Obamacare is turning out well? Insurance rates are going up. The cost of Obamacare itself is skyrocketing. Care providers are clearly going to be screwed, and they will have plenty of paperwork to fill out while being screwed. The quality of care is going to diminish. The great NHS in Britain is a perfect example. Care there has become a constant scandal, wherein instead of professionals providing the best care they can provide you have bureaucrats in lab coats and nurses uniforms allowing people to die as they figure out who is supposed to (seemingly framed usually as “who has to”) take care of the poor sick or injured schlub who is unfortunate enough to need hospitalization. The whole thing is an unaffordable, bureaucratic nightmare. I’m sure there are bright spots, but papers in England sure find a lot of dark and dingy spots.

By tampering with the market for insurance, politicians and bureaucrats have all but guaranteed that insurance will be unaffordable. They are putting in more mandates for what a policy has to cover, and further removing the consumer of the product from the actual payment for the product. They’ve actually gone in the exact opposite direction of what would have brought prices down. Allowing people to buy catastrophic care policies and having health savings accounts where they save pre-tax money and actually shop for their care (putting the consumer back in touch with the provider, instead of having a third party payer) would have started bringing prices down and getting more people insured. The big government answer was to make everything harder and worse, and to sell it as a good thing that is cost effective. Come on! Are they insane, stupid, or evil? Are the people who keep buying into it insane, stupid, or evil?

How many examples can you come up with? The debate about gun control… Re-instituting a ban on assault weapons–which account for a tiny percentage of gun deaths and which did not work the last time it was implemented, nor did Connecticut’s state ban on them help prevent anything–but not doing a damned thing about making it easier to institutionalize the crazy sons-o-bitches that do these kinds of shootings… We’re supposed to take these politicians and their “comprehensive solutions” seriously. The politicians and bureaucrats think that passing laws stops people who have no compunction about breaking laws. All it does is put more burden on the law abiding citizen. Isn’t that obvious to anyone who isn’t insane, stupid, or evil? (I can forgive Joe Biden for his point of view, because I’m convinced that he’s just stupid.)

It’s frustrating in the age of Obama… the age of big government. Those of us who  believe in individual liberty, free markets, and limited government have no choice but to look around at the goings on in Washington and in politics in general and wonder what the hell people are thinking.

If you and I did our math the way they do math in Washington at our jobs we would be fired. If we did our math the Washington way on our taxes, we’d be fined or in jail.

We all know the typical Washington math gimmick: Call something a “cut” when you are simply reducing the rate of growth, which itself is based on pure projection, not actual need.

The other Washington gimmick we’re all familiar with is: back-load “cuts” into a ten year reduction plan, claiming you’ve made cuts while absolutely nothing has happened because a future Congress’ budget cannot be prescribed by a current Congress. Ten year budget plans are, by their very nature, fiction.

It turns out that the people who represent us in Washington are even more devious than that when they are talking about budget cuts. From the Washington Post (http://www.washingtonpost.com/politics/many-2011-federal-budget-cuts-had-little-real-world-effect/2013/02/09/11938e3e-6bc6-11e2-a396-ef12a93b4200_story.html?hpid=z1):

Late on the night of April 8, 2011, Washington’s leaders announced that they’d just done something extraordinary. They had agreed to cut the federal budget — and cut it big.

“The largest annual spending cut in our history,” President Obama called it in a televised speech. To prevent a government shutdown, the parties had agreed to slash $37.8 billion: more than the budgets of the Labor and Commerce departments, combined.

But the bill also turned out to be an epic kind of Washington illusion. It was stuffed with gimmicks that made the cuts seem far bigger — and the politicians far bolder — than they actually were.

In the real world, in fact, many of their “cuts” cut nothing at all. The Transportation Department got credit for “cutting” a $280 million tunnel that had been canceled six months earlier. It also “cut” a $375,000 road project that had been created by a legislative typo, on a road that did not exist.

At the Census Bureau, officials got credit for a whopping $6 billion cut, simply for obeying the calendar. They promised not to hold the expensive 2010 census again in 2011.

Today, an examination of 12 of the largest cuts shows that, thanks in part to these gimmicks, federal agencies absorbed $23 billion in reductions without losing a single employee.

“Many of the cuts we put in were smoke and mirrors,” said Rep. Mick Mulvaney (R-S.C.), a hard-line conservative now in his second term. “That’s the lesson from April 2011: that when Washington says it cuts spending, it doesn’t mean the same thing that normal people mean.”

What do you call it when people intentionally misrepresent what they’re doing? I’m pretty sure it’s called “lying.” In a business, if someone is trying to pass off some phony gimmick as real to make the company look better, it’s called “fraud.” In fact, a publicly owned company that cooked the books the way Washington cooks the books would find itself in big trouble with the SEC.

As citizens, we should be outraged. When people in Washington talk about spending cuts we need to stop being nice about it and start calling them liars and charlatans. They are intentionally misrepresenting how they are managing OUR money. If we hired a financial planner to manage our money and they behaved this way, we’d have them arrested AND sue them.

The charlatan-in-chief is about to give his State of the Union address. Apparently, he is going to “pivot” to jobs and the economy. Once more, he will talk about a “balanced approach” asking for balance between revenue (taxes) and spending cuts. Will he acknowledge that we just raised taxes? That doesn’t count. That’s yesterday’s news. It wasn’t enough to make any significant impact (the rich weren’t punished nearly enough), so the government needs more of the money citizens have earned. He’ll propose more “investments” (spending) in order to create jobs (as though the government is the driver of job creation) and he will taut the great spending cuts already in place. Except, they’re not in place. Many of them were fabrications, and even more are in the out years where they will never take place.

New taxes happen NOW. New spending happens NOW. Budget cuts? They aren’t really cuts, and they never really happen. It’s outrageous.

This is an absolute must read by David Horowitz: How Republicans Can Win

http://www.powerlineblog.com/archives/2013/02/david-horowitz-how-republicans-can-win.php

Readers of this blog understand the destructiveness of the Democrat/Progressive agenda. We have the advantage of understanding economics and history. What Horowitz is doing in this article is providing a method of communicating that effectively to voters. He exposes the Democrat’s thinking and methodology, and explains how Republicans are losing what should be a completely winnable argument.

Please read the article and link to it. I believe Horowitz is absolutely right.

As usual, John Hayward not only give the facts, but excellent, thought provoking commentary about the income tax which is celebrating its 100 year anniversary today, Feb 3:

http://www.humanevents.com/2013/02/03/one-hundred-years-of-the-income-tax/

(cut and paste into your browser… still no clue why I can’t create a link)

The great Dan Mitchell also comments on the anniversary of the income tax:

http://danieljmitchell.wordpress.com/2013/02/03/the-100th-anniversary-of-the-income-tax-and-the-lesson-we-should-learn-from-that-mistake/

It turns out that, under Obamacare, the IRS predicts that the lowest cost insurance available for a family of four will be $20,000. TWENTY frickin’ THOUSAND dollars. That sure is bending the cost curve down!

Read this from Hot Air: http://hotair.com/archives/2013/02/01/irs-cheapest-qualifying-family-health-insurance-plan-will-be-20k/

(cut and paste into your browser… I still can’t create a real link. Don’t know why.)