Monday, May 24, 2010

Is Obama destroying the liberal agenda?

Barack Obama has been president of the United States for only about a year-and-a-half now. In that time, aided by large majorities in both houses of Congress, he has won a host of legislative victories on major programs. In spite of everything, the world is more dangerous than before he took office, the economy is stagnant, and the president is more unpopular than ever. The reason may be that the Democrats’ unfettered success exposes the utter failure of their ideas and leaves them with no one else to blame.

The cornerstone of the president’s legislative agenda was his healthcare reform bill. After almost a year of legislative wrangling and backroom deal-making, the bill finally passed. Almost immediately after passage, a host of problems became apparent. For example, in the scramble to pass the legislation before their fragile coalition cracked under the pressure of public opposition, the Democrats left out a much ballyhooed provision that would have enabled “children” up to 26-years-old to stay on their parent’s policies ( Insurance companies volunteered to enact this coverage voluntarily.

More seriously, the healthcare reform that was supposed to lower healthcare costs almost immediately started driving costs up. A Health and Human Services report that was concealed until after the final vote revealed that Obama did succeed in “bending the cost curve” for health insurance ( The problem was that his reform bent the cost curve upward! The Democratic cost estimates used unrealistic cost predictions that did not survive a real world analysis. Further, several companies have already announced that the reform law will increase their healthcare costs ( President Obama’s healthcare reform, while a legislative success, is proving to be a spectacular and expensive failure in terms of lowering costs.

Another of President Obama’s notable legislative successes was the stimulus package. Passed in February 2009 amid dire warnings of what would happen if the bill failed to become law, the stimulus package has been a disappointment. President Obama had claimed that the unemployment rate (at 7.6% when he made the claim in January 2009) would rise as high as 8.5% by April 2009 without the stimulus package or 7.8% with it ( ). Of course, the reality is that unemployment continued to rise as high as 10.1% with the stimulus package before settling in at 9.7 - 9.9% where it has stayed for months and remains as of this writing ( The real unemployment rate, counting the underemployed and people who have given up looking for work, is estimated as high as 22% and the length of unemployment has also increased ( Other associated programs, from the extension of unemployment benefits to mortgage modifications to cash-for-clunkers, have had no appreciable long-term effects on the economy.

While the stimulus did create jobs, it did so at an enormous cost to the nation. First, there was much dispute over how many jobs the stimulus actually created. Many stimulus jobs were over counted leading to exaggerated claims of jobs created or saved ( There is actually no accepted mechanism at all to count jobs saved in spite of White House claims.

USA Today, which is not a conservative newspaper, estimated that a single construction job cost more than $500,000 in stimulus funds ( Other estimates put the average cost of each stimulus job at $117,933 ( ). This is a huge expense for a jobs program that still resulted in chronic 10% unemployment and underscores just how wrong Obama’s economic assumptions are.

Further, the collapse of the Greek economy and the rising debt loads in both Europe and the United States have shown in graphic terms where huge government spending programs ultimately lead. Greece finally reached a point where it could no longer borrow to finance expensive government programs and public sector salaries. Bailing out Greece has brought the euro to the edge of collapse and there are fears that the crisis will spread to other European countries. The debt level of the United State is not far below that of Greece (

Finally, President Obama’s foreign policy has also not shown the desired result. The centerpiece of Obama foreign policy was the desire to repair America’s image in the world. He also wanted sit down and talk with leaders such as Iran’s President Mahmoud Ahmadinejad to solve issues such as Iran’s nuclear ambitions. His effort to reach out to the Arab world culminated in June 2009 with a speech in Egypt. He has also announced plans to withdraw from Iraq and Afghanistan. President Obama and Secretary of State Clinton have made several diplomatic initiatives to Iran, while threatening sanctions.

Polling does reveal that foreign approval of the leadership of the United States has improved under Obama ( ), but that fact has not translated into heightened safety for American citizens. Under President Obama, the US has withstood or narrowly missed a series of terror attacks. Since Obama has been president a terror cell was disrupted near Raleigh, North Carolina in July 2009, a plot to blow up NY subways was disrupted in September 2009; Maj. Nidal Hasan murdered thirteen soldiers at Ft. Hood, Texas in November 2009, an Afghan immigrant tried to blow up a Delta jet on Christmas Day, 2009, and a Pakistani immigrant tried to set off a car bomb in Times Square in May 2010.

Obama and his administration have been criticized sharply for treating terror suspects as civilian criminals rather than wartime (illegal) combatants. The decision to bring captured terrorists into the civilian court system jeopardizes the ability of the military to obtain and act on intelligence that might prevent future attacks.

With respect to Iran, President Obama has extended the olive branch only to have it ignored. Repeated calls for Iran to renounce its nuclear ambitions have gone unheeded. Even President Obama’s popularity in the UN and new treaty with Russia have not enabled him to pass meaningful sanctions against Iran. To the contrary, with Obama’s encouragement, Brazil and Turkey recently signed a deal to exchange uranium with Iran. The deal’s gaping holes will allow Iran to appear compliant while still building nuclear weapons ( ). At the same time that Iran, a country that has been attacking the US continuously since 1979, is building missiles and nuclear warheads, President Obama is trading away the US anti-missile program began under President Bush.

President Obama has disappointed pro-democracy groups around the world by failing to speak out on their behalf. For example, Obama failed to support or encourage the democratic uprising in Iran at a time when the survival of the regime could have been at stake after the sham elections there. Likewise, the Obama Administration has been slow to criticize countries like China and North Korea over human rights abuses (

In contrast, President Obama has been quick to criticize and make demands of our allies. For example, the president made the unprecedented demand that Israel stop all construction, including natural growth in their capital city of Jerusalem ( In Honduras, the president supported ousted President Manuel Zelaya, who was constitutionally removed from power as he tried to follow in the footsteps of Hugo Chavez in becoming a lifetime president (

President Obama has achieved notable legislative victories and made notable steps in foreign policy during his tenure in office. With huge Democratic majorities in both houses of congress, it would have been unlikely that his policies would not have been advanced. However, the lack of results from the passage of these milestones is what Democrats should take notice of… and fear. We have seen with our own eyes that progressive economic programs are expensive and unworkable. We have seen how words fail to persuade murderous dictators and terrorists. With Democrats in firm control of both the legislative and executive branches of government, they have few others to blame for the failure of their programs to work.

Insanity has been defined as doing the same thing over and over while expecting a different result. The question now is whether President Obama and the Democrats will continue failed policies that have demonstrated themselves to be unworkable. If so, the country should vote for real change.


Orlando FL
May 24, 2010

Photo credit: Maggie Smith

Tuesday, May 11, 2010

Greek Ruins

Greece is in crisis. Recent reports have shown rioting and told of the bombing deaths of Greek bank employees. For most Americans, the reports from Greece probably come as a shock. What happened to Greece and how did they get into this situation?

Greece certainly suffered from the global economic downturn that began in 2008, but its problems began long before that. In simple terms, Greece spent too much money. Like other social democracies, much of the money went to government salaries, pensions, and welfare state programs. By some estimates, government workers account for as much as 40% of the Greek economy []. These government workers earn lavish salaries (they are paid for 14 months of work each year) and pensions. The Greek economy is also slowed by high levels of corruption, nepotism and tax evasion. Further, Greece also hosted the 2004 Olympic Games in Athens. The Olympics is always an expensive, and usually money-losing, proposition for the host country.

In the past, when Greece or other countries ran up high levels of debt, they would simply print more of the national currency. This would devalue the currency, the drachma in this case, and cause inflation. The government would then pay its debts in cheaper drachmas and repeat the cycle.

This changed in 2001 when Greece joined the euro zone and adopted the euro as its national currency. The more stable euro allowed Greece to finance its spending with lower interest rates and the country ran deficits to pay for its expensive public sector workers.

It wasn’t long before Greece began to have problems. Rules for the European Union specify that member nations are not permitted to run deficits larger than 3% of GDP (gross domestic product) [ ]. However, in 2004 it was revealed that Greece’s deficits had not been below 3% of GDP since before 1999. How did they manage to join the EU with larger deficits? They lied [].

At that point, Greek voters ousted the socialists and installed a right-wing government in an attempt to restore fiscal sanity. The new government raised taxes on alcohol and tobacco, as well as increasing the VAT (value added tax) and, for a time, the Greek economy appeared to improve [].

The next bill began to come due in 2008 with the crash of the global economy. As with most of the rest of the world, the Greek economy entered a recession. As the economy shrank, the deficit increased as a percentage of GDP. To make matters worse, the national debt had also increased by approximately 100 billion euros since 2004. The socialists returned to power in 2009 and announced sharp cuts to government spending to combat the crisis [].

It wasn’t enough. Greek bond ratings were revised downward and the Greek deficit for 2009, which had been estimated at 6%, was revealed to be as high as 13.6% as history repeated itself and Greek financial reports to the EU turned out to be less than accurate []. Greek bonds soon reached junk bond status.

The Greek government imposed an austerity package of spending cuts and higher taxes on the nation. As a result, government union workers and anarchists opposed to multinational corporations began rioting in the streets. Three bank employees were killed when their bank was firebombed by rioters.

At this point, it appears that other European nations and the International Monetary Fund (IMF) will have to bail out Greece to prevent a national bankruptcy. According to the most recent reports, the EU and the IMF plan to loan Greece an additional $145 billion, of which $39 billion will be supplied by the IMF []. Some of the IMF money will be supplied by the United States.

Part of the danger of the Greek debt crisis is that it could spread to other parts of the EU and from there to the world. Other EU nations such as Spain, Portugal, and Italy also have debt crises, although not to the extent of the Greeks. Greek debt is worth approximately $400 billion and a default could cause a domino effect on banks, companies, and nations around the world []. Additionally, the crisis is already shaking investor confidence in the euro, causing its value, as well as stock markets around the world, to decline.

Many analysts are also pointing out that Greece might be a “canary in the coal mine” for many other western nations. The recession has caused many nations to run up deficits as they attempt to stimulate their national economies. Around the world, countries are finding that they can no longer afford expensive social programs and lavish salaries for public workers. As European research institute GaveKal noted, “If Greece was the birthplace of democracy, the question now is whether it will be the graveyard of social democracy” [].

The total Greek debt is now estimated to be at approximately 125% GDP []. That means that Greece owes more than it can produce in one and one-fourth years. The Greek deficit is currently estimated at 13.6% GDP.

How does that contrast with the United States? The US debt is at 87.3% GDP and will soon reach 90%, the point at which the debt’s drag on the economy will increase markedly []. The US is not far behind Greece in budget deficits. The federal budget deficit for 2009 was 9.9% []. Given the spending habits of the current administration and congress, the US deficit and debt are both likely to continue increasing. As the numbers of federal employees increase, along with increasing federal pay rates and generous government pensions, the US is headed down the Greek road.

The US does enjoy several advantages over Greece. One is that US debt ratings are still good enough to garner low interest rates. There have been indications, however, that the US is in danger of being downgraded to a riskier status. Additionally, the US controls its own money supply. Unlike Greece, the US can print more money to pay its debts, although this would result in inflation (devalued and cheaper dollars).

The situation is different for many of the states, however. California, one of the leading basket case economies in the US, bears a striking resemblance to Greece. California is plagued by expensive government employee wages and pensions as well as costly social services. Government employee unions resist attempts to cut spending. Nevertheless, in 2009 California passed its own “austerity package” of tax hikes and spending cuts after it was forced to resort to paying state debts with IOUs. Like Greece, California also cannot manipulate its money supply since it uses the dollar. California’s 2010 budget shortfall was 56% of its total budget []. If the situation does not improve, California may ultimately face the stark choice of begging for a federal bailout or a state bankruptcy.

In our own state of Georgia, we have also been hit hard by the economy. Georgia faces a budget deficit and shortfall as well. Georgia’s estimated budget shortfall for 2010 is 26% of the general budget. The state government is enacting deep budget cuts in education, transportation and health care.

Faced with a huge financial crisis, the states are adopting the Greek method of austerity measures while also relying on assistance from the federal government. In contrast, the federal government continues to grow and spend at a rate that dwarfs historical precedent. Ultimately, the bills will also come due to the federal government and the nation will face the painful realization that nothing is for free, including government services.


Chicago IL
May 10, 2010

Friday, May 7, 2010

Illegal Immigration

Illegal immigration has been on a lot of people’s minds lately. Recently this issue resurged with the passage of a new law in Arizona designed to give local and state law enforcement more tools to combat illegal immigration. Some on the right sound almost xenophobic in their opposition to immigration. On the other hand, some on the left seem to want totally open borders and no enforcement of immigration law.

Regardless of the ultimate fate of the Arizona law, the federal government does need to step up and enact immigration reform. If the current system were working, Arizona would not have felt the need to enact legislation to do what is the federal government’s role. In spite of the media firestorm, the law has strong support among Arizona’s voters [4].

Most of us would agree that even in our current recession the United States remains an attractive alternative to many other countries. Who among us can blame immigrants for wanting to better the lives of their families by coming to the United States? The economic opportunities and freedom found in the US are unparalleled anywhere else on earth. The truth is that most immigrants, legal and illegal, are decent people who only want to make life better for their families.

I have had personal experience with illegal immigrants as an Athens, Georgia insurance agent. We routinely sold auto policies to men with Mexican driver’s licenses since we were one of the only agencies in town that represented a company who would insure a driver with a foreign license. The men often worked in the chicken processing plants around Athens and would usually pay cash for a six-month policy. Several months later, when they had earned enough money, they would sell the car to another immigrant and return to Mexico.

The fact is that the current situation is our own fault. Yes, it is illegal to sneak into the country, but by ignoring the problem, we have given tacit approval to the practice. Illegal immigration is similar to speeding. Driving too fast is illegal, but since it isn’t taken seriously, it is a frequently broken law. If you get caught, expect only a slap on the wrist. And so many people are doing it that the chance of getting caught is miniscule.

The first step to reaching a common sense solution would be to eliminate the extremes. First, we must acknowledge that we are not going to stop all immigration, illegal or otherwise. Immigrants bring a lot of new talent and ideas to the US and have throughout our history. We are all either immigrants or descendants of immigrants. Even American Indians migrated here from Asia in prehistoric times. We should also acknowledge that we are not going to round up and deport all illegal aliens. The public would not stand for splitting up families and placing otherwise innocent people into internment camps to await deportation. Nor should they.

On the other end of the spectrum, we are also not going to leave the border undefended and ignore the potential threat to national security of having millions of unknown people within our borders. Additionally, public opinion dictates that the US can no longer ignore with a nod and wink the fact that employers are skirting tax and employment law by hiring and paying illegal aliens under the table.

The first step in any immigration fix must be to secure the border. This is a national security imperative. The 9/11 attacks are almost a decade behind us yet it is still commonplace to have people cross into the US illegally. This is inexcusable. It would be absurdly easy for terrorists to enter Mexico or another Latin American country legally and then use the services of a “coyote,” human trafficker, to cross into the US illegally. If people and drugs can be smuggled into the US, so can weapons and terrorists.

Securing the border should also done to protect the immigrants themselves. The illegal journey across the southern border into the US is fraught with danger [3]. Many illegal immigrants die each year in the attempt. Some starve or die of thirst in the harsh climate of the southwestern desert. Others fall victim to the very coyotes to which they had paid an exorbitant fee to guide them into the US. Coyotes routinely rob or murder their charges. Sometimes the immigrants are held captive until their families pay additional money to the coyotes in exchange for their release. In other cases, the illegal immigrants enter the US to life of virtual slavery working for unscrupulous employers or illegal businesses.

The process of securing the border was begun by President Bush who dramatically increased the number of Customs and Border Protection agents [1]. President Bush also began construction of a fence along the US border with Mexico and stepped up enforcement of laws banning the employment of illegal aliens.

The second step, which should be taken after the border is mostly secure, is to deal with the issue of those immigrants who are already here illegally. To deport these people would cause a host of problems. First and most obvious is the expense and cost of locating, detaining and deporting them. This would be hugely expensive and a drain on law enforcement resources that are needed elsewhere. It would also be a public relations nightmare.

Mass deportations would also cause significant difficulties to American businesses. Even though unemployment is at a very high rate currently, many of the unemployed American citizens do not want to work at the jobs that illegals routinely perform. This is especially true since congress has repeatedly extended unemployment benefits. Deportations would stress the many segments of the economy, significantly food production.

A better alternative would be to focus enforcement efforts on illegal aliens who are caught committing other crimes. If immigrants, legal or illegal, are found to be guilty of crimes such as murder, robbery, or drug trafficking then they should be deported.

The only realistic course for illegal immigrants is to bring them into the light. In aviation, a common procedure in a malfunction is to match the switch position to the condition. For example, if an item is switched, but not working, often the procedure will call for turning the switch back off. Similarly, if aliens are already here and working, we should acknowledge that reality by having them register as guest workers, pay a fine, and become legal aliens. This would not make them citizens or grant them amnesty, but it would allow them to stay here and work legally.

When this process is complete, the federal government should begin requiring employers to verify citizenship and immigration status for prospective employees. Employers that continue to knowingly hire illegal aliens should face stiff penalties.

Another following step would be to deal with the problem of “anchor babies.” Current law gives illegal aliens an incentive to come into the country illegally and have a child. When a child is born within the United States, it automatically becomes a citizen and its family is allowed to remain in the country to care for it. Congress should pass legislation that stipulates that citizenship is only granted in cases where aliens are within the US legally. This may require a constitutional amendment, or at the very least a favorable interpretation of current law by the Supreme Court. Sealing the border and enforcing visa time limits would also help to resolve the issue of anchor babies.

We also have to realize that the Mexican border is not the whole immigration problem. A more insidious problem is the number of people who enter the US legally on a temporary visa and then remain past the visa expiration date [2]. The list of people who overstay visas is long and is made up of citizens of countries all around the world, including four of the 9/11 hijackers. Additional oversight and follow up of visa visitors to the US is needed to make sure that people don’t enter the country legally and then remain illegally.

Finally, to complete the reform, the US needs to make it easier for immigrants to come here legally. The US is an immigrant nation and we should continue to welcome the “poor, the tired, the huddled masses yearning to breathe free.” Immigrants built this country and made it prosper. They are also important for its continued success. We should welcome legal immigrants and help them to assimilate into the American melting pot.

There are also a few things that we should definitely not do with respect to the immigration debate. First, we should not allow racist language or beliefs to shape what is essentially a national security debate. Immigration reform is not about keeping out people who look or speak different from us; it is about keeping out people who want to kill us. Second, we should avoid any attempts to extend federal benefits to those who are here illegally and who refuse to come into the open when reform is passed. Likewise, the right to vote, even in local elections, should be reserved for citizens, not mere residents. We should also not push immigrants into separate ghettos or barrios or cater services to a dozen different languages. We should encourage them to assimilate into society and learn English. Speaking English is and always will be a key to success in the US.

Most importantly, the American people have to make sure that the politicians don’t let the politics of competing for Hispanic votes obscure the need for true immigration reform and border security. Hispanics have nothing to fear from legitimate reform and will even benefit from the opportunity to work and live in the US legally.


Chicago IL
May 7, 2010

Thursday, May 6, 2010

The General Welfare

“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States….
US Constitution, Article 1, Section 8

The commerce clause of the Constitution has been used to justify all manner of government social spending. Does this clause mean that the government can legitimately spend tax money on any project that will enhance the welfare of any American?

A good place to start looking for the original meaning of the phrase “general welfare” is with the author of the constitution. The constitution was drafted by a constitutional convention in Philadelphia in 1786 and 1787. Its primary author was James Madison, who later became the fourth US President. Madison is considered the “father of the constitution.” Together with Alexander Hamilton, James Madison was also an author of the Federalist Papers. Madison authored Federalist #41, which discussed the question of general welfare [1].

Madison, writing as Publius, notes that some critics of the constitution claim that the language of the general welfare clause “amounts to an unlimited commission to exercise every power which may be alleged to be necessary for the common defense or general welfare [1].”

Madison then goes on to note that the second half of the general welfare clause, the same sentence, lists seventeen powers of congress that allow the federal government to “provide for the common defense and general welfare of the United States.” Madison asks, “For what purpose could the enumeration of particular powers be inserted, if these and all others were meant to be included in the preceding general power? Nothing is more natural nor common than first to use a general phrase, and then to explain and qualify it by a recital of particulars. But the idea of an enumeration of particulars which neither explain nor qualify the general meaning, and can have no other effect than to confound and mislead, is an absurdity, which, as we are reduced to the dilemma of charging either on the authors of the objection or on the authors of the Constitution, we must take the liberty of supposing, had not its origin with the latter [1].” In other words, the constitution lists specific powers of congress that are to be used for the general welfare of the United States.

Madison went further in 1817 when he vetoed an internal improvements bill. In his veto message to congress, Madison wrote “Such a[n unlimited] view of the Constitution would have the effect of giving to Congress a general power of legislation instead of the defined and limited one hitherto understood to belong to them…. It would have the effect of subjecting both the Constitution and laws of the several States in all cases not specifically exempted to be superseded by laws of Congress…. [4].”

Alexander Hamilton, another prominent author of the Federalist Papers, took a more expansive view of the clause, but was much more restrictive than modern interpretations. Hamilton wrote in the Report on Manufactures that a limiting factor for the general welfare clause should be “the object to which an appropriation of money is to be made be General and not local; its operation extending in fact, or by possibility, throughout the Union, and not being confined to a particular spot [2].”

According to Hamilton, an appropriation under the general welfare clause must benefit the entire union, not just a locality, and definitely not an individual. In Hamilton’s view, the general welfare might include projects such as parks, libraries, and museums that are open to all people. It would not include transfer payments to benefit an individual. Nor would it include earmarks to benefit the people of a single community.

Even though Thomas Jefferson was not directly involved in the writing of the constitution, he agreed on a limited interpretation of the commerce clause. In his Opinion on National Bank, Jefferson wrote, “It would reduce the whole instrument to a single phrase, that of instituting a Congress with power to do whatever would be for the good of the United States; and, as they would be the sole judges of the good or evil, it would be also a power to do whatever evil they please... Certainly no such universal power was meant to be given them. It was intended to lace them up straitly within the enumerated powers and those without which, as means, these powers could not be carried into effect [3].”

Jefferson realized that an open interpretation of the wording of the constitution would mean that there was no limit at all on the powers of the federal government. If a government can enact any law that it believes will be for the benefit of the nation, then the government can do anything at all. We have seen this in our own time as the government expands beyond its constitutional role to take actions that the founding fathers would have never considered constitutional.

Whatever the founding fathers thought, the principle of federal restraint with respect to spending on the general welfare lasted less than a hundred years. Under President Lincoln, congress passed the Pacific Railroad Acts of 1862 and 1864, which subsidized the construction of transcontinental railroads [6]. This was similar in many respects to the bill that James Madison vetoed in 1817. However these subsidies could be justified under Hamilton’s concept of national good.

In contrast to Lincoln, Grover Cleveland, a conservative Democrat left a legacy of fiscal restraint and protection of free markets. In 1887, congress passed the Texas Seed Bill which appropriated $10,000 to purchase seed for Texas farmers in drought-ridden areas. Cleveland vetoed the bill, stating “I can find no warrant for such an appropriation in the Constitution; and I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit [5].”

Since the days of Lincoln, the interpretation of the general welfare clause has continually expanded. Franklin Roosevelt’s New Deal programs were a vast expansion of federal power, as well as a vast expansion of federal spending on social projects. Lyndon Johnson’s Great Society broke new ground in creating more federal entitlements and transfer payments, transfers of federal tax money to for the benefit of specific individuals as opposed to the general welfare. Finally, our own Barack Obama has created a massive new federal entitlement to health care that not only redistributes money, it also requires Americans to purchase a privately marketed service under the guise of promoting the general welfare.

The first Supreme Court review of the general welfare clause came in 1936 in United States v. Butler [8]. The court agreed with Hamilton that the clause granted the federal government power to spend on areas that were not specifically mentioned in the constitution, but that the spending had to be for national welfare. Local spending did not meet the criteria.

Unfortunately, in 1937 the court revisited the issue in Helvering v. Davis [8]. FDR’s court packing scheme may have influenced the outcome of this case because this time the court ruled that congress could determine what constituted the national welfare. This essentially gave congress a black check to spend on whatever they could justify as being for the national welfare. It also overturned 150 years of tradition and the court’s own precedent which was established only a year earlier!

To date, no law has ever been ruled unconstitutional because it violated the general welfare clause. Therefore it falls to voters to vote out officials who allow unchecked – and ultimately unconstitutional – spending.


Kansas City MO
April 29, 2010