Obama's Ideal Model of Good Government is crumbling: the EU

The policies of President Obama and the Democratic Party are those of the left-wing parties of the Europe. Obama's Healthcare Plan was to be the Universal Healthcare coverage system of Great Britain. His ideas for new taxes are similar to those of France, Italy, and elsewhere. Tax the income, profits, and inheritance of the rich, impose a value-added tax, and tax carbon emissions. His fiscal policy of spending our way out of economic recession, massive debts, and expanded mandatory spending programs is almost identical to every European country, like Greece for example.

President Obama seems to think we should be more like Europe. The problem is this center-right country is comprised mostly of selfish, intolerant, knuckle-dragging rednecks that cling to their guns and religion. But after 2008, he and his liberal-socialist allies had a chance to change all that and transform this country into another European Union.

We can now see where that leads.

Greece is on the verge of defaulting on its bonds and declaring the equivalent of national bankruptcy. Portugal and Spain have had their credit ratings reduced this week. Nearly every European country has massive national debts, high unemployment, low economic growth, and powerful public labor unions that have all but paralyzed government attempts to solve the fiscal problems.

Sound familiar? It should, I could've easily been talking about California or Illinois.

The European Union is in decline economically and politically. Its influence in the world has been in steady decline for years, its economy has been stagnant, and its fiscal problems are finally about to erupt. Many experts speculate we may be witnessing the end of the Euro currency and a collapse of the European Union as a whole.

Well, its a global recession right? Not really. China, India, Brazil, and Indonesia are seeing positive growth. They have recovered. China projects growth this year at 8-9%. So as the United States and European Union continue to drown in debt and see growth of less than 1%, other countries are growing. We can safely conclude that the US and EU are seeing their massive lead in the world economy and world politics shrink rapidly.

So who should we look to? China? Brazil? Well maybe. These countries don't have a great deal in common though. They do have lower taxes on corporations, no massive entitlement programs, low debt, and business-friendly labor laws.

Meanwhile we are doing the opposite. More taxes on corporations, new entitlement programs, more debt, and stricter labor laws.

One can see the contrast within the United States as well. Should we be adopting the same policies as our own states of California and Illinois? That is what Obama and the Democrats seem to be doing. Who should we be following?

The answer: Texas, Oklahoma, and Alaska. Low tax burdens, business-friendly conditions, small deficits, no big entitlement programs, and they are seeing unemployment rates much lower than the national rate of 9.7%. They are actually growing while the rest of the country is stagnant.

The answer is right in front of us.

President Obama is following a failed model. The European Union is on the verge of collapse, the euro is about to vanish, and the continent will soon shatter into disarray and might shift back to its historic roots of nationalistic rivalries and arms races.

The United States needs to adopt a new model. And fast.

More on the Tea Party: Not Radicals

This is from my Princeton Fox Blog, so it is more directed at Northeasterners. Here is what I have observed as contrasts between places like Illinois, North Carolina with New Jersey:

I am frankly surprised at the misconceptions and total lack of knowledge that New Jerseyans have of the Tea Party. It is clear the media, journalists, and others have successfully written them off as radicals, racists, and revolutionaries. And you have bought it.

The Tea Party Platform
The Tea Party is a loose confederation of conservatives, libertarians, concerned citizens, unaffiliated voters, conservative democrats, and independents. These groups may have their own top issues or most important agenda items but there are three main common themes:

1. Limited Government (in both power and dollars)
2. Individual Freedom (protections for religion, speech, right to bare arms, states' rights)
3. Free markets (strong rejection of socialism)

Gallup surveys showed the Tea Party's demographics are fairly mainstream. In other words, they are not All-White, All-rich, All-Christian, All-Republican, or All anything.

So really what makes them tick? The massive growth in government spending, the national debt, the increase in government power in areas of the banking sector, finance, healthcare, student loans, and automobiles. This political event alone is what awakened them. And I say awakened for a reason.

Gallup has also consistently shown this is a center-right country, 40% identify themselves as conservatives and other polls show that 50% or more have fiscally conservative views. Only about 26-29% of people identify themselves as liberal. And yet the Democrats won 255 of 435 seats in the House, and 60 of the 100 seats of the Senate. Obama won with 53% of the vote. How is this possible? Why is it that the Republicans don't dominate American politics???

The Awakening of the Right Wing
Like I said, this conservative side has only recently awakened. There is a segment of conservatives that don't vote because they regard both parties as essentially the same (and have a good case for it). However, the political battles and divergence of policies between the two parties in the last year and a half has changed that sentiment and "awakened" this segment. In other words, Obama's left-wing agenda awakened them. Had he practiced some moderation in his policy proposals, this movement might've remained asleep.

Another segment of the Tea Partiers simply don't vote because they don't feel their vote really makes a difference. Most of this type are not politically active at all. They have these beliefs but would rather keep to themselves and keep their beliefs to themselves. They have been convinced by televisions, movies, and other media that their beliefs are radical fringe right-wing ideas and that they would be ridiculed if they got more vocal of them.

Another segment is the far-right wing. They are a very small group, probably about 5-8% of the total population. They are militias, Christian Fundamentalists, most of them probably racist, and are in many respects anarchists. They may align themselves with the Tea Party, but a vast majority of the other groups in the Tea Party regard these people as crazy, just like the rest of the country.

The final segment, the largest, are disenchanted Republicans and fiscal conservatives that felt their party failed them and did not vote in 2008. This group is the most politically active in general, vote often, but this changed due to Republican failures in 2005-2007. They stopped identifying themselves as Republicans and expressed utter frustration with their party and the country as a whole. this segment was likely to awaken regardless of how leftist Obama's agenda was. It is the combination of this group with the others that give the Tea Party tremendous potential. They are reaching into populations of non-voters and even unregistered voters. Not to mention the fact that Independents are steadily realizing that the Tea Party reflects their ideas in regards to the deficit and government spending.

So, are they racist? Maybe 1 in 20 has white supremacist beliefs, AT THE MOST.
Are they anarchists? No, not even close.
Do they advocate overthrow of the government? No
Are they Christian Evangelicals or Fundamentalists? Many of them are, but none of the issues they are demonstrating for are related to religious or social issues. Sometimes yes, but like I said government power and spending are at the top of the list.

And it is important to note, the Tea Party is steadily growing. Gallup and other surveys show that more Americans consider themselves part of the movement in comparison to three months ago.

So what is their objective?
The slogan most often heard at Tea Parties is "Remember in November". A political protest and demonstration that wants to increase energy AND VOTE. What a bunch of psychos right? They are supporting candidates, donating money, hell they are voting in record numbers! MY GOD, they are going to tear this country down!!! They are critical of a Black President! Surely they are racists!!! By that logic, a Black President is infallible.

A Cautionary Note for Northeasterners
Most Americans do not live within 100 miles of New York or Washington. Most Americans do not get their news from the Big 3, or CNN, or MSNBC. Most Americans are not afraid of guns. Most Americans are not afraid of God or Christians. Whatever sophistication or education level you have achieved, remember you are in the minority and if you fail to take movements like the Tea Party seriously, you will remain in the minority in a sort of hyper-urbanized bubble of the East Coast from DC up to Boston. You are a minority and I think its time you do a MUCH better job understanding the rest of the country and their beliefs because in my experience in New Jersey there is a poor level of understanding.

Self-identified Republicans and moderate conservatives in the Northeast seem to be somewhat elitist and arrogant similar to liberal democrats. That must change. Not only Republicans but Northeasterners in general because last I checked the Census projects Massachusetts, New Jersey, and Pennsylvania will be losing electoral votes to Texas, Utah, and Georgia.

Its time to make a better effort to understand the rest of the country. Because there are more of them than you, and in November, more of them will win election to the House and Senate while Democrats will likely still dominate the Northeast.

National Debt: The weakness of US Power

How are we able to borrow $12 trillion in the first place?
Nearly all countries borrow money to finance deficit spending. It is a fact of the modern world economy. Some countries borrow more than others. For example, Japan's debt is 120% of their GDP. Ours after 2010 will be 90% of GDP. The United States, Japan, and European Countries are able to borrow because they are considered excellent credit risks. In our case, the world believes the U.S. dollar is the most stable and reliable investment in the world. For most of the past 60 years that has been true. The dollar is stable because the United States is stable.

Banks, countries, and international institutions will continue to finance our deficits as long as the US dollar has primacy. To continue on our present course, the dollar must remain strong. So the issue is whether the US dollar will remain a good investment for the forseeable future given the President's budget proposal. To be stable the U.S. economy must remain strong, vibrant, and its government must be able to repay the treasury bonds and pay the interest on time. Conversely, should the US economy weaken, contract, and the government becomes unable to meet its loan obligations, it is a problem. The risk is higher than it has ever been. So much so that credit rating companies are considering lowering the "AAA" rating on US treasuries, something that has never been discussed before.

Another problem. Many world powers are considering creating a new world currency, or re-evaluating their investments in the US dollar. China has already decided it will start diversifying its holdings because it believes the US dollar is more risky and may threaten them. They are worried, so much of their assets are in US dollars, and therefore, to avoid massive losses they must diversify. Russia and others have talked about establishing a new currency unattached to the US. Should a lower risk alternative present itself, US debt will become even less attractive and will likely have to start paying higher interest rates to compensate for the increase in risk.

We cannot fund Social Security, Medicare, and our deficits are massive. So in short, we are getting closer to being unable to pay interest on our debt. Our credit risk is increasing and the primacy of the dollar is being called into question. The answer is clear, on the current track our debt presents more risk than ever before, and the US dollar, although secure for the next 5-10 years, will fall after that. Especially if a new currency replaces it.

In the scenario where a new currency replaces the US dollar, a couple things happen. First, we will not be able to run deficits like we do now, and we would likely have great difficulty borrowing at the level of 90% GDP. We will have to pay higher interest rates, increasing its share of the federal budget crowding out spending on defense, healthcare, education, social security, etc. In short, we will have a much lower credit limit. Basically a death sentence for our economy and our way of life. There are numerous examples of empires of the past, and countries in the modern era falling deep and hard in this situation.

No more aircraft carriers, no more troops abroad, and no more subsidized healthcare for anyone at home. Everything else that we want to do as a nation to protect life, liberty, and the pursuit of happiness would be difficult or impossible to do. It would take years to recover and by then who knows what the world will look like. China and Russia may be running the show by then. Countries that have relied on our protection will start arming themselves, possibly with nuclear weapons to deter aggression. Dictators and other authoritarian regimes would seize the opportunity and gain power and influence in the world. The power vacuum would be immense and it will put the entire world in great danger.

This is not an economic issue. It is a national security issue and an existential threat to our way of life. My generation does not want to pay for your mistakes. And the great nation we became after World War 2 will be squandered thanks to the ineptitude and cowardice of the American government, and the inability of the American people to do their civic duty and elect officials with the capacity to make the hard choices.

National Debt

The Problem
The government intends to spend $3.83 trillion in 2011, that would have a deficit over $1.3 trillion. About $2.4 trillion comes from mandatory spending programs (Social Security, Medicare, Medicaid, Unemployment benefits, and interest on the debt. That rises about 5-15% every year. So about half of our spending is on old people.

The discretionary spending, what everyone likes to talk about, is $1.4 trillion ($650 billion is defense). It increased 13% in 2010 and will increase again in 2011. Obama proposes freezing part of that amount AFTER 2011. It is not even a drop in the bucket, it is a drop in the dolphin tank.

Past few years the feds have had between $2.4 and $2.6 trillion in revenue. To balance the budget we would need to cut spending (from Obama's plan) by $1.3 trillion. Not easy.

How do we balance the budget?
Well if it was just out discretionary spending alone, all we really need to do is cut around $1.1 or $1.3 trillion from that to get down to the revenue level. Wait, that would mean cutting defense by 90%. Not a good idea. What if we raise more revenue? Overall tax revenues would have to be increased by 40%. Does that sound like a good idea to you? What kind of tax hikes would be required for that? We would turn into Sweden or France with their 50% tax rates, and not just for rich people mind you.

What about economic growth to push up revenues? That has always been done through tax cuts, but even then the economy would have to expand dramatically for a while for us to catch up to what we owe. We will never be able to catch up to the skyrocketing costs of social security and medicare alone in the next twenty years.

What if we get rid of the old people? Euthanasia would certainly solve the problem but its not really a popular option. Wait, raising the retirement age is probably a better option, more humane, and cheaper than the roving death squads needed for the first option. Life Expectancy in 1945 was 60, retirement age was 63. Now its around 80 years, but retirement is 65 or 67 I believe. So really Social Security was never meant to provide income for people for more than 5-10 years really. If only all that smoking, red meat, and dangerous toys had thinned the heard.

As someone who will be paying into Social Security for the next thirty to forty years, and will likely have to be part of the generation that pays off the $12 trillion debt, these aren't policy choices, they are necessary.

Forget what Republicans and Democrats say about discretionary spending cuts and economic growth to push up tax revenue. Until we can make the really hard decisions we are fixing for a FALL in probably 10-20 years. A Great Depression and a likely fall of us as a Global Power. Without us there will be war in numerous places across the globe. Tyrants will seize the opportunity of a now fallen US.

This country will have to accept the fact that the federal government was not meant to be involved in education, housing, banks, healthcare, and unemployment payouts. In the past sixty years we have gone far beyond the original intent of the founders, stretching the Constitution to the breaking point. It has had its consequences.

As a country we are getting weaker every year while potential rivals China and India appear to be growing. The power gap between us and other world powers is shrinking. We need to accept the fact that we will not be the dominating superpower we have been over the past twenty years. We should aim to be #1 for as long as possible, but to do that we need to get our own house in order first. Until then, I believe our time at the top is very short.