America's Troubled Economy

Insanity has been famously described as doing the same thing over and over again, but expecting a different result each time.  The pattern of massive government spending, heavy Washington control, and cash handouts to politically connected ventures has been repeated for four years, with the same dismal results each time.  Retail spending remains in the doldrums, manufacturing languishes, and home prices continue at their low level.

Most devastatingly, unemployment remains at near-depression levels.  Both the number of unemployed persons, at 12.7 million, and the unemployment rate, at 8.2%, remain unacceptably high. The number of long-term unemployed (those jobless for 27 weeks and over) rose from 5.1 to 5.4 million, accounting for a deeply troubling 42.8% of the unemployed. The number of those forced to work only part time edged up to 8.1 million. There are also 830,000 discouraged workers, and many others who remain uncounted.On the other hand, since January 2008, the federal government’s payroll has skyrocketed by 11.4%.  With a near-depression economy, there are no funds to pay for all those extra government jobs, and no tangible programs or results to justify the hires.

Other economic indicators are equally troubling. Since 2007, inflation-adjusted family income fell 7.7%, and the decline in family median net worth has dropped 38.8%.  No improvement is in sight. Recent college graduates, whose consumer habits and needs can normally spark the economy, are now a drag on it due to heavy tuition indebtedness, at a stunning $904 billion, a $30 billion jump since the last quarter.  It’s so high that it exceeds America’s massive credit card debt.

The future currently holds no immediate hope of improvement.  Stocks are expected to sharply drop this fall.  Most worrisome of all is the looming threat of “taxmageddon,” the combination of the expiration of the Bush tax cuts and the implementation of 5 of the 18 new tax hikes from the President’s Health Care Act.  These two factors will draw almost $500 billion out of the private sector.

The Heritage Foundation  breaks down the increase on individuals as follows:  for families in general, a $4,138 increase; baby boomers, $4,223; low income workers, $1,207; millenials, $1,099;  and retirees, $857.  The burden falls primarily on the already hard-hit middle class, since the expiring Bush Tax Cuts provided 60% of its benefits on them and low-income taxpayers. Many analysts believe that the reluctance of businesses to hire now is a reflection of their concern over the predicted economic downturn from “taxmageddon.”

The reason the economy hasn’t improved over the past several years is clear.  Washington’s overspending—which benefits incumbents and not the nation or its citizens—remains unabated.  Even worse, bureaucratic meddling in the private sector, which prompted the Great Recession in the first place, continues to prevent it from recovering.

Governmental intervention in the housing market in the1977 Community Reinvestment Act forced vast numbers of unsafe mortgages on financial institutions. Decades later, President Clinton pressured Fannie Mae to increase its ratio of unsafe loans. The inevitable result of extensive mortgage failure held by these large institutions prompted the Great Recession.

Rather than pull back from high taxes and intrusive regulation, Washington continued and enhanced the very attitude that prompted the recession in the first place. Decisions were and are being made based on politics, not practicality.

Bailouts and “stimulus” programs have left the taxpayers deeply in debt, with nothing to show for it.   Unlike President Roosevelt’s New Deal, which failed to end the Depression but at least produced roads, buildings, parks, and other “brick & mortar” projects, there are no tangible results.  In fact, the depression-era arms buildup that did eventually put the nation back to work has been replaced by budgetary policies that cut planned funding for the military.

Our federal, state and local elected officials use your tax dollars as a campaign piggy bank for the benefit of their own re-election bids, offering everything to everybody regardless of whether it helps or hurts the national interest.  Heavy handed Washington control, and the redistribution of collected revenue, particularly from middle income taxpayers, is bankrupting the USA

Misguided City Hall

The real crises facing The Bronx, and New York City as a whole, remain unaddressed as Mayor Bloomberg obsesses over his pet peeves.

   Over the past several years, it has become apparent that City Hall has lost its way. The chief problem is the Mayor’s odd interpretation of his duties.  In a recent radio interview, he stated that if “helping people stay healthy isn’t the duty of government, I don’t know what government is for.”  Memo to the Mayor:  helping people stay healthy is the duty of physicians, not politicians. 

   Budgetary concerns may cause the closing of firehouses (Once again, the Mayor is attacking the City Island station.). Crime and taxes are both rising. Our Bronx has the highest unemployment rate in the state, at 14.1%, while the U.S. endures an 8.2%.  Half of our 8^th graders fail statewide science tests.  The Cross Bronx, The Bruckner, and many of our subways stations are in disrepair.  Our bus system is woefully inadequate. The once excellent express bus system is decaying.  

   Bloomberg’s recent attempt to regulate the size of soft drinks has turned his administration into a national laughingstock, criticized by Democrats and Republicans alike.  The Mayor seeks to impose his soda regulations without even seeking the input of the City Council.

   His clear lack of understanding of what makes NYC tick has led to horrible results.  During the 2010 snowstorm, his administration’s transportation chief ordered the plowing of a Manhattan bike lane before many key roadways were cleared; at least one death was attributed to the inability of an ambulance to make a timely arrival.

   The Mayor’s attempt to impose his personal preferences on the public is clearly contemptuous of your intelligence.  In essence, he believes that you are just too ignorant to function as an adult and make your own decisions.  It also reeks of elitism.  Put down that Coca-Cola and spend your money on a decent bottle of expensive wine, the way any decent billionaire does!

   PJ Media recently asked, “If government bureaucrats can ban the types of fast food outlets available, manipulate the size and types of drinks we consume, and regulate every aspect of food preparation, what couldn’t they attempt to ban?...Will Bloomberg next propose a measure limiting red meat intake…Will the nanny state do-gooders ban hot dogs, or force Americans to take part in government exercise programs…?”

   Education joins nutrition as a forum for the imposition of this Administration’s bizarre attitude.  Despite parental outrage over the attempt by a Coney Island principal to ban the signing of “I’m Proud to be an American” at a public school event, neither the Mayor nor his Education Chancellor have seen fit to act.

   Perhaps, to a globe-trotting billionaire who is sure he is so much better than you, patriotism, like soft drinks, is just too old fashioned, and too American, to be tolerated.

The Moribund US Space Program

     New York State once had a thriving space industry. The Famed “Lunar Module” which allowed the Apollo astronauts to land on the moon was built on Long Island. The giant Saturn 5 rocket’s engines were designed in Buffalo. But those facilities are long gone. Now, many other states across the nation are also losing jobs and revenue as Washington cuts funding for “The Final Frontier.”

     However, the recent success of a private company in sending a supply capsule to the International Space Station may herald a new way that America can reach orbital heights in a more affordable manner. The recent mission of the SpaceX’s Dragon space craft, launched by the corporation’s own rocket, Falcon 9, demonstrates that a private/NASA partnership can work.

     The nation’s credibility had been severely reduced when the Shuttle era ended with no replacement capable of the activities necessary to maintain a strong presence in space.  Washington is currently incapable (until 2017 at the earliest) of putting an astronaut into space and must pay Moscow to ferry astronauts to orbit.  China also can send people into space; indeed, it has embarked on an exceptionally ambitious program that includes its own orbiting space station and trips to the Moon.

     Commentator Charles Krauthammer notes that while in the future private companies will have a vigorous portion of space activity, that future remains decades away, and “In the interim, space will be owned by Russia and China.”

     Democrats in Congress during the Bush (43) administration began to grumble that America’s future plans would spend funds they felt should be committed to domestic programs. President Obama acted on those concerns after taking office. The vast sums he spent on stimulus programs included nothing for NASA. Republicans have failed to vigorously oppose the lack of White House support, and have not made the matter a significant issue.  Indeed, they have at times been less than supportive of NASA’s needs.

     Both Presidents Bush (43) and Obama gave more verbal than fiscal support to the space program, (which even when “fully funded” receives only about 1/2 of 1% of the federal budget.)  but the recent cuts under the current administration have been the most severe. A space research advocacy publication, Mars Daily, notes that Russia commits a higher portion of its GDP to space industry than the U.S.

     Allowing the private sector to boldly go where only governments had gone before began with President Reagan’s 1984 signing of the Commercial Space Launch Act.  It was supplemented in 1990 when President Bush (41) signed the Launch Services Purchase Act. Russia has also seen private ventures interact with government space efforts.

     The goal is to use the private sector to provide space services in a less costly manner than a government-run program could.  NASA wants to outsource to the private sector all cargo and crew missions to the Space Station by 2017. 

     The space agency states that “NASA is helping commercial partners develop and demonstrate their own cargo space transportation capabilities to serve the U.S. Government and other potential customers.  The companies lead and direct their own efforts, with NASA providing technical and financial assistance.”

    Uncertainty over a number of international legal issues may chill corporate efforts.  The “International Code of Conduct for Outer Space Activities” may impose unforeseen burdens on private, military and civilian efforts. The Obama Administration favors the Code, but Congress has expressed concern over potential issues.

    It remains to be seen whether the nation founded by explorers and pioneers will protect its future prosperity by devoting the resources necessary to continue their legacy. 

Threats to Free Speech

   The future of American free speech on the internet will be the focus of a key conference this coming December.  The meeting will not take place in Washington, or anywhere in the U.S.A.  It will not include members of the public, the press, or even any elected officials other than a White House representative. 

   If that doesn’t frighten you enough, then consider this:  the most enthusiastic proponents of the event are the Chinese and the Russians. They, along with other members of the United Nations, will convene at the World Conference on International Telecommunications to establish a cyberspace regulatory scheme. The ability to engage in uncensored political speech is on the table.

   Some nations, especially China, already engage in internet censorship. Unfortunately, Secretary  Clinton’s State Department has failed to adequately combat internet censorship, according to the Global Internet Freedom Consortium.  In fact, although Congress provided $50 million in funding to the State Department for this fight, little has been done. 

   United Nations Secretary General Ban Ki-Moon has echoed those who believe in at least some censorship by stating that “considering the immediate impact of information in the digital world, journalists must be much more responsible in their work to ensure accuracy, balance and fairness, and not use the media to disseminate hatred or conflict, or incite violence.”  Unfortunately, the definitions of “accuracy, balance, fairness and inciting” would be left to the same rulers who internet writers may be opposing.  The fact is, both governments and other powerful institutions have increasingly killed, arrested or censored internet journalists. 

   China, Russia, Tajikistan and Uzbekistan are introducing a resolution at the U.N. to establish an internet “governance” concept that would insert censorship into this most democratic of media. 

   Observer Raven Clabough writes that “Last year, Russian Prime Minister Vladimir Putin met with the head of the [UN’s] International Telecommunications Union [ITU] and declared ‘international control over the internet’ to be vital.  Former UN Ambassador David Gross contends that “in the…[December] conference…countries such as China and Russia will once again attempt to expand the authority of the ITU.”

   Concern has been mounting in Washington about the Obama Administration’s position on the issue.  The major shift could be seen in the White House’s acceptance of the innocuous sounding but worrisome Anti-Counterfeiting Trade Agreement, or “ACTA.”   The general purpose of the measure is to establish global standards and an international legal framework to enforce intellectual property rights, copyright laws, etc., a goal that is clearly in American interest. But both the means it uses to do so, and the manner in which the President imposed its provisions, has caused extraordinary concern to civil libertarians and constitutional traditionalists.

   Under the treaty, signed by President Obama last October, foreign interests are entitled to demand that internet service providers (ISPs) remove web content within the United States without any court supervision.  This sets a precedent for authoritarian nations to demand that critical political comments be removed from U.S. websites in future treaties. 

   Equally as worrisome is the manner in which Washington “ratified” the measure.  The treaty has been presented by the White House as an “executive agreement,” circumventing any interaction with Congress.

   Not to be outdone in the realm of acting irresponsibly, our own New York State Senate is considering a bill (deceptively named the “Internet Protection Act”) introduced by State Senator Tom O’Mara (R-Elmira) that would provide some control over the internet under the guise of preventing cyber-bullying. 

   The rising threat of governmental censorship and lawsuits is threatening the internet’s freedom.  Legitimate concerns such as copyright protections can be addressed by simpler cooperative efforts on a state to state level.   Last week, on Memorial Day, we honored those who gave their lives to protect our freedom and our Constitution from foreign armies.  Will we now surrender them to foreign bureaucrats?

ABM Protection Needed

     The advanced military programs of irrational and terrorist states such as Iran and North Korea have made the need for defense against nuclear-armed missiles more crucial than ever.  In a recently published interview, NATO Secretary General Ramussen recently noted that thirty nations have acquired or are seeking to acquire ballistic missile technology.

    Recent technological achievements have made an effective deterrent against these weapons a reality. However, political and diplomatic obstacles stand in the way of developing a shield protecting the US and its allies.

    The House of Representatives included $100 million dollars for anti ballistic missile (ABM) development in its version of the 2013 Defense Appropriations Bill in May. The funds would be used to develop a missile defense site on America’s East Coast.  (Two other sites exist in Alaska and California.)  The new facility could become operational by 2015, employing 20 ground-based interceptors at a total cost of approximately $2 billion. However, it currently appears that neither the Senate nor the White House will go along.

    The Obama Administration and Congressional Democrats have been reluctant to implement missile defense. Rep. Jared Polis (D-Colo.) is seeking to defund the ABM program and redirect the funds to domestic, nonmilitary programs.  The President’s opposition has been longstanding.  In 2001, then-State Senator Obama stated that he was opposed to missile defense; as a candidate for president, he pledged to eliminate funding for it. He continues to advocate the slashing of funding and implementation plans for ABM systems, and is committed to completely prevent any space-related ABM plans.

    The opposition has resulted in significant embarrassment for the White House.  Plans to move ahead with limited ABM protection against an Iranian threat to Europe were a successful product of extensive negotiations between the Bush Administration and Eastern Europe.  Former Soviet satellites in Eastern Europe, where key ABM elements would be based, had to endure a war of words from Moscow, which has persistently opposed any NATO self-protection measures.  

   However, President Obama proclaimed on Sept. 17, 2009, that he was unilaterally stopping the plan. The date he announced this was the 70^th anniversary of the Soviet invasion of Poland. The President’s decision infuriated Warsaw’s leaders, who had to expend significant political capital to gain approval from their voters.  The resulting loss of Eastern Europe’s trust in the White House directly led to the Czech Republic’s withdrawal from related agreements.

   Thus far, Moscow has not been able to dissuade NATO from support for ABM protection.  In an interesting development, Bloomberg News recently reported that even France’s new socialist-minded President Francois Hollande has solidly backed missile defense.

   The second major White House embarrassment came in March.  At a meeting in South Korea at a global security summit, believing the microphones were off, Mr. Obama requested that Moscow delay discussions until after the presidential elections, when he would have “more flexibility.”

   Despite its opposition to American ABM efforts, Moscow has long been a leader in antimissile efforts. In 1962, the USSR initiated construction of the globe’s first operational ABM system, and engaged in a major upgrade in the late1970’s.  Its effectiveness, however, was not considered especially high, leading to Moscow’s fears that superior American technology would provide the U.S. with an advantage.  The Kremlin’s opposition has been fierce. The Associated Press reports that Russia’s top military officer, Chief of General Staff Nikolai Makarov threatened a pre-emptive strike on NATO missile defense facilities in Eastern Europe if they are built. 

   The U.S. and its allies urgently need protection from the actions of rogue nations like Iran and North Korea, as well as the more established threats from Russia and China. 

    COMACTA extends its sincere appreciation to the heroic current and former members of our armed forces on this Memorial Day, and to the families of those gave their lives in defense of our nation.  

Taxmeggedon

 American taxpayers are at the precipice of exceptionally high tax increases, scheduled to begin in January.  Those hikes signal very bad news for anyone seeking employment, as well as for families already struggling to make ends meet.

     34% of the increases are due to the expiring Bush Tax Cuts, 25% from the expiration of the payroll tax cut, and the remainder from various provisions of President Obama’s health care reforms.  Top rates will climb to 39.6% from 35%, the child tax credit would shrink, the capital gains tax would soar to 20% from 15%, (which could play the major role in a harsh employment picture) and the estate tax would affect more families, as noted in Heritage/CRS reports.

     There is some level of agreement that those making less than $200,000 should be shielded from some increases.  However, the implementation of any increase in this era of rampant unemployment, underemployment, and long term unemployment will affect taxpayers across the board. 

    The ongoing recession and the continued unemployment crisis make any tax hike a very risky business.  In a Wall Street Journal Article, Harvard economics professor Martin Feldstein noted that “Historians and economists who’ve studied the 1930s conclude that the tax increases passed during that decade derailed the recovery and slowed the decline in unemployment.  That was true of the 1935 tax on corporate earnings and of the 1937 introduction of the payroll tax.  Japan did the same destructive thing by raising the value-added tax rate.”

    Advocates for higher taxes point to the astounding federal deficit, which on May 10 stood at $15,678,869,907,107.48 (according to the National Debt Clock.org) as a reason to raise taxes.  Decades of spending more than revenue taken is, of course, responsible for the dramatic figure, and the last three years have overwhelmingly accelerated that practice.  The deficit in 2008, the last of the prior administration, was $425.7 billion; during the current administration, it has averaged $1.185 trillion per year. 

     Government spending has increased 21.4%, representing a 24% share of the whole U.S. economy, far higher than the 20.7% historical average. 

    Would higher taxes actually reduce the deficit?  An NPR study indicates that it could result in a 17.7% decrease.  But experience demonstrates that the detrimental effect on the economy would offset even that meager impact.  

   As a Heritage report noted, “The Clinton tax hikes slowed economic growth during that decade, despite the common assumption that it was a period of rapid expansion.  It was not until a tax cut later in the decade that growth took off.  Lower rates paved the way for faster growth.  The 2003 Bush tax cuts helped the economy recover from a recession and put in on a stronger footing…”  The argument that tax increases reduce budget deficits lacks substantiation.  A Hoover Institution study noted that as revenues increase, so does spending.

   For job seekers, this is particularly worrisome.  The past three years of sharply higher government spending have seen dramatically higher unemployment rates, and worse, dramatically higher long-term unemployment.  Oddly, unlike the “New Deal” spending in the 1930s, the funds spent over the past three years have produced almost no tangible products, such as the roads, buildings and other large projects under President Roosevelt. 

   History reveals that lowering taxes, as occurred under presidents Kennedy, Reagan, and G.W. Bush, allows unemployment rates to go down, as described by the Tax Foundation.

    Higher tax rates simply cannot substitute for ending irresponsible government spending.

Should the US negotiate with the Taliban?

    Should the United States negotiate with the Afghan faction that allowed al Qaeda to mount its 9/11 offensive against the United States? 

     During his recent trip to Afghanistan, President Obama stated that “my administration has been in direct discussions with the Taliban.”  He believes that the conflict can only be ended through “reconciliation,”   and has publicly proclaimed a 2014 date for ending U.S. combat operations.  It is a stunning departure from America’s long-standing policy, specifically decreed in a State Department document issued before the 9/11 attack, to “Make no concession to terrorists and to strike no deals.”  It is a tradition that goes back to the presidency of Thomas Jefferson, who used the scarce resource of a nation still in its infancy to protect Americans from the Barbary Pirates.

     The Taliban has opened a political office in Qatar.  True to form, its leadership group, the Quetta Shura, been reluctant to include the current Afghan national government in discussions.  In fact, it has been linked to last month’s assassination of former president Burhanuddin Rabbani in Kabul.  The Taliban’s concept of negotiation appears to be merely to reduce confrontation until the U.S. ceases fighting in 2014.  According to the National Intelligence Estimate, the pro-terrorist group is confident that they will retake complete power within several years.  A Brookings Institute study recently concluded the Taliban considers Washington’s willingness to negotiate as a sign of weakness, and that their re-conquest of Afghanistan is inevitable.

     Despite his current support of the Administration’s policy, Vice President Biden, while still a senator in 2007, noted that “The Taliban is back—keeping much of Afghanistan ungovernable.”

     Legal author Shannon Wiley questions whether the Taliban is even Afghani.  She notes that many are actually Pakistani members of the Pashtun tribe.  “Nevertheless,” she writes, “these men now claim Afghanistan as their own, and seek to impose their interpretation of Islamic law upon its people.” 

     There is a serious question of the morality of negotiating with the sponsors of 9/11 and other terrorist attacks across the globe. The Brooking Institute study found that “After ten plus years, …the Taliban leadership has not changed.  They are not peacemakers.  They are not ready to abandon al Qaeda.”

     Moral outrage to negotiating with the Taliban is due to more than its support of worldwide terrorism.  It also comes from its hellish treatment of the people of Afghanistan while in power from 1996 to 2001.  Its extreme tyranny included not only the complete absence of any semblance of decency and freedom, but the virtual enslavement of women.  The United Nations found it to be “The most misogynist entity in the world.”

    Prior to the Taliban’s regime, Afghani women had made great progress. In 1977, for example, 15% of their nation’s legislators were female.  In the 1990’s, 70% of school teachers, 50% of government workers, and 40% of doctors in Kabul were female.  After the Taliban took over, women were banished from the work force, forbidden to attend school, prohibited to leave their homes unless accompanied by a close male relative, and were not allowed to be treated by male physicians (a virtual death decree, since there were almost no female doctors permitted to practice.)

    Americans are understandably weary from the long Afghan war.  But the Administration’s virtual surrender to the Taliban will result in nothing less than the need to return to that nation again after the Taliban returns and resumes its support of worldwide terrorism and the oppression of the Afghan people.