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The Common-Sense Ramblings of a Hispanic Conservative...

Ideology vs. Reality

posted Nov 9, 2013, 3:34 PM by Angelica Wolf   [ updated Nov 9, 2013, 3:43 PM ]

Liberals tend to believe that certain social or political issues are so morally imperative that the achievement of the goal is all-important, regardless of the means used to achieve it. A good example of this is The Affordable Care Act, better known as ObamaCare. For decades, liberals have pushed for universal health care and have made impassioned speeches on how healthcare is a basic human right. In the 1990's, the Clintons took a hard run at it with "HillaryCare" but fell short. However, this doesn't mean that they gave up on the idea. For years, various liberal special interest groups, think tanks, insurance interests, etc. have busily worked on crafting the 2000-plus pages of regulation that make up the new law. It has been waiting in the wings for the right moment to be pushed through by a weak or willing Congress and Executive branch. With the election of Barack Obama in 2008, that moment had arrived.

Although no one in Congress had thoroughly read or even understood the bill, liberal Democrats rushed to pass it into law and get it signed by a willing President. Though polls showed that more than 70% of Americans did not want the law passed and the fact that the law did not receive a single Republican vote, Democrats gladly foisted it upon the people and took control of one-sixth of the US economy. The tactics they used to accomplish this goal give us deep insight into the liberal moral perspective and I think, highlight a big difference between liberal and conservative ideology. 

Throughout the public-relations war to try and sell the American people on ObamaCare, none less the President himself repeatedly stated that no one would be required to give up their existing health plan, their doctor, pay additional taxes, etc. All these talking points were parroted by His staff, Congressional Democrats, media liberals and others. They tried desperately to convince the citizenry that this law wouldn't hurt anyone indeed, it would help. They did this despite the fact that they KNEW what they were saying was untrue. When that didn't work and public opinion remained strongly against the law, they passed it anyway.

We now know that millions of Americans are losing their existing plans. They don't meet the basic requirements of the new healthcare law. Recently, it has come to light that those proposing the new law knew in advance that up to 67% of existing plans would not meet the requirements of the new law and would have to be terminated. 

Many people are losing their doctors as physicians stop taking Medicare. This is because the new law takes half-trillion dollars from Medicare to fund itself. They achieve this by arbitrarily reducing physician reimbursements for care provided under Medicare. As a result, many doctors are refusing to take Medicare patients any longer and people are losing their long-term physician relationship.

The law itself places a new tax on medical devices. Every time someone as a procedure requiring a medical device, the cost is passed on to the insurance company. These costs are reflected in the higher costs and lower reimbursements of the plans being offered through the new insurance exchanges. Early evidence is showing that most of the new participants are being faced with either shockingly higher premiums or much higher out-of-pocket costs for the new health plans. If people choose to opt out, they must pay a tax for not participating.

These are just a few examples of how the Obama administration and it's proxies deliberately deceived the American people to achieve a goal they felt was a moral imperative. There are many, many more. However, it does highlight an important point in understanding social liberalism. It is a belief system that embraces the idea that "the end justifies the means." In their worldview, lying and deception are perfectly acceptable in the pursuit of a higher moral goal. 

I believe this also provides illumination on why conservatives often seem to have such a difficult time understanding liberals including President Obama. They want to believe that he is somehow unaware that he is lying or that he simply misspeaks. In my view, that is dangerously naive. In the liberal mind, a lie may be a bad thing. However, a lie in the service of the greater good is a useful tool.


©2013, Angelica Wolf

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The Nature of Government

posted Sep 9, 2012, 2:06 PM by Angelica Wolf   [ updated Nov 9, 2013, 3:37 PM ]

As far as government being our provider and caretaker, I believe our founders would have said that government is a necessary evil and therefore it should be strictly limited. This is why our Constitution spends less time talking about our rights but instead spells out exactly what government can do and especially it's limitations. They understood that it is the nature of government to grow and become more intrusive in the lives of those it is supposed to serve. I believe they also understood that power always seeks more power. People in Congress believe they need to "fix" things. Worse, some actually believe they can. 

When you speak about Waste in government, you are beginning to understand its true nature. It cannot be efficient. Those who hold the purse strings will never value the money as much as those it is being taken from simply because they did not earn it. This is basic human nature. We do not value things that are free. No matter how much money you throw at a social problem, it will never change human nature. As Ronald Reagan once famously said, "Liberals fought the war on poverty... and they lost." When government talks about providing free healthcare, free education, free food, etc. they're not being honest. None of these things exist for free. They are taking the hard work and diligent effort of one individual and giving it to another. To some degree, most of us can agree on some redistribution of wealth. We need roads, schools, hospitals, technological development, a strong military, etc. to keep our union strong. However, in an effort to grow itself, government is becoming the universal feeding trough of the masses. Every country that has tried this has gone bankrupt. When people are seeing most of their wealth confiscated and given to others who didn't earn it, they simply stop producing or they leave. Either way, we lose. As Vladimir Lenin once wrote, "The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation."

We would always do well to remember that our goal should be to keep government as small and unobtrusive as possible. If we keep on promising everything to everybody to get votes, the takers will eventually outnumber the producers. Alexander Tyler, a history professor at University of Edinborough in his essay The Fall of The Athenian Republic wrote, "A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship." (emphasis mine) Tyler wrote those words in 1787. Our founders wisely feared what government could become if human nature was left unchecked.

© 2011, Angelica Wolf

 

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The "70" Percent

posted Feb 4, 2012, 11:31 AM by Angelica Wolf   [ updated Feb 6, 2012, 5:19 PM ]

Recently, the news has been filled with those in this country who claim they represent the 99% vs. the 1%. They say that they are crying out against the tyranny of the rich over the poor, management over labor, the haves over the have-nots, etc. Some political operatives have tried to quickly align themselves with these disaffected individuals by claiming that they are their “voice” in Washington, DC so as to increase their party’s power base. The question is, are these claims true? Is the American public really so divided politically, socially and economically?

 

Over the past couple of decades, it seems both parties have moved further to the extreme right or the extreme left while giving very little thought to the broad base of the American public. I believe this effect is largely the result of special interest money corrupting the political process. Recent polls have found that most Americans favor smaller vs. larger government, less government spending, less intervention in both social and business areas, less foreign intervention and less foreign aid and finally, a focus on common over special interests.

 

Most Americans feel government has grown too large and the demands of these huge bureaucracies have become ridiculously onerous. As the federal government continues to grow (it is the one sector of the economy to experience a boom since 2008) states and both large and small businesses find it increasingly difficult to function. Local school boards chafe under the government mandates placed upon them by unrestrained federal power. State healthcare programs (Medicaid) are pathetically underfunded from the feds and so the indigent sick suffer for lack of care. Healthcare-related businesses find that reimbursement rates don’t even come close to covering costs and many hospitals, clinics and doctor’s offices have shut down because they can no longer operate at a profit.  Big corporations find the regulations foisted upon them by out-of-control and out-of-touch agencies make it more profitable to move business (and jobs) overseas. Small businesses find they cannot even afford to comply with the massive regulation associated with these new laws (e.g. Dodd-Frank) and simply close up shop.

 

Government spending is quickly undermining national security and sovereignty because of the massive amounts of borrowing required to support its growth. Because the US Dollar has held the status of a global reserve currency, our government has been able to borrow money very cheaply for decades. When money is cheap, it is easy to make interest payments on the debt. However, anyone who has ever had an adjustable-rate mortgage knows that when the interest rate goes up, the old debt can quickly become unaffordable. When the government runs a deficit, it means they borrowed the money from somewhere else to pay for everything in the budget. In 2011, the federal government took in $2.3 trillion but it spent $3.6 trillion. This means that they borrowed $1.3 trillion to make up the difference. In order to get this money from our tax revenue, they would have had to increase our taxes by over 50%! Of course, no one would set still for this so instead of living on what they brought in, they simply borrowed it. One day, that debt has to be paid off and in the meantime interest has to be paid to the lender (i.e. China, Saudi Arabia, Brazil, etc.).  As of the end of 2011, our national debt is over $15 trillion. We are currently experiencing historically low interest rates so the interest payments are affordable. However, even a 1% increase in the interest rate would cost taxpayers an additional $150 billion each year. That is more than $500 for every man, woman and child in the US! If we lose our status as a global reserve currency, interest rates will spike and we will have no choice but to default. Hello Greece, here we come.

 

Our leaders have failed the nation by involving us in foreign entanglements where we have no national interest and no clear purpose or mission. After more than a decade in Iraq and Afghanistan, we are pulling out abruptly and already we are watching the very forces we opposed step in to fill the vacuum. After countless lives lost, injuries to our soldiers, tens of billions of dollars spent, etc., Iran is benefiting by increasing their sphere of influence in Iraq, the Taliban is already in resurgence in Afghanistan and we have further alienated ourselves from the Arab world.

 

Closer to home, we have allowed massive illegal arms shipments into Mexico which have not only been used in the murder of our own border patrol agents but have resulted in the deaths of countless Mexican nationals. The head of the justice department, Eric Holder claims no responsibility even though documents show he had knowledge of the practice while it was occurring. This type of failed leadership continues to underscore one of the biggest problems facing our country – everyone wants to be in charge but nobody wants any responsibility.

 

We have continued to send billions of dollars overseas to buy influence in foreign countries but it has resulted instead in enriching many of the very people who wish to destroy our nation and western culture. A good example of this is Muammar Qaddafi. At the time of his death, it is estimated that he had nearly $200 billion in assets invested worldwide, much of it money from US foreign aid and oil profits from US purchases. Our long-term financial support of Egypt and its leader Hosni Mubarak ended with the popular uprising “The Arab Spring” and he has been replaced by the much more radicalized Muslim Brotherhood. While there is certainly a place for foreign aid, it makes sense that it should be more humanitarian and to support open, democratic governments and less to buy influence of petty dictators.

 

Special interests (both foreign and domestic) have largely taken over the political process in Washington because of the vast amounts of money they spend in promoting the election of one politician or another. One of the largest lobbying efforts in DC represents the Saudi royal family. Flush with petrodollars, they throw money around like its going out of style. The average American finds it disgusting to watch President Bush walking along holding hands with the king or President Obama bowing to him. As our second largest debt holder (behind China) the influence they wield in our government cannot be understated. The Saudi government continues to finance the radicalization of Muslims through the literally thousands of madrasas they have established, through indirect financing of terrorism (e.g. Muslim charities funneling $ directly to terrorists), etc. Most of the 9/11 hijackers were from Saudi Arabia but where was the great outcry of our government against the Royal family? All that influence bought a lot of silence from our elected officials.

 

Domestic special interests have shown that their financial contributions can also buy direct legislative support in Washington. Recently, the National Labor Relations Board sued Boeing for trying to open a new manufacturing plant in South Carolina, a right-to-work state. This was clearly a ploy by the current administration to support some of their largest campaign donors, the labor unions. The administration has also held up the Keystone XL pipeline project (which would create an estimated 20,000 high-paying jobs in the US) until after the 2012 election cycle as a nod to the environmental lobbies. This type of corruption in both parties has become standard operating procedure.

 

Washington and the mainstream news media continue to promote the idea that we are a very polar country. They say we are a country of conservative vs. liberal, right vs. left, rich vs. poor, 99% vs. 1%, etc. I think this is one of the biggest lies in history. On June 16, 1858, Abraham Lincoln, upon receiving the Republican Party’s nomination for US Senator of Illinois, gave a speech in which he quoted Jesus as saying “A house divided against itself cannot stand.” Slowly, over decades we have allowed the parties (GOP and DEM) and special interests to divide us into smaller and weaker groups. There may indeed be 15% of the population at the far-left and far-right ends of the political spectrum. It’s time for the 70% of us in the middle to take back our country before it’s too late.


© 2011, Angelica Wolf

 

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Whatever Happened To Reason?

posted Dec 18, 2011, 5:17 PM by Angelica Wolf   [ updated Dec 18, 2011, 6:10 PM ]

The Sharon Statement

Adopted by the Young Americans for Freedom Conference at Sharon, Conn., September 11, 1960

IN THIS TIME of moral and political crises, it is the responsibility of the youth of America to affirm certain eternal truths

WE, as young conservatives believe:

THAT foremost among the transcendent values is the individual's use of his God-given free will, whence derives his right to be free from the restrictions of arbitrary force;

THAT liberty is indivisible, and that political freedom cannot long exist without economic freedom;

THAT the purpose of government is to protect those freedoms through the preservation of internal order, the provision of national defense, and the administration of justice;

THAT when government ventures beyond these rightful functions, it accumulates power, which tends to diminish order and liberty;

THAT the Constitution of the United States is the best arrangement yet devised for empowering government to fulfill its proper role, while restraining it from the concentration and abuse of power;

THAT the genius of the Constitution - the division of powers - is summed up in the clause that reserves primacy to the several states, or to the people in those spheres not specifically delegated to the Federal government;

THAT the market economy, allocating resources by the free play of supply and demand, is the single economic system compatible with the requirements of personal freedom and constitutional government, and that it is at the same time the most productive supplier of human needs;

THAT when government interferes with the work of the market economy, it tends to reduce the moral and physical strength of the nation, that when it takes from one to bestow on another, it diminishes the incentive of the first, the integrity of the second, and the moral autonomy of both;

THAT we will be free only so long as the national sovereignty of the United States is secure; that history shows periods of freedom are rare, and can exist only when free citizens concertedly defend their rights against all enemies…

THAT the forces of international Communism are, at present, the greatest single threat to these liberties;

THAT the United States should stress victory over, rather than coexistence with this menace; and

THAT American foreign policy must be judged by this criterion: does it serve the just interests of the United States?

Website www.yaf.org

I find it interesting that today's youth are so busy trying to "Occupy" Wall Street and show their general dissatisfaction with the overall state of our government, political system and business environment yet they have had such a hard time clearly defining exactly what it is they stand for. The text above was submitted by Young Americans for Freedom, a group of college age conservatives in 1960, as a manifesto of what they believed was the limited role of government in the affairs of men and how when government exceeds its mandate, personal freedom, markets and even society itself suffer as a result.

Listening to the Occupy crowd struggle over the past couple of months to identify any common cause or purpose, it is hard not to compare the two groups and wonder - What has happened to reason and enlightenment over the last five decades? 

Today, students pay more than ever to obtain a college education. However, most of those interviewed by the press during the recent protests came off as ill-informed or moronic. Even those who could string a lucid sentence together often appeared to be promoting socialism, communism or anarchy as a viable alternative to democratic governance. Most of the protestors were college students taking time off from school to participate in civil disobedience and unrest and yet, they were promoting the failed ideologies of past generations rather than focusing on what is necessary to reform our current system.

The problems we face today are very real and very threatening. Our political system has been hijacked by an out of control Congress (that serves itself over the American people), activist judges (who legislate from the bench - strictly prohibited by the separation of powers in the Constitution) and an Executive branch that rules by fiat (through the use of Executive Orders) to go around the legitimate functions of our government. 

The young men and women of our colleges and universities have the opportunity to step up and show true leadership in this moment and instead the best they can come up with is a mangy rabble - disorganized, chaotic and  unable to even vocalize what is the nature of their discontent. The difference between them and their counterparts of yesteryear is truly disheartening. The institutions of higher learning in this country are failing these young men and women. Unless we see some real reform in education, the road ahead for this generation looks bleak indeed.


© 2011, Angelica Wolf

 

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Freedom vs. Anarchy

posted Nov 27, 2011, 8:01 AM by Angelica Wolf   [ updated Nov 28, 2011, 1:24 AM ]

In the last couple of months, we have all witnessed the spectacular protests being held under the "Occupy" movement. The movement is made up of disparate groups that have come together to protest what they feel is an unfair government that favors rich over poor, big business over labor and a host of other grievances. In fact, it is at times difficult to know what their real goals are, as interviews conducted with various protestors seem unable to clarify an overriding cause or objective. While they have had trouble putting into words what their goals are, we have been able to witness the actions of this crowd and from that we can glean what is at the core of the movement - anarchy.

Anarchy is defined* as:

1. Absence of any form of political authority.
2. Political disorder and confusion.
3. Absence of any cohesive principle, such as a common standard or purpose.

Over the past several decades, there has been a persistent effort in our country and throughout much of western culture to reject all authority. It started in earnest in the 1950's with the anti-establishment movement, accelerated through the Vietnam era and really took root in colleges and universities during the late 60's and early 70's. In 1966, Ronald Reagan, as then governor of California, gave a speech warning about how radicals were using colleges and universities to recruit young people to their cause. He quoted a California university professor as saying, "I think we agree that the revolution is necessary and that you don't conduct a revolution by attacking the strongest enemy first. You take care of your business at home first, then you move abroad. Thus we must make the university the home of the revolution." Since that time, there has been a consistent message of radicalization being poured into the minds of impressionable youth. 

When I attended school in the 1980's, these efforts were still somewhat marginal. Today, they are right out in the open and in your face. A prime example of this is the recent comments of a Suffolk University Law professor who said US soldiers were those who go to other lands to kill people. Never mind that our country's soldiers have freed more oppressed people than any other nation in history. Never mind that we saved Europe from Nazi domination. Forget about the fact that our military stopped the Soviets from spreading Communism throughout the free world and eventually, freed even those living under the hammer and sickle themselves. Never mind that western-style democracy has lifted more people out of poverty, ignorance and bitter infighting and increased the standard of living more than any other political ideology. It is a concerted effort to distort and rewrite history so as to take advantage of the ignorant and misinformed. But to what end?. Are we to believe that those who promote anarchy and a complete "throwing off" of government have no greater ambition than social justice? And how will they achieve that social justice they speak of? 

History has given us many clear examples of how these movements achieve their goals - at the end of a gun. The first thing they do is terminate all dissenting opinion with prejudice. All those who might be able to sway public opinion are marginalized, jailed and even murdered. The free press is dismantled and state-run media is installed in its place. This allows the new government to ensure a consistent message to the people - one which promotes the new government and leadership, of course. The armed forces must also be controlled, or else a military dictatorship may rise up and overthrow the new government. Individual freedoms are taken away one by one. The freedom of speech, the right to assemble, the right to own firearms, freedom of religious expression, the ability to move about freely - all gone in a short period of time. Soon, the government tells you what kind of work you must do, where and if you can go to school, where you must live, how much you can make, etc. Every aspect of your life becomes controlled by the state in order to ensure "Social Justice". Freedom becomes a thing of the past.

Today, our youth are taught that Freedom and Anarchy are the same thing. They are taught that freedom is being able to do whatever you want, whenever you want. But is this true freedom? What if I want to shoot my neighbor's dog because it sometimes barks at night? What if I want something you have and I am strong enough to take it? What if I don't want to participate in taking care of the nation's infrastructure and I simply refuse to pay taxes? What if I don't feel like hauling my trash to a proper place of disposal and instead just choose to dump it on the side of the road? What if I don't feel like obeying traffic laws? Is my ability to do whatever I want the true test of freedom?

I would submit that real freedom is liberty with responsibility. It involves understanding that every choice I make impacts others around me. It means I must temper my decisions with the knowledge that others will be affected and I must strive for a positive personal outcome that will not harm others. Anything less is short-sighted. If I harm you by my choices, you or someone else will do the same to me. Social order devolves into chaos. Only the strong can survive. The weak are preyed upon by the strong and moral leadership is replaced with schoolyard bullies. Individual liberties are lost and remain so until enough people rise up to throw off the brutal regime. Our founders understood this completely. In 1798, John Adams, in a speech to the military, warned "Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other." Benjamin Rush, one of the signers of the Declaration of Independence, said "...without virtue there can be no liberty, and liberty is the object and life of all republican governments." These men and many others understood that freedom can only flourish in a moral environment. We must be willing to rule our own passions and exercise self-control if we want a society that is just and truly free.

Liberty without responsibility is not freedom. It's called narcissism.

© 2011, Angelica Wolf

 

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Definition of Anarchy courtesy of "The Free Dictionary" by Farlex. http://www.thefreedictionary.com 

The Virtue Of Intolerance

posted Nov 20, 2011, 2:58 PM by Angelica Wolf   [ updated Nov 20, 2011, 4:25 PM ]

Over the past few decades, brave men and women have fought difficult and dangerous battles for freedom and equality in America. These include the civil rights movement, women’s liberation, gay rights, and more. Across our nation, average people have picked up the mantle of freedom and through non-violent expression challenged the status quo to advance the cause of human freedom. It is one of the characteristics of our great country that the majority will fight for an oppressed minority both here and abroad.

Unfortunately, as we have striven to become more accepting and tolerant of those with different cultures, religions, lifestyles, points of view, etc. we have established a culture of political correctness which blinds us to many changes in our society that threaten to undermine the foundations upon which our country has flourished.

We have allowed a pernicious culture of drugs and alcohol to completely overwhelm our youth. As early as grade school, boys and girls are being exposed to marijuana on a regular basis and many take up the habit as early as 9-10 years old. We are told that whether someone uses drugs is simply a choice but what choice does a child have when the use of drugs is glorified in popular music, television shows and movies? When the pushers send their gang into a school and they put massive pressure on kids to try the drugs or be labeled as an outcast, what choice do they have?

When society idolizes someone like Paris Hilton, whose major contributions to our culture are a sex tape, being photographed leaving parties wasted and multiple arrests for drug possession, is it any wonder that our youth would try to emulate her behavior? Not only does she objectify herself so she can make money and attain popularity, she creates an image in the mind of impressionable young boys of what an ideal woman should be. She might claim she is just living her life and having fun but she is selling herself and her image for a profit.

When the most popular shows for teens include drivel like The Jersey Shore, what does that tell us about character quality of our young adult population? The characters basically go from one boozed-up, sexed-up, drugged-up encounter to another while displaying a level of narcissism rarely seen outside of television. All this so teens and young adults can learn how to become better predators.

When college-age youth “occupy” parks, sidewalks and bridges in major cities to rail against the very form of government and free-market based capitalism that has provided them with the highest standard of living in the world, what does this say about the priorities of the next generation? When they dare to equate the worthiness of their “cause” to the struggle of previous generations (such as those who fought against Hitler and his goal of global fascism) it reveals how infantile and selfish their cause truly is. How can they possibly lead this country to a brighter future?

When millions cross our borders illegally each year, use our hospitals, schools, public services, infrastructure and more at our expense and face no penalty as a result of doing so, how can we not go bankrupt? When our government refuses to enforce the immigration laws currently in place or for that matter, any law they happen to disagree with, how can we stop from sliding into eventual chaos?

When the CEO’s of public corporations raid the company for ridiculous compensation and bonus packages and then kick tens of thousands of employees to the curb during the next economic downturn, what does that say about the morality of business leaders in our country. When they place themselves above the shareholder, the employee and the customer and are rewarded for doing so, how can capitalism survive?

When the high-frequency traders and hedge fund managers treat our stock market as a casino and profit from volatility that they themselves often create, how can the average investor continue to have faith in our markets? When investors have finally had enough and eventually take their money off the table, how will businesses get access to the capital they need to grow? How will workers prepare for retirement if they only invest in fixed-income assets? Why haven’t the SEC and FINRA lived up to their mandate to protect “fair and orderly markets”?

When our politicians exempt themselves from the same laws that indicted Martha Stewart for insider trading and led to her spending some serious time in jail, what kind of message does it send to society? Many members of the House and Senate go to Washington as struggling lawyers and even semi-successful business owners but they rarely leave without becoming millionaires. They have made it legal (although it could never be moral) to profit from insider knowledge they have as a result of their position. This includes profiting from non-public information that would result in you or I being tossed in the slammer. They pass health-care laws that the rest of the country must accept, but give themselves a Cadillac plan that they get to keep for life at our expense. In 2011, members of Congress get paid $174,000/year plus benefits. While this is a healthy salary, it doesn’t allow one to keep a house back home and a nice apartment in Georgetown and still become a multimillionaire. Is it any wonder that the people have lost faith in our system of government and Congress’ approval rating is at historic lows?

When the President travels around the world apologizing for the United States and its “imperialistic” nature, what kind of message does it send to those who have seen America as the best hope for the continued freedom of mankind. If our own President does not believe in our country’s past and the exceptional nature of our Republic, what kind of message does that send to the enemies of freedom? How many have been emboldened by his lack of character and commitment?

Through the decades, America has made great advances in the name of tolerance. Yet today, we find that “tolerance” has been co-opted by those who advocate an “anything goes” society. All cultures and beliefs are not equal. Living in a post-modern world where the liberal elite promote the value (or lack thereof) of moral relativism has shown what happens to a society when it loses its sense of right and wrong. One has only to look at the riots in France, England and yes, even Oakland, CA to see where it all ends – in chaos. Young people running wild in the streets, tossing Molotov cocktails, burning buildings, destroying private property and assaulting the innocent. If we continue to let liberal progressives undermine our history, our sense of civic duty and our moral values, we will wake up one day and not even recognize the country we live in. We need to fight those who have used our schools as a breeding ground for amoral ignorance and disrespect for our great nation. We need to remove those in public office who have shown the ultimate disrespect for our country and are guilty of gross dereliction of their duty. We have to demand the removal of immoral business leaders who put quick profits over long-term profitability and a concern for employees, customers and shareholders.

What we really need today is a healthy dose of “intolerance.”

© 2011, Angelica Wolf

 

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EnoughisEnoughDC@hotmail.com

9-9-9... Hope or Hype?

posted Oct 23, 2011, 9:55 AM by Angelica Wolf   [ updated Oct 30, 2011, 7:44 AM ]

Herman Cain's 9-9-9 plan has been taking a lot of heat recently from both the right and left ends of the political spectrum. Some of it may be warranted, especially how it may place an even greater burden on the poor. Lower-income workers in the US pay more in taxes (as a percentage of their overall income) than the middle and upper classes. This is because they still have to pay into Social Security, state income taxes, local income tax, property tax, sales taxes, government fees, etc. When these taxes and fees are figured as a percentage of their overall income, the rate is higher than what wealthier Americans must pay. In addition, food, auto repairs, housing and general living expenses eat up a larger portion of their overall income. Mr. Cain's plan would raise the amount of income tax paid by lower income Americans (many pay $0 in federal income tax and may even receive a government check for the Earned Income Tax Credit or Childcare credits), make no mistake about it.

Mr. Cain claims that the additional income tax burden on the poor would be offset by lower prices on the goods and services they purchase. That sounds a little better but exactly how does his plan achieve that goal? Let's take a look at the three parts to the 9-9-9 plan and their impact on our total tax burden. The first "9" in the plan is a 9% Business Flat Tax. This tax would be assessed on the gross income of any business - less goods or services purchased from other US businesses, any capital investment into the growth of their company and finally, any goods they export overseas. In addition, Mr. Cain proposes setting up "Empowerment Zones" where businesses can write off the payroll expenses associated with those they employ in the zone. This would be aimed at helping especially hard hit areas like our inner cities get the economy moving and people back to work. There are several advantages associated with a lower, simpler corporate tax including eliminating deductions granted by Congress as favors to special interest groups, zero taxes on capital gains (thereby freeing up billions for reinvestment), relieves American business of a nearly $400 billion per year burden in tax code compliance, and most important of all, makes US corporations more competitive on a global scale. By eliminating taxes on all export goods, our products go around the world with little to no embedded taxes making them less expensive and more attractive to foreign buyers. All imports would be subject to the same sales taxes as American goods, thereby creating a fairer competitive environment where US-made goods have an equal opportunity to compete for your disposable income. Mr. Cain's plan would also allow for the immediate repatriation of all overseas US profits with no tax penalty. This would free up another $1 trillion for immediate capital investment. 

The second "9" in the plan is a 9% Individual Flat Tax. The only deduction would be for money donated to qualified charities such as churches, foundations, charitable organizations, etc. As mentioned above, this would be an additional burden to those Americans paying little to no income tax. Here, Mr. Cain's plan states that individuals will receive an offset through lower priced goods and services, higher wages (as a result of higher employment and wage growth) and the elimination of payroll taxes. Most Americans do currently pay into Social Security, Medicare, Medicaid and Disability Insurance. Mr. Cain's plan would eliminate these taxes going forward. His website is somewhat light on how exactly these programs would be paid for moving forward (except through expected increases in revenue as a result of adoption of 9-9-9) and he has publicly called for individual social security accounts similar to a model used in Chile. Certainly, his plan would broaden the tax base ensuring that nearly every American has a financial stake in the running of our government. Most Americans support broadening the tax base but want to make certain that it affects both higher and lower wage earners. In recent years, the top 10% of earners have seen their income rise while their tax burden has steadily declined. The middle class has actually seen an inflation-adjusted decrease in their incomes and in many cases, they end up paying a higher percentage of their income in taxes than the very wealthy. This is because they do not qualify or have the financial means to avail themselves of the many loopholes in our current tax code. Lower-income earners who pay no federal income tax often vote for those who make the biggest promises for transfer of wealth. Mr. Cain's flat tax on income would eliminate much of the Congressional shell game for moving money around to buy votes. It should be noted that in the last couple of days, Mr. Cain is actually proposing a reduction in the federal income tax to 0% for those living below the poverty level. This makes sense because the poor can least afford to pay federal income taxes. If Mr. Cain's plan does work and creates up to 6 million new jobs as stated on his website, many now living in poverty would eventually find themselves earning enough to pay federal income taxes. 

The third "9" in Mr. Cain's proposal is a National Sales Tax. It should be stated that this will not replace any existing state sales taxes. As President, Mr. Cain would have no ability whatsoever to regulate how states tax their citizens. The 9% national sales tax makes all foreign goods more competitively priced with those manufactured here in the US. Currently, we assess up to 39% taxes on US corporate income. This is the second-highest rate amongst developed nations behind Norway. These taxes are embedded in the price of everything made here in the US regardless of whether it is sold here or internationally. So, if a company in the US makes a television set and the average tax rate for that company is 30%, the TV set has an additional 30% embedded into its price. If a company overseas makes a similar TV but only pays 10% in corporate taxes, they only have 10% additional expense embedded in the price. They can ship that TV to the US and sell it for less than the domestically made product. This is a serious problem for our country and the main reason why so much of our manufacturing has moved overseas. For decades, we have given foreign companies a tremendous pricing advantage and it has cost America millions of manufacturing jobs. Mr. Cain's plan would make American manufacturing competitive again on a global scale. A Chinese-made TV set would cost roughly the same amount as a US-made set and both would be subject to the 9% national sales tax. By shifting the tax burden from the corporate income tax to the national sales tax, goods would be priced more evenly. In that environment, US businesses would only need to worry about containing production costs such as labor, materials, administrative expenses, etc. US companies are the most productive in the world at managing costs and delivering value to employees and shareholders. Another benefit of the national sales tax is that it would capture revenue currently lost to the black market economy. Much of the total US income goes unreported each year due to the money being earned illegally or through tax-cheating. Because these people still spend the money they have under-reported or received through criminal activities, they would still be paying 9% in sales tax on everything they buy. The national sales tax could be the biggest driver of US economic growth in Mr. Cain's plan.

Herman Cain's 9-9-9 plan is an interesting proposal. It is very likely that his plan would reduce or eliminate many of the abuses inherent in our current system of taxation. It would broaden the the tax base, eliminate deductions and loopholes for corporations and special interests, make US products more competitive globally and even collect taxes on the black-market economy. Many of his detractors have said that his plan would harm the poor, would not result in a reduction in the price of goods and most importantly, might not remain 9-9-9. Many fear that a future Congress may raise any or all of the categories and that by giving the government a new National Sales Tax we are only inviting future trouble. Whether they are right or not remains to be seen but in the meantime, Herman Cain has laid out a bold proposal for fixing some of the toughest issues facing our economy and deserves our attention and respect.

© 2011, Angelica Wolf

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Who Really Pays Taxes?

posted Oct 17, 2011, 7:13 PM by Angelica Wolf   [ updated Oct 17, 2011, 7:20 PM ]

Over the past few years, our political system has become more and more polarized regarding the issue of taxes and how much individuals and corporations should pay. There are many who believe the rich don’t pay enough taxes in this country and there are others who feel that taxes are already far too burdensome. Well, let’s take a look at the facts and see what’s really happening…

According to a 2009 article from CNN Money, over 47% of Americans pay no federal income tax and that number is on the rise. Many of those who do not pay qualify for the Earned Income Tax Credit or Childcare credits. This means they receive a check from the government even though they did not pay any federal income tax. They do however pay in to Social Security, Medicare and Disability insurance programs. They also pay sales tax, state income tax and property taxes. As a percentage of their overall income, lower income workers typically bear the greatest tax expense.

On it’s website, the Tax Policy Center estimates that the bottom 20% of wage earners pay less than 1% of Federal Income Tax. The next 20% pay under 4% of the total. The middle 20% pay approximately 10%. The next 20% pay approximately 20% of the tax burden and the top 20% of earners pay 65% of total federal income taxes. It is clear from these numbers that the majority of federal income taxes are paid by those that earn the most.  But is that the whole story?

Over the past 25 years, our tax code has continually become more complicated. The Joint Committee on Taxation, which analyzes proposed changes to the tax code has literally found itself inundated with requests from various Congressional offices to score potential new tax rules. This scoring is necessary for any proposed changes to be seriously considered for inclusion into law. Many of these changes represent political payback to wealthy donors or local industrial interests. According to a recent article in Forbes magazine, the number of requests in 1986 was 474. By 2009, the number of scoring requests was 6,983. Congress has been using the tax code as the biggest vehicle for transferring wealth from the lower and middle classes to the wealthy in the history of our nation.

The very wealthy can afford to hire armies of CPA’s, tax attorneys, form various business entities, move money offshore and use other techniques to lower their overall tax burden because the tax code specifically provides for these loopholes. One case in point involves hedge fund managers. In 2007, they successfully lobbied Congress to continue treating the management fee they receive from running their funds as capital gains with a 15% top tax rate. But they don’t even have to pay those taxes today. They can simply leave the money in the fund earning interest and borrow from the fund at ridiculously low rates putting off paying taxes for years to come. Hedge fund manager John Paulson made $9 Billion in two years by betting against the mortgage market and then investing in gold. His current tax bill on those profits is $0.

Over the past 90 years, the Average US income grew by $38,000, adjusted for inflation. Roughly 50% of the gains went to the richest 10% of the country and 50% was distributed amongst the rest of the population. However, over the last three decades, 96% of the increase went to the richest 10% while the rest of the population received only 4% of the increase. The last decade is even worse, 100% of the gain went to the richest 10%. The rest of the population actually saw their income decline on an inflation-adjusted basis.

Unfortunately, its not just personal income tax avoidance that is hurting our country but also Corporate Income Taxes. For example, last year General Electric made $14.1 Billion in profits of which $5.1 Billion came from US operations. Not only did the company not have to pay any federal income tax, they received a tax credit from the US government of $3.2 Billion. According to the IRS, corporate profits between 2000-2008 were up nearly 12%. During this same time, even though marginal tax rates did not change, corporate income tax revenues fell by nearly 8% thanks to loopholes and tax incentives.

It is clear that real tax reform is needed in order to fairly distribute the tax burden across our population. No one should enjoy the benefits of living in this great country, enjoying its infrastructure, military protection and system of government without some contribution on their part. However, the current shift in income distribution from the poor and working classes to the wealthiest Americans is unsustainable. We need a fair and common sense approach to redistributing the tax burden and eliminating the loopholes that allow so many individuals and corporations special protection under the code. Let’s tell Congress that the tax code is not their personal pork barrel. Let’s tell them, enough is enough!

 © 2011, Angelica Wolf

A "Virtuous" Cycle?

posted Sep 24, 2011, 11:35 AM by Angelica Wolf


Saturday, September 24, 2011

In business, there is a phenomenon known as “The Virtuous Cycle”. As an investor, I put my capital at risk to open a new company. I may manufacture a product or provide a service to my customers. I may hire additional workers and trade my money for their time and production to produce even more of a profit. I make a return on my investment that I use to buy goods and services that create profit for someone else. My employees use their paychecks to do the same. My customers purchase my goods or services. This frees them up from the labor required to produce these things and allows them to use their time more profitably. The cycle goes on and on. It is a virtuous cycle because everyone benefits – the investor, the employees and the customers.

When government begins to intrude into markets, the “Virtuous Cycle” is destroyed. A good example of this is the mandated production of ethanol and other biofuels here in the US. The Energy Policy Act of 2005 laid out a series of government mandates for the increased production and consumption of biofuels through 2012. The Energy Independence and Security Act of 2007 expanded these regulations and extended them for another decade through 2022. Both of these rules were passed by Congress and signed into law by President George W. Bush. We were told that the real reasons for passing these laws was to help reduce greenhouse gas emissions and create a more prosperous, energy-secure future for our country, help us make the transition from unsustainable fossil fuels to sustainable alternatives and create a cleaner world for our children. But is this actually the case?

Ethanol is produced from sugar crops. In Brazil, the world’s largest producer of ethanol, production is derived mainly from sugar cane or sugar beets. In the US, these crops do not grow effectively throughout much of the nation due to climate conditions. Instead, ethanol is largely produced from one of our staple food crops – corn. Corn is used in a wide variety of food products, sweeteners, preservatives, etc.  and is also one of our chief sources of livestock feed. Annual price variations in corn due to weather-related production losses, demand, disease and more can create a tremendous ripple effect that spreads across our economy. In addition, mandating large amounts of our crop produce to be used in alternative fuel production has had a similar effect. According to the Congressional Budget Office (CBO) the increased demand for corn to be used in Ethanol production between April 2007 and April 2008 caused prices to rise between .50 to .80 per bushel. This accounts for somewhere between 28-47% of the total increase in corn prices during that time. Other factors that impacted crop prices were increased global demand for meat (corn is a staple in livestock feeds), the devaluation of the US Dollar and weather-related crop concerns. During this year alone, corn prices increased from $3.39 to $5.14 per bushel. Demand for corn just to produce ethanol during this same time period was up by 43%. Unfortunately, the costs don’t stop there.

When corn prices rise, demand for cropland also increases. When the cost of land increases, all crop prices must increase. Other food crops are competing for the same arable land and higher land prices are reflected in the prices of these crops. As food prices rise, the Consumer Price Index (CPI) goes up. As the CPI rises, government benefits like Social Security, civilian and military pay are adjusted accordingly which creates higher government spending. Even federal assistance programs like SNAP (formerly Food Stamp Program), child assistance and WIC have to increase as well.

What about the promise of saving our atmosphere and reducing greenhouse gas emissions? According to 2007 research by Argonne National Labs, the amount of greenhouse gas emission from the use of ethanol is directly related to how the ethanol is produced. In the US, ethanol facilities are largely powered by natural gas and coal. Natural gas plants burn cleaner and according to the study actually produce a positive reduction in greenhouse gas emissions of ethanol vs. gasoline. Coal-fired plants actually produce more greenhouse gas emissions than the production and consumption of gasoline. Fortunately, most ethanol production plants are powered by natural gas. So how much did we reduce our carbon footprint in the transportation sector by substituting ethanol for gasoline in the 2007-2008 time period? By the most optimistic estimates, it was probably reduced by around 0.7%.

Another issue is the economic viability of using ethanol as a substitute for gasoline. Since 1978, companies that blend ethanol with gasoline have received a tax subsidy from the federal government. Today, that equates to about .45 for every gallon of ethanol blended into gasoline. According to the CBO study, the price of a gallon of gas must be roughly equivalent to 90% of the price of a bushel of corn for ethanol production to be financially sensible with no government subsidies. As of this writing, the cost of a bushel of corn is roughly $6.98. Gasoline (regular) currently averages $3.65 nationwide. In other words, gas costs 52% as much as a bushel of corn. It makes no economic sense to turn corn into ethanol unless it is subsidized by taxpayer dollars. This means the government must forcibly take your money and give it to the owners of a refinery in order to make ethanol economically viable. There is no win-win in this type of artificial cycle.

What about the looming threat of running out of fossil fuels? In the last few years, technology has advanced to allow the removal of vast oil reserves that was formerly trapped in tar/oil sands and shale. On the North Dakota/Montana border, the Bakken formation is currently being exploited profitably by using methods such as fracturing, lateral drilling, moveable platforms and more. A 2011 report indicates that up to 24 Billion Barrels may be harvested using current technology and the total size of the oil reserve may be as large as 300 BBbls. Much of that oil is not extractable using these new technologies but may be harvested in the future. A recent interview on CNBC stated that as long as oil stays above $40 barrel, current drilling technologies are leading to profitable oil extraction. In one interview, a geologist estimated that with the current pace of drilling technology advancement, as much as 150BBbls of oil may one day be extracted from the Bakken formation.

Government certainly has a role in funding the research and development of new technologies and energy sources that may one day have a positive impact on our environment and economy. Advancements in wind, wave, nuclear and solar energy are important as we look for ways to produce cleaner, cheaper energy to meet our national interests. However, government should not be involved in subsidizing the production of these technologies. For a new commodity or technology to be produced, it should be viable in the marketplace and able to stand on its own. Anything else is counter-intuitive and diminishes viable and profitable markets.

Isn’t it immoral to use food to make fuel when so many go hungry every day? Doesn’t artificially increasing the cost of food for consumers reduce a family’s ability to provide for itself? Who is hurt the most by government intrusion in the markets? It is ultimately the poor and lower income households that feel the greatest economic pain from this type of intervention because food and fuel prices represent a much larger portion of their take-home pay than the middle and upper class. There is nothing virtuous in this “Cycle of Destruction.”

© 2011, Angelica Wolf

Corporate Responsibility

posted Sep 11, 2011, 4:24 PM by Angelica Wolf

Recently, it seems like every time you turn on the news, you hear about another corporation that is laying off thousands of employees, shutting down factories, sending manufacturing overseas or outsourcing jobs to India.  Often we are told it is because of the economy, the high cost of US labor and corporate taxes. While it is true that the economy has been in recession and is now in a period of very slow growth, labor in many third world countries is cheaper than the US and corporate taxes here in the United States are the second highest amongst developed nations, I think that one of the biggest factors is a lack of corporate leadership or business ethics.

I am sure that you are all aware of some of the high profile cases of corporate fraud, greed and mismanagement from the past few years. All of us have heard of companies like Enron, Tyco, WorldComm and others where dishonest executives destroyed the companies under their management with illegal and unethical business practices. More recently, we have only to look at Lehman Brothers, Merrill Lynch, Countrywide, Fannie Mae and Freddie Mac to know that corporate malfeasance and risk-taking has been on the upswing. These stories are legend and often used as case studies in business schools across the country. Today I would like to focus on some of the more insidious business practices that I feel are doing tremendous damage to our country and our economy. 

Many years ago, people went to work for a corporation and often spent the rest of their working career with that same company. Employees and employers had a responsibility to one another. If I worked for you, I had a responsibility to show up on time, perform the requirements of my job to the best of my ability and deliver value for the wage I was paid. The company had a responsibility to provide me with a safe environment, pay me fair market value for the work I produced and run the company in a manner that would provide profitable growth for the shareholders, stable employment to its workers and a good product and service to its customers.

Over the past few decades, things have changed dramatically. In 1965, the CEO’s of major US corporations earned approximately 25 times what the average worker made. By 1978, the ratio grew to 35 times. By 1989, CEO’s earned approximately 71 times as much. In the late 1980’s to early 1990’s, Congress grew concerned that while CEO pay was growing at astronomical rates, oftentimes the companies they represented were posting huge losses and hundreds of thousands of employees were being laid off and shoved onto the public dole. In 1993, Congress moved to limit the deductibility of executive income to one million dollars. A company could pay more cash compensation but they could not deduct it as a business expense.  This should have brought CEO pay more in line with what the average worker was earning.  Yet by 2005, CEO pay was on average 262 times higher than the rank and file worker.

Unfortunately, the Law of Unintended Consequences reared its ugly head and corporate compensation committees came up with an alternative way to incent their executives using stock options and restricted stock grants. This seemed like a logical approach as the CEO’s pay would be tied to the performance of the company and its stock. While that sounds both good and fair, we all learned very quickly that no one is in a better position to manipulate the value of a company’s stock than its executives. Since the early 90’s fraud, manipulation and misrepresentation of company earnings have been steadily on the rise.  In November of 2008, the Wall Street Journal published an article outlining how CEO’s and top executives of major corporations liquidated their stock between 2003 and 2007 before the stock market collapse 

Richard Fuld of the now bankrupt Lehman Brothers, cashed in $184.6 million. Countrywide’s CEO, Angelo Mozillo sold over $400 million of his stock during his tenure with the company and cashed out $129 million in the 12 months leading up to August 2007 alone. Ken Lewis of Bank of America reportedly sold off $81 million during this time and the CEO’s of Fannie Mae and Freddie Mac pocketed $23 million and $33 million respectively for their last two years of service, even though they were chiefly responsible for the downfall and subsequent government takeover of the two companies. As these CEO’s were liquidating their stock and exercising their options, who purchased the stock they were selling? You and me. The mutual funds in our 401k plans and IRAs were buying up this stock at exorbitant prices right before the bust.

How could the very people who destroyed the businesses they were hired to serve have profited so much from their failure? What about the shareholders who lost trillions in value from bankruptcies, declining share prices, bond defaults and more? What about the employees of these companies who were just doing their jobs and suddenly found their lives turned upside down because they were out of a job during one of the worst recessions in history? What about the customers of these companies who were left out in the cold?

During boom years, the ridiculous compensation of many executives serves to drain corporate profits and hurt shareholder performance. During lean times, these same executives simply engage in massive layoffs to bring “costs” under control and help profitability. Tens of thousands of workers suffer because they experience a drastic reduction in income and the taxpayer is left holding the bill for unemployment and government assistance.

 Isn’t it logical to assume that companies will experience both good and bad times? Shouldn’t they feel some responsibility to their employees? Shouldn’t they make plans to retain these employees by building a cushion during the good years? Sadly, these same CEO’s and executives receive huge bonuses for helping boost company performance by cutting costs and laying off so many employees. Is this really the best we can do?

 © 2011, Angelica Wolf

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