“Our people look for a cause to believe in. Is it a third party we need, or is it a new and revitalized second party, raising a banner of no pale pastels, but bold colors which make it unmistakably clear where we stand on all of the issues troubling the people?”
- Ronald Reagan
Washington is out of control. Democrats and Republicans are both responsible for the abysmal economic performance we have seen over the last five years. I say that because despite recent attempts by the Republican leadership at fiscal reform, since 2010 the budget has still increased. At the present rate of spending, the National Debt will continue to increase by almost $1 Trillion dollars per year. And with each year the United States is getting economically weaker and weaker.
Each year the US is less able to feed its poor, educate its youth, and rebuild its infrastructure. Does this sound extreme? It's not! An early warning sign: The United States can no longer feed all of its people. The richest nation on earth has 13.5 million children living below the poverty line. Funding of Federal programs like SNAP and WIC are being challenged because the government cannot afford the massive budget increases in other areas such as defense. A recent documentary called "A Place at the Table" details the issues that we are having right here in America....with hunger:
http://www.magpictures.com/aplaceatthetable/ I strongly recommend you watch to understand where things really stand in the USA.
We are headed for a major economic meltdown and social upheaval if significant change is not made, and soon. The 2016 election must be a pinnacle moment when the US electorate sends a significant message to Washington. It's time to send the self serving betrayers of the American tax payer home! We've had enough of elitism. Enough quid pro quo. Enough pork barrel legislation. Enough of lobbyists and PACs wielding power in Washington. It is time to take the country back from the these power-mongers that have turned what should be a noble duty into a fat business called "regulatory capture". The term is defined in Wikipedia: "
Regulatory capture occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or special concerns of interest groups that dominate the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as an encouragement for firms to produce negative externalities. The agencies are called "captured agencies".
Washington has evolved to a point where conflict of interest seems to be its overriding principle. Today Americans find themselves the victims of over twenty years of legislation which is a product of lobbyists and special interest groups. This legislative history has weakened the United States, gutted the middle class, and produced approximately 66,000,000 citizens who's income is below the poverty line. Who among us stood up in 1992 and proclaimed NAFTA to be a good idea? I remember driving in Southern California on highway 5 back in 1991 near the border. I'm not sure if they are still there, but there were giant yellow warning signs with the silhouette of a family running across the highway. The idea was to avoid cars hitting illegals that were entering the US on foot. The family was running
toward the United States. I remarked to my wife that after implementation of NAFTA, the sign will have to point to Mexico. Because that's where the jobs are going and the families will be running the other way! Considering the job destruction created by NAFTA, that statement wasn't far from the truth! NAFTA turned out to be a way for companies that lobbied for the legislation to send jobs offshore. Read:
http://www.theatlantic.com/past/docs/unbound/polipro/pp9707.htm
And who among us stood up in 1998 and proclaimed repeal of Glass Steagall to be a good idea? Anyone? I was "raised" in the securities industry and Glass-Steagall was always considered to be sacred. I was shocked when it was repealed. It felt like driving without an economic seatbelt! And yes, there is no doubt that legislative masterpiece triggered the Great Recession. $300,000,000 of lobbying fees went into the repeal.
Those two legislative disasters are mere examples of the fact that Washington is working for trans-national corporations and special interest groups, not in the interest of Americans. Websites such as Opensecrets.org, influenceexplorer.com and followthemoney.org track the contributions and lobbying activities of all industries. Those sites have a treasure trove of information that leads to many questions. Why would Siemens AG for example, a German industrial company spend over $94,000,000 on Washington lobbyists over a 10 year period? Why? so that they can win Federal contracts.
A review of the information, particularly the earmarks by state, leads to some very basic questions like: Why is the Federal government funding half of these activities in the first place? Aren't these State level activities? We're going broke while 635 elected officials budget luxury items. Some of the items align with National priorities such as infrastructure renewal. And some create jobs, some don't. But many don't align at all. Meanwhile, at the end of it all, it is Americans that get stuck with the big bill Washington creates. Name a current problem, and its root can be traced to lobbying and legislative capture.
Financial Crisis- Would never have occurred if Glass Steagall was not repealed: legislative capture. Citicorp Chairman Sandy Weill, and Robert Rubin orchestrated that one. They had so much power in the Clinton Administration they violated Glass-Steagall with the Travellers Insurance merger and then got Congress to repeal it. Lobbying fees $300,000,000.
Health care - another legislative disaster is about to be launched in Obamacare. $120,000,000 was put into lobbying for Obamacare. See who participated:
http://www.libertariannews.org/2010/03/30/big-pharma-and-insurance-industry-lobby-heavily-for-obamacare/
Gun violence - legislative capture
No tort reform - legislative capture
The list goes on and on. And it's time for American citizens to retake control of their government.
The US Federal debt is now a staggering 105% of GDP. The last time debt was this high as a percentage of GDP, Americans fought the Third Reich in Europe, and the Japanese Empire at the same time, and won!
Since 2004, Federal Government spending went into a vertical climb, going from roughly 60% of GDP to over 105% currently. As of today, according to usgovernmentdebt.us, the National Debt is $16,738,158,460,000. And that number does not include what the government calls unfunded liabilities associated with Social Security and Medicare (usgovernmentdebt.us).
Comparing the direction of gross debt to the direction of GDP begins to show the real nature of the monumental problems that the nation currently faces. Real Gross Domestic Product began to recede at the beginning of 2007. In 2007 the National Debt was roughly $9.0 Trillion to $13.206 Trillion of Gross Domestic Product, or roughly 68% of GDP.
Graph provided by www.measuringworth.com. Full data set available at http://www.measuringworth.com/datasets/usgdp/result.php
During the recession period between 2008 and 2009, National Debt increased by $3.5 Trillion dollars from the 2006 benchmark. And since that time, another $4 Trillion has been added. Some of the roughly $7.5 Trillion was associated with financial programs to stimulate the economy. TARP was the first program which was designed at the end of the Bush Administration and signed into law in January 2008. TARP invested $418 Billion in the controversial bail outs of GM, AIG, and many banks. But as of March 2012, over 90% of the TARP money has been repaid.
The Federal Reserve instituted a program of Quantitative Easing in three phases. QE1 and QE2 peaked at $2.1 Trillion. And QE3 has potential to spend another $480 Billion. But since the Quantitative Easing program purchases saleable assets, e.g. bonds and mortgages, we can net that out of the $7.5 Trillion. So a net $5.4 Trillion dollars was the direct result of government spending not directly associated with economic stabilization. What did the American tax payer receive for $5.4 Trillion dollars? According to the Bureau of Labor Statistics, the Civilian Labor Force is roughly 155,000,000 people. The $5.4 Trillion dollar spend is a burden of roughly $34,838 per civilian worker over the five year period from 2008 to 2013. And if things don't change, $1 Trillion will be added per year for the next five years. 2012 median household income was $50,722.
It becomes very clear why S&P downgraded the US Government credit rating. Since 2008, the Obama Administration has authorized $7.5 Trillion dollars of deficit spending to achieve a Gross Domestic Product increase of $431,400,000,000 and a net loss of roughly 2,190,000 jobs. In January 2008, there were
146,248,000 Americans with full time employment. As of June 2013 there were 144,058,000 full time jobs. That dismal level of performance is actually hard to believe!
http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_7.26.13
A more disturbing trend is highlighted by comparing S&P 500 earnings, pictured above, with jobs growth. As the graph indicates, earnings growth from 1/2008 to 7/2013 is up almost 17% vs. -1.49% job growth. The data trend can be attributed to many variables. However, it points to earnings growth which is off-shore, and thus not directly benefiting US jobs growth and also not benefiting corporate tax revenue.
Under these circumstances, the US cannot afford any budget increases without significant economic growth. It's a "catch 22", the economy won't grow without government investment, and additional government investment, if it is unsuccessful, could worsen the economy. Are there any alternative options? The answer is a resounding yes. Will the parties identify these options and arrive at solutions? Not under the current status quo. The entrenched positions of special interest groups will impede these efforts. Basically, Congress is hugely conflicted, so no progress will be made.
It is up to the voters to understand the critical nature of these issues and develop a mechanism to hold politicians responsible. Elections are not enough. Each election cycle, politicians of varying capabilities parade before the American voter seeking their shot at the pie. Each election cycle the political parties throw the usual sound bites at the electorate with the aim of dividing and conquering the electorate. For the Democrats the latest strategy has been to focus on social issues, which gets minority, LGBT and women voters. There's a reason abortion, which was passed in 1973 still dominates the debate in any major election. It's a fear technique which guarantees the majority of the women's vote (51% of the population) for Democrats. Similarly there's a reason gay marriage was thrust into the forefront. The Democrats understand the numbers. For Republicans it's "apparent fiscal conservatism" second amendment rights etc. Regardless of party, the rhetoric may be different, but the individual political goal of securing a piece of the pie is the same. Once the election is over, the game of carving up begins. Republicans have special interests and love pork just as much as the Democrats. Ideology is not a factor. Power is the factor. Between the White House and Congress, 636 elected officials control a $3.7 Trillion dollar annual budget. That is what the game is all about. Does all of this sound a bit far fetched? Consider the following statement by the Cato Institute: "
When you spread food out on a picnic table, you can expect ants. When you put $3 trillion on the table, you can expect special interests, lobbyists and pork-barrel politicians".
Runaway wasteful spending, conflicts of interest, political elitism, failed strategies! How can Americans recapture the government? There are five principal pieces of legislation that will be essential to pass if this country is to survive. And I mean no offense to special interest groups, but they don't involve abortion, gay marriage, race relations, gun control or any of the other social issues that have dominated the political dialogue of the last two election cycles, while the country goes bankrupt!
1. Campaign Reform - The most critical change must be to get corporations out of politics. Corporate donations of any form e.g. Political Action Committees (PAC's)
must be outlawed. This is one critical change that will lay the foundation for returning the government to the people. It's far better to have a cap in individual contributions and matching Federal funds at some level. Candidates should win elections based on the best position platform, not who purchase the most TV minutes. Elections have become exercises in media saturation.
2. Make Lobbying Illegal - The second critical component is to keep corporate America out of the legislative process. There must be a total separation between legislation and corporate interests. Lobbying is legal today. There are many studies on ways to accomplish separation without compromising the efficiency of the legislative process. Congress must pick one and implement it. This will eliminate the impact of regulatory capture.
http://www.brookings.edu/research/papers/2011/06/06-lobbying-drutman
3. Term Limits for the House and Senate - And the third way to take the government back is to impose term limits for Congress. There are subtleties in the language of the Constitution. For example, what does "government
for the people by the people" mean? The Founding Fathers were not professional politicians, they were farmers and prominent business people. Today, we have cultivated a class of "professional politicians". There are exceptions, but for the most part these people are developing political careers. In order to keep a government for the people and by the people, we need to eliminate the potential to form a "professional political class". I imagine this will reduce the chances of the ideological gaps we see between the "beltway" and "main street".
4. Outlaw PAC's and replace with Political Platform Committees. Today PAC's collect funds to endorse or defeat candidates. This should be illegal as it is a way for corporations to influence elections. PPC's would not be allowed to endorse a candidate or engage in activities to defeat a candidate. PPC's would be limited to endorsing positions on specific issues, or attacking issues they do not agree with. Candidates would have the right to claim allegiance to a particular PPC in order to clarify their positions. But PPC's would be prohibited from endorsing candidates or funding campaigns in any way. PPC's would be required by law to publish a report card post term for every candidate that claimed allegiance to a specific PPC. The Federal Elections Board would be responsible for monitoring abuses where candidates seek to claim allegiance without delivering legislative support. PPC would not be required to declare allegiance to any particular political party. The benefit of this approach is it will help to educate the electorate in the issues and allow them to make intelligent choices.
5. Balanced Budget - Congress must pass a balanced budget amendment that allows 10 years to bring expenses in line with realistically projected revenues. Such an amendment would immediately freeze current spending and begin implementing many of the savings outlined in the Hamilton Project.
To date, Americans have aligned themselves with political parties. But individual candidate positions can vary widely from the National Committee level platform. And there can be inconsistencies between National and State level committees. The DNC and RNC political position platforms tend to be vague, leaving voters with very limited information on specific issues. Voters put more research into buying cell phones than they do their political candidates. And one major reason for that is a significant information gap. Are Americans electing qualified candidates to vote on critical issues such as fiscal policy and preservation of constitutional rights? Probably not, as 1 in 20 congressmen do not hold a college degree. Certainly there are highly intelligent and qualified people without degrees, just as there are people with PhD's that are unqualified.
http://thechoice.blogs.nytimes.com/2009/12/24/congress/?_r=0
But candidates should be required to publish a "prospectus" which clearly explains their full credentials, along with a third party assessment of their ability to understand and vote on the range of issues facing the nation. Risk factors should be highlighted. The days of sending unqualified candidates to govern the Nation must end. We are now in the technology and information age, where we are faced with complicated issues such as how to protect constitutional rights in a changing technology environment. Where the next war may involve cyber attacks and EMP's not battle ships and tank squadrons. Are our congressmen capable of understanding and governing through these challenges?
Voters can take control by funding parallel organizations to their political parties (PPC's) to analyze specific issues, create a platform. And unlike political action committees that endorse specific clients, "political platform committee" should endorse and advertise specific positions. Think Tanks like Brookings, Cato and Pew among others should be leveraged by these parallel organizations to formulate well informed political platforms. And candidates should align themselves to a specific platform and be scored on their compliance during their term in office.
Republicans have suffered in recent elections because of extreme positions on social issues. And in many cases, certain high profile issue outliers have damaged the Republican election chances. For that reason, Republicans more concerned with economic issues than social issues, would be well served by a Political Platform Committee that could clearly outline a common sense platform to get the US economy back on track. This platform would probably appeal to independent voters as well as right leaning Democrats.
What would happen if PPC's existed? Voters would be able to easily navigate through all of the talking points and spin during an election cycle. And politicians would pledge to adhere to the platform (or not) in order to attract voters. This type of voter controlled mechanism is essential at this juncture. Because it would give voters leverage over the policies adopted by the candidates.
Those five steps will lay a foundation to bring the government back. But it is only the beginning. Many bloated programs must be cut down. The Federal Government must be trimmed down to constitutional levels. And the budget must be wrestled back to 2008 levels. And the states must pick up programs that the Federal Government transitions to the states.
There is significant work to be done. And in the coming weeks, I will be writing about components of an ideal platform beyond the five foundational components outlined in this document. I will discuss proposals to cut the budget and include other "social issues" in order to develop a comprehensive platform. I expect the platform to appeal to the center. This blog will also document my attempt to fund and market this platform in preparation for the 2016 election cycle.
