Steve G.

Archive for the ‘Spending’ Category

Why I Reject Mike Gravel’s National Initiative

In Activism, Democracy, Libertarian, Local Politics, Minorities, Personal Responsibility, Spending, US Government on February 10, 2010 at 6:37 pm

For some time now, Mike Gravel, a former Democratic Senator representing Alaska, has been advocating the National Initiative for Democracy (NI4D).  It was, in fact, the main focus of his 2008 campaign for the U.S. presidency.

The NI4D is a proposal, put forward by The Democracy Foundation, to create ballot initiatives at the U.S. federal level, that is, allow the American people the power to propose and vote on laws directly, bypassing the politician in Washington.  Along with Gravel, Ralph Nader and Tom Knapp have also endorsed this proposal.

Gravel makes this sound good, claiming that the people can, under his proposal, repeal the many egregious laws foisted upon us by the political class.  He provides a solidly libertarian defence, saying that this initiative will “stem[] government growth.”  Writes Gravel,

American citizens can gain control of their government by becoming lawmakers and turning its purpose to public benefit, and stemming government growth—the people are more conservative than their elected ofcials regardless of political party.

With all due respect to Mr. Gravel, whom I still consider to be a hero for his role in ending the draft and the Vietnam War, I reject the NI4D proposal.  While it’s not the worst proposal in the world, it fails to address the fundamental problem of governance vis-à-vis the natural, inalienable rights of the individual.  It does not promote true self-government, but rather erects an illusory self-governance.

We need to devolve all government power, not simply down to the state level, not simply down to the county level, not simply down to the level of the local community (although that would certainly be a step in the right direction), but all the way down to the individual level.  No person should be able to have power over another person’s life except insofar as the second person chooses to allow the person to have said power, and for a duration no longer than the second person allows. Unfortunately, democracy allows majority factions to rule over minorities, and as such, I have to reject democracy in favour of individualist anarchism.

Now, by anarchism I certainly do not mean that chaotic state of existence we call lawlessness or anomie.  By anarchy, I merely mean that state of existence in which no person is considered to legitimately rule over the person or justly-acquired property of anyone else.  My anarchism is clearly a libertarian anarchism, for I consider such actions as rape, murder, and the theft or unconsensual destruction of someone’s justly-acquired property as violations of natural law, what I call “natural crimes.”  Of course, one is justified in using defensive force, if one so wishes, against these “natural criminals,” so long as the defensive force used is proportional to the initiatory forced employed by the criminal.

Benjamin Tucker, the nineteenth century individualist anarchist most famous for his newspaper Liberty, defined anarchists as

simply unterrified Jeffersonian Democrats.  They believe that “the best government is that which governs least,” and that that which governs least is no government at all.  Even the simple police function of protecting person and property they deny to governments supported by compulsory taxation.  Protection they look upon as a thing to be secured, as long as it is necessary, by voluntary association and cooperation for self-defence, or as a commodity to be purchased, like any other commodity, of those who offer the best article at the lowest price.  In their view it is in itself an invasion of the individual to compel him to pay for or suffer a protection against invasion that he has not asked for and does not desire.

Gravel correctly notes, in his defence of the NI4D, that “[g]overnments throughout history have been tools of oppression,” but he then incorrectly adds: “they need not be.”  The state is an inherently oppressive, inherently aggressive institution, for all states, in order to be states, either must steal the products of someone’s labour, must dictate how people may live their lives and spend their money (even when said people are acting entirely nonviolently), or must use aggression to prevent private security agencies from having an equal footing under the law with itself.  If the state were to cease doing these three things, then it would cease to be a state, but would instead become simply a private charity or firm.

In an address delivered in 1877, the venerable liberal Lord Acton stated,

It is bad to be oppressed by a minority; but it is worse to be oppressed by a majority.  For there is a reserve of latent power in the masses which, if it is called into play, the minority can seldom resist.  But from the absolute will of an entire people there is no appeal, no redemption, no refuge but treason.  The humblest and most numerous class of the Athenians united the legislative, the judicial, and in part, the executive power.  The philosophy that was then in the ascendant taught them that there is no law superior to that of the state, and that, in the state, the law-giver is above the law.

If the NI4D is established, people will be no freer than they were prior to its establishment.  All that will have changed is that the individual will gain a single, minuscule vote on matters of dire importance, a vote that will be completely overwhelmed by the combined votes of the others.  In other words, the individual will still be under the tyrannical control of others, will still be a victim of oppression.

If people are reticent in telling George Bush and Barack Obama, “No, you don’t have a right to run my life,” how much less willing will they be to say that to the supposed vox populi?

In summation, the National Initiative for Democracy sounds nice, but it won’t give people the freedom to control their own lives, all it will give them is a vote in the control of the lives of their neighbours.  Worse yet, because it will create the illusion of self-rule, of self-government, it will discourage people from fighting for their own liberation, and as such, is a highly anti-libertarian and counter-revolutionary idea.

—Alexander S. Peak

Creative Commons License

The Next Greatest Generation?

In Activism, Congress, Corruption, Democracy, Democrats, Economics, Fraud, Libertarian, Lies and the lying liars who tell them, Personal Responsibility, Politics, Pork, Republican, Spending, Taxation, US Government on January 13, 2010 at 8:09 pm

I know of very few people in America today who would disagree with the statement that America is heading for a mountain cliff heedless of the dangers which will await us once we plunge over it. While people of differing ideologies might not agree about the various factors which are pushing us farther and farther into danger, I think that one thing that can be agreed upon by all factions is that our national budgets / spending are out of control and is one of the contributing factors. There are two basic topics which I want to discuss with this article. One is about some factors which I think compound the problems and combine to make our nation fiscally unsustainable. The other is a call to action and sacrifice by my own generation.

Have you ever wondered how one politician can claim that government spending has been reduced while another politician can claim that government spending has been increased and, yet, they can both be telling us the “truth” while our financial problems continue to get worse and worse with each passing year? Well, we can thank the idea of “baseline budgeting” for making such political contortionism possible. Baseline budgeting is the concept that, for a new budget year, you will draw a line at specific totals of spending from the previous budget (the baseline) and you then incrementally increase spending above that baseline. Thus, one politician can say that spending has been cut if the amount of money that will be allocated above the baseline is less than what might otherwise be allocated while the other can say that spending has increased because the current budget is higher than the previous one. In neither case, however, has the issue of the already bloated budget mess been addressed.

On the opposite end of the possible budgeting methods is “zero-based budgeting”. Zero-based budgeting is the process of building a brand new budget from the ground up each and every year. As stated in the Small Business Accounting Guide, “(ZBB) is a method of budgeting which requires you to justify all planned expenditures for each of your new business period[s]. It defers [sic] from traditional incremental methods which may only require you to explain the amounts you need in excess of the previous period’s funding.” (http://www.small-business-accounting-guide.com/zero-based-budgeting.html)

Baseline budgeting is easier for politicians who either can’t be bothered to spend the time necessary to actually create an annual budget from the ground up or who don’t want to cut pet projects and excess pork that benefits their own constituents (and thus, their chances of getting re-elected). Baseline budgeting also increases the likelihood that expenditures will be made annually that no one is actually aware of. To make a baseline budget sustainable over a period of years or even generations, you must have an infinite and ever increasing source of money and resources. Without such an infinite or growing pool of resources, taxes must be continually raised and new sources of taxation must be found, otherwise you have a system which continually increasingly overextends itself. Eventually, the golden goose (the taxpayers and revenue sources) die, leave or rebel because they have no more to give.

If you want to see a demonstration of why continuous baseline budgeting without a sufficient resource pool to draw from creates an unsustainable economy try this, get some Legos® and attach one block to a Lego base. So far, so good, it is solidly grounded. Now, what you do from there is to continue adding new Legos to the stack (not the base, the stack) you have started EXCEPT that, instead of placing new Legos completely over the ones already there, you add each subsequent Lego one step off from the one below. This creates a stair-like effect. The problem is that, without addition support from its base, you eventually reach a point where the weight on the topmost and farthest point of the stack is too great to be supported by the base and the end topples over. When it does collapse though, the top block is not the only one that falls off. Because of the connectivity of the blocks to the ones above and below them, most of the stack will collapse. THAT is the end result of continuous baseline budgeting.

Another way to look at it is that our government is a drug addict and the drug which they need to get high is tax dollars. As with any long-term and strung out junkie, the amount of drugs needed to give them their fix increases. Junkies do not make wise choices. The will ignore food, hygiene, love, any and everything which does not contribute to their high. They will also beg, borrow and steal money from anywhere that they can in order to buy them their drugs because they can’t make rational decisions. Eventually, those who have willingly or unwillingly financed their habit want their money back. If you don’t see where this is going, try watching the movie Less Than Zero and imagine that the character played by Robert Downey, Jr. is our government.

Things would be bad enough if baseline budgeting was the ONLY budgeting problem that our government has. Unfortunately for us (the taxpayers) there are quite a few other flaws in the system. As a result, simply changing our budgeting method to a zero-base budgeting system (or to any one of several other possible ideas, such as program based budgeting) will not fix the problems with government expenditures.

Another of the problems (out of many) is that budgets are made based on PROJECTIONS of what Congress and the President THINK our national income will be for a given year. As a result, the actual amount of what is available is always wrong. If the projection is too high, then money will have to be “borrowed” to make a budget work. If the projection is too low then the excess money will STILL be used to fund SOMETHING. How this problem works is that taxes are due in April and usually by October, the government has a pretty good idea of what they actually have to spend. This is good because it coincides with America’s fiscal year. This is bad because what is being budgeted for is the fiscal year starting the NEXT October. While it would be painful to remedy this (and take several years), the time to present the next year’s budget can be moved back by two or three months each year until eventually budgets that are presented are based on what the real government income was (and which has been in “the bank”) since the PREVIOUS October. This, again, draws back to the analogy of the drug addict and trying to clean him up and wean him off of his drugs. Right now, we are theoretically spending money a year before we have it. We need to move things back until we are only allowed to spend what we have had in our hands since the previous October.

On another front, while in THEORY the budget is made up of a lot of individual budgets for all of the different budget areas, what is now the common practice is to make the process so continuous and time consuming that eventually Congress is forced by time limits to roll everything up into huge and monstrous constructs, so big that NO ONE can actually know what is contained within them, called omnibus budget bills. ( http://corporate.cq.com/wmspage.cfm?parm1=232) As a way to delay the “need” of passing of omnibus budget bills, Congress can, and does, pass what is called a “continuing resolution” or a CR. (http://www.thisnation.com/question/003.html) What a CR does is authorize the government to continue spending what it is already spending based on the lowest possible amount… the amount proposed by the Senate, the amount proposed by the House, or the actual expenditure. While holding spending at the lowest level asked for might, on the surface, sound good, it is usually a political ploy to either hurt programs not liked by some members of Congress or to continue funding a pet project that might otherwise be cut. This game is played out until the “clock” runs out and, viola, the only option available is to pass yet another omnibus package.

There are many more problems which simply screw the taxpayer each year, such as earmarks, pet projects, hidden budgets, etc. Did you know that Congress gets an AUTOMATIC pay raise every year unless it votes to specifically NOT give itself a pay raise in any particular year? Because of a law passed in 1989, Congress doesn’t have to do anything or pass anything to get their automatic raise each year. If they do NOTHING they get the raise. (http://usgovinfo.about.com/cs/agencies/a/raise4congress.htm) In addition, for a nation which was designed to have no permanent political class, elected office now comes with huge pensions and benefits. (http://money.cnn.com/2006/01/20/commentary/wastler/wastler/index.htm).

In addition, our legislatures operate under a sort of reverse-NIMBY (Not In My Back Yard) philosophy when it comes to spending taxpayer’s money. I say reverse because (unlike politicians doing whatever they can to keep anything potentially negative from happening in the locations that they represent, no matter how necessary they might be or how they might be the best solutions for our nation, as a whole), politicians will say that we need to reduce spending EXCEPT for the spending that benefits their districts or states. Hey, we have too many military bases; no problem, we will close some, EXCEPT for the ones in my district. Wow, that project is a huge sinkhole for money but the money goes to my constituents so, by God, I will fight tooth and nail to keep it funded. Everyone agrees that spending needs to be cut but no one is willing to cut spending that benefits them or their businesses, no matter how much sense it might make to stop that spending. We have become a nation of whores who will justify any and every atrocity as long as we personally make money off of it. Such spending is nothing more that wholesale bribery by our legislatures to us, the people, to buy our votes to keep our Senators and Representatives in their jobs. “Every government is a parliament of whores; the thing is, in a democracy, the whores are us.”(Anyone who is interested in how our government works, or doesn’t work, but has not read P. J. O’Rourke’s brilliant Parliament of Whores needs to read it as soon as they can.)

So, what are some of the actual ways in which our government budgeting process and its resulting need for ever larger amounts of revenue harm the people of America. Well, for one thing, if we go back to the drug addict analogy, our government is not just addict, it is also a powerful “crime lord”. For a nation born from a tax revolt, America has become one of the most, if not the most, greedy and oppressive nations in the world when it comes to collecting taxes, even to the extent of its belief that collecting American taxes justifies its right to bully other nations into cooperating with the IRS. The United States is unique in the world in its obsession with collecting taxes from any and every American living outside of the US. (http://www.ivdgl.org/pages/c-lifeevents/expatriation.html) (http://wapedia.mobi/en/Tax_evasion) (http://www.richw.org/dualcit/faq.html#discover)

Unfortunately, this standard only seems to apply to individuals who the government can beat up on. Large American corporations can, for all intents and purposes, buy their way out of being taxed, even when they “base” themselves outside of The United States, by simply giving politicians “great heaping wads of cash” or, to use O’Rourke’s phrase, “more money than you can shake a stick at AND the stick”. If individual citizens were to do this, they would be considered “tax evaders” and prosecuted wherever they might relocate to. America wants “its” money and it is damn well going to get it, even if it means hounding geriatrics into their graves.

So, how can our national and state budgets be fixed before everything collapses? First, some generation is going to have to accept that it is going to be screwed, either by cutting or losing their own benefits or by being left holding the hot potato when it blows up. I realized this many years ago, when my own grandparents were still alive and I, in my twenties, listened to my grandfather get very angry about anything being done or even talked about by the government which might lessen his own benefits without any concern for what kind of mess would be left behind. Now, I loved my grandfather, he still is one of my heroes, but, at that moment, all I could think was “You selfish bastard; what about your own grandkids?

I realize that it is unconscionable to take away from people who have already entered their last years because they cannot rebuild their own lives. We cannot expect those generations to harm themselves like that. If sacrifices are going to be made, one of the younger generations will have to make them. Just as it is not reasonable to ask the dying generations to make such sacrifices, it is immoral to say to younger generations “I don’t care what happens to you or what you are left with. I’m going to get mine while I can and to Hell with anyone else.” (This, of course, is essentially the foundation of Ayn Rand’s objectivist “philosophy”.) This is where my call to action comes in. While this mess was created and worsened by the generations of our parents, grandparents and great-grandparents, if my own generation doesn’t simply suck it up and take the bullet, it will be the generations of our children and grandchildren and great-grandchildren who will be hurt, and even worse than we would be by taking the hit now.

My grandfather’s generation has been called “the greatest generation” because it fought and died to save the world from the Axis powers in WWII. How can any of us expect to beat what they did? What we can do is harm ourselves in order to make things better for the generations which follow us and, maybe, give them something to live up to. We can become “the NEXT greatest generation”. This is my call to my own generation; this is my call for us to be heroes to the generations that follow us. Let us make the painful choices now. Let us absorb the harm, the lessening of benefits, the belt tightening, the need to rely on others to personally help us because we won’t be getting the help from the government that many of us will need.

I would also ask my readers to keep in mind that not only is my monthly government disability check my own source of income; I have no children to either rely upon or to worry about leaving our messes to. I have every reason to keep things the way that they are now and no reason to worry about how any future generations might be harmed. I have nothing to gain in this and everything to lose, but, if it would help future generations, I would willingly give up what I personally get and need. Would any others from my generation agree to make the necessary sacrifices themselves? Can we be the ones who clean up the mess that has been left to us? Do we have to courage to make ourselves “the next greatest generation”?

Rhys M. Blavier
Romayor, Texas

“Truth, Justice and Honor… but, above all, Honor”

© copyright 2010 by Rhys M. Blavier

Thank you for reading this article. Please read my other articles and let me know what you think. I am writing them not to preach or to hear myself think but to try to create dialogs, debates and discussions on the nature of our government and how we can build upon and improve it based on what we have seen and learned over the course of the 225 years of The American Experiment.

The Cost of Doing Business

In Activism, Libertarian, Libertarian Party-US, Libertarian Politics, Spending on December 29, 2009 at 10:27 pm

When I moved my family from Michigan to Nashville three years ago one of the decisions we had to make was where we were going to live. We could have chosen to live in the heart of the action and moved to a loft in down town Nashville. We chose to spend half as much and move to a neighborhood. Sure, when we go to see a ball game or attend a play we have to fight traffic and drive downtown. In the long run, by living away from downtown we free up thousands of dollars a year to spend on other things.

If you run a business or run a household you know that we make economic decisions daily. Often the issue is not how much you spend; it is how you are spending it.  By spending money on one thing you now have less to spend on other things. This is a lesson Libertarians have been trying to teach government for years.

In order for the Libertarian Party to have moral authority to teach this lesson it is imperative that we make sure as a party we are wisely spending our own money. Federal Election Commission December report shows the LNC pay’s $10,928.89 a month for office space.  To put this into some perspective, a sustaining member pays $25.00 annually for their membership; it takes over 437 sustaining members a month to pay the rent on our Washington, D.C office. If you are a sustaining member, it took you and 5,245 others to pay the rent on our national office in 2009.

Just like that loft in Nashville, the Watergate office puts us right in the heart of the action. But, could this money have been spent more wisely? If the Ron Paul campaign taught us anything, it has taught us that donors care more about your web address then they do your office address.  The Milken Institute publishes a “cost of doing business” index every year. Recent findings by the institute showed the average cost of office rentals in all fifty states and ranked the state of Virginia in the exact middle. The average monthly office rent in the State of Virginia is $1.72 a square foot.  The monthly cost of our Washington, D.C. office is $4.00 per square foot.  If you were to move the D.C. office into Virginia (which is within driving distance to Washington D.C.) the party could conceivable free up close to $80,000 annually to spend on other things.

The FEC December report also shows the LNC spent a total of $0 on candidates in 2009. Several states grant automatic ballot access for the party if a candidate for a state wide office obtains a certain percentage of the vote. We can lose an election and win a campaign. When our state candidates gain a certain percentage, the national party is often rewarded with ballot access for our presidential candidate.  What if the party spends less on an office and more on our candidates, on ballot access and outreach? It is within the realm of believability that by financially supporting state wide candidates we could end up spending less on ballot access in some states. By having to spending less on ballot access in some states we could spend more on candidate’s campaigns and ballot access in other states. You can imagine how this ripple effect could turn out.

I am not advocating moving the national office into Virginia. In the electronic age we live in, the national office could conceivable be located anywhere. South Dakota ranked the cheapest place to have an office at a monthly rate of $1.15 a square foot. I am advocating a serious look into the expensive cost of running an office out of Washington, D.C. I am advocating that we as a party look at how we spend our money. Most importantly I am advocating we spend more on the real work of a political party, outreach and campaigns, and less on having an office in Washington D.C.

Scott Williamson is currently the S.T.A.R Representative of Outright Libertarians USA, Chair of Outright Libertarians Nashville and the Secretary for the Libertarian Party of Nashville and Davidson County. He is often a guest on Queer Talk Radio and Out and About TV political round table where he promotes the libertarian philosophy to the GLBT community. Scoot is currently considering running for LNC Regional Representative.  Scott holds a degree in Political Science and resides in Nashville, TN with his partner Brian Rhinehart. You can read more by Mr. Williamson at www.outrightnashville.com; and, you can contact Scott at scott.williamson01@comcast.net.

Live-blogging: Hamilton’s Curse: Chapter 2: Public Blessing or National Curse?

In Books, Censorship, Corruption, Economics, First Amendment, History, Libertarian, literature, Live-blogging, Spending, Taxation, US Government on May 22, 2009 at 4:32 pm

It’s unfortunate that economics is such an esoteric subject, for it certainly impacts all of us.  It’s perhaps all the more unfortunate because of the ease with which the political class can confuse and dupe the public, thereby exploiting the masses.

Thomas J. DiLorenzo begins the second chapter of his Hamilton’s Curse noting that “[g]overnment debt is every politician’s dream” because it allows him or her to “buy votes by spending on government programs…that will make him popular now, while putting the lion’s share of the cost on future taxpayers, who must pay off the debt” (p. 38).

The result of this is obvious enough: we, the taxpayers, never truly grasp how expensive are the programmes with which we’re presented, and so the debt keeps mounting.  The national debt, at the time DiLorenzo was writing his book, had exceeded $9 trillion, with unfunded liabilities mounting around $70 trillion (p. 39).

Then there’s “the biggest government program of all—war” (Ibid.).  The American taxpayer would be much more likely to demand peaceful relations if they were presented with “an explicit tax bill for it” (Ibid.).  Thus DiLorenzo writes, “Taxpayers feeling the sting of gigantic wartime increases would be much more inclined to pressure their governmental respresentatives to limit their military adventures to national defense purposes, as opposed to imperialistic ventures based on more dubious motives” (Ibid.).  And this is why Jefferson held that “the perpetuation of debt, has drenched the earth with blood” (p. 40).

What has any of this to do with Alexander Hamilton? It was precisely Hamilton who “championed,” in pursuit of his goal of bigger, more centralised government and imperial glory, “the creation of a large national debt” (Ibid.).  He did this in two ways:  He (1) encouraged the federal state to assume all of the debt from the old government and (2) encouraged the central government to assume the war debts of the various states (pp. 41, 46).

His first proposal was very popular, as it allowed the political class to become much more wealthy.  Federal politicians and other New Yorkers learned of the federal government’s plans to pay off old war debts at full face value long before the information could filtrate to the rest of the country and the many holders of old war bonds.  These members of the political class, with their inside information, quickly entered the game of speculation, buying up these government bonds around the country from “haplass and unsuspecting war veterans at prices as low as 10 percent of full value” (pp. 41–42).  Republicans and Federalists alike profited from the graft.

This did not sit well with James Madison, however, who proposed that the original bondholders also be paid at full value.  Madison was denounced “as a dreamer” (p. 44).

Hamilton’s second proposal was not as popular as his first.  For one thing, this entire generation saw the various states as free and independent countries, with the federal government being merely a meeting of the states to better secure their basic and collective needs, such as defence or the coining of a uniform currency (p. 46).  For another, the states that had already paid off their debt, such as Virginia, did not want to have to socialise the debt of the other states that had not been in their opinions as dilligent (p. 47).  As such, Hamilton’s assumption plan was defeated in Congress no less than five times (p. 48).  It did not eventually pass until Hamilton struck a deal with Jefferson to allow the U.S. capital to move from New York to Virginia, something Jefferson had desired but the Hamiltonians had, until that point, been blocking (Ibid.).

The reason Hamilton wanted the newly centralised government to assume vast quantities of debt was that “he wanted to tie the wealthy to the state as a permanent, big-government lobbying class” (p. 45).  The primary government bondholders, after all, would be the more affuent citizens, and they would have an “interest in continued borrowing and continued tax increases to assure that they would be paid their principal and interest” (Ibid.).  Therefore Hamilton, not surprisingly, also rallied for higher taxes, “including the notorious tax on whiskey, a carriage tax, and a national property tax (which spawned a tax revolt in massachusetts—the Fries Rebellion)” (p. 43).

Hamilton defended the “[p]lundering of the working class with onerous taxes” because he saw Americans as too “indolent” and held that these harsh taxes would encourage the people to work harder (Ibid.).  Of course, the opposite is true.  The more people have to surrender in taxes, the less motivated they are to work hard.  What’s the point, they ask, when Uncle Sam is taking it all anyway?  Perhaps one of the worst aspect of these changes was the opportunity for a standing army of tax-collectors to be created, precisely what Hamilton had used to squash the Whiskey Rebellion (p. 44, cf. 33–36).  DiLorenzo cites this as “one of the chief reasons why the Anti-Federalists never trusted Hamilton.  A standing army of tax collectors could (and eventually would) destroy states’ rights altogether” (p. 44, cf. 48).

As I expressed in my previous entry, I’m not personally fond with DiLorenzo’s use of the term “states’ rights.”  Governments, after all, cannot possess rights.  Only individuals—and the voluntary associations they create—can possess rights.  The founders understood clearly that states did not and could not possess “rights,” and thus, when they drafted the tenth amendment, they clearly referenced powers rather than “right.”  What this Hamiltonian centralisation of power threatens, therefore, are the powers that were reserved to the states under the U.S. Constitution.

In any event, there were those who opposed Hamilton’s nationalist schemes.  Albert Gallatin of Pennsylvania called Hamilton’s assumption plan “subversive of the rights, liberty and peace of the people,” a view “endorsed by the Pennsylvania legislature” (p. 47).  (Luckily for Gallatin, Hamilton was unsuccessful in his drive to “have Gallatin arrested and put on trial” (Ibid.).)  John Taylor of Virginia pointed out that the Hamiltonian schemes “would result in ‘the accumulation of great wealth in a few hands,’ accumulted through ‘a political moneyed engine.’  It would create British mercantilism in America, in other words” (p. 48).

DiLorenzo also addresses the despicable Sedition Act, which the federal government used to silence Jeffersonians and other Republican opponents of the Federalists’ nationalist agenda.  Many innocent men were arrested under this law, including at least twenty-one newspaper editors, “all of whom supported Jefferson….  No Federalists were harassed by the Sedition Act” (p. 50).  This act, along with the Alien Acts (collectively called the Alien and Sedition Acts by historians), was what lead Jefferson and Madison to author the Virginia and Kentucky Resolves of 1798, thereby nullifying these laws within their state borders.

DiLorenzo attributes the reactionary policies of the Federalists to the 1800 Republican victory.  On pages 51–53, he details the history of national debt in the United States from the time of Jefferson to the present, showing how, over time, the amount of debt the government has opted to take on at any given time has ratcheted upward.  He concludes on page 53 that perpetual government debt “essentially relies on forced labor,” turning today’s citizens into tax serfs, and points out that governments have historically relied in the “hidden tax” of inflation to pay off debt, knowing that citizens do not notice this form of taxation in the same way they notice direct taxes.  Finally he spells out the destructive effects of this approach on pages 54 and 55, and draws the connection between Hamilton’s bad policy ideas and the destructive policies of modern Keynesians on pages 56 and 57.

Overall, I found the chapter stimulating.  Authors do not often comment, especially in any great detail, on the problems with large national debts.  This is probably because historians and political theorists often do not have much background in economics—DiLorenzo does, and is able to incorporate his understanding of this otherwise esoteric subject into his historical analysis.

—Alexander S. Peak

The Powers to Raise and to Spend Taxes (Liberal Libertarians Discussion Topic #01)

In Boston Tea Party, Charles Jay, Congress, Corruption, Democracy, Economics, Fraud, History, Law, Libertarian Party-US, Libertarian Politics, Politics, Pork, Spending, Taxation, Thomas L. Knapp, US Government, War on April 15, 2009 at 7:29 pm

The single greatest factor behind the rise and development of the English Parliament was taxation. What very quickly developed, and what lasted until the British Monarchy lost its functional power as a part of government and became a marginalized figurehead position (which happened over the course of the 1800s) was that the power to SPEND tax money was separated from the power to RAISE tax money. Under that system, only Parliament could RAISE tax money but only the Monarch could SPEND tax money. If the Monarch wanted to spend anything (for wars, his houses and mistresses, public building projects, anything) they had to convince Parliament to raise the necessary tax monies and give those money to him 9or her). Likewise, if Parliament wanted money spent on anything in particular, they had to convince the Monarch to agree to spend raised money in such ways. The inherent conflict within the system required negotiation and compromise from both sides. Sometimes one side would be more powerful than the other and would dictate to the other. Likewise, Kings would often not actually spend money as they agreed to. THOSE situations would lead to further conflicts in the future. Sometimes the Monarchs would simply get sick of their Parliaments and would dismiss them and not call another to replace it, but then the King could not raise any money. In those situations, the losers would usually be the common people who were hurt by both sides.

One of the main sources of conflicts between Monarchs and Parliaments (as in ALL nations) was the exorbitant costs of the wars which the Monarchs would want to fight. Because of the unique circumstances of both WWII and the Viet Nam war, Americans now think that wars create profit. They do not. Wars are and always have been burdensome drains on the public coffers. Monarchs want wars for various reasons, but those wars HAVE to be paid for… even in a dictatorship… and, historically, most wars bankrupt their nations as well as the other nations involved. Look at the current situation with our undeclared wars in Iraq and Afghanistan. Let’s not even get into the cost to human life or to property, let us just look at the actual fiscal cost to fight them, clean them up, care for our veterans afterwards, intelligence… all of it. The problem is, in America, because of the way the power to raise and spend tax monies is allocated, the dialogue is usually focused on questioning the patriotism of those who disagree with one side; on attempts to gain power by individuals, parties, factions, ideologies or branches of government; or is hurting our ability to deal with OTHER national priorities by saying we can’t question the money we spend on our wars so we cut the pennies in order to be able to keep throwing away the dollars.

So… in all of the discussion we hear these days about taxes, we are still simply talking about the ‘symptom’ of actual taxation rather than trying to explore the root causes of the actual problems. To ME, the issue is not whether or not taxes are too high, or if they are properly spent, it is that there is no incentive or system in place to DISCOURAGE spending OR raising tax money. If you give the people who have the power to SPEND your money the additional power of determining how MUCH of your money they can take you have the fox guarding the hen house. To me, before we talk about the very real issues of tax codes and policies in America, we need to talk about the basic powers involved in the fundamental issue of taxation.

Here is my personal idea, to start the ball rolling:

01.) ONLY The House of Representatives should have the power to RAISE tax monies. The functions of government which deal with raising and accounting for the expenditures of those monies should be placed under the authority of The House… the people’s house of government. I think that the IRS is the wrong organization for our nation but before it can be dismantled, we need to figure out something to take its place because its ROLE is, and will be necessary. We can NOT destroy something which has such a key role in the operation of our government (whether it SHOULD or should NOT HAVE that role is irrelevant… it does and it must be dealt with as a reality). The House should be completely in charge of our nation’s checking and savings account. This would result in Representatives keeping THEIR jobs in large part based on how they keep taxes low.

02.) ONLY the Senate should have the power to SPEND tax monies. The functions of government which deal with purchasing, contracting, supervising, etc. the expenditures of those monies should be placed under the authority of The Senate. The Senate should be completely in charge of our nation’s checkbooks, passbooks, and ATM cards. This would result in Senators keeping THEIR jobs in large part based on how much swag they can send back home.

03.) The President should be the mediator that coordinates the efforts of the two house of Congress and makes the deals. The President would also be the one who would make sure that all agreements between the two houses on both the raising AND the spending of tax monies would be followed to the letter. The President would be the one who makes sure that every side is honest with the other. The President would also be the one who signs off on all agreements (budgets) and certifies them as satisfying all sides and being in the best interest of the American people.

04.) All three parties involved (The House, The Senate and The Executive Branch) would have complete and unrestricted access to all records, notes, documents, EVERYTHING made or kept by any of the other parties regarding ANY issue regarding or relating to taxes. Further, all finalized, ratified and signed budgets and expenditure agreements shall have full force as LAWS for their durations and any violations of any parts if those agreements and budgets can be prosecuted as such, with the individuals responsible for those violations… ALL individuals at ALL levels up and down the ‘food chain’… being PERSONALLY accountable and liable for those violations (whether it is a Senator, the members of a specific committee, or a clerk who signs a check… EVERYONE is accountable and THUS has the motivation to be honest and above board about all actions and decisions regarding taxes).

05.) All three parties involved (The House, The Senate and The Executive Branch) would create a non-partisan, non-governmental committee or board, to which they will all appoint an equal number of members, which has the power and authority to review and mediate all agreements and violations and to make final and binding non-partisan decisions regarding the same when there are ANY questions about or challenges to finalized agreements or budgets which deal with tax monies and their expenditures. Each state would also get to choose one or two members of this board. Obviously all of the exact details would need to be carefully studied and worked out.

06.) SOMEHOW, The Federal Reserve and The National Bank (and any other such relevant entities) would be brought back under full federal control and incorporated into this who system… somehow.

No matter what our own personal and unrealistic idealistic vision of our government is, taxes are real, they are not going to go away and they ARE necessary. What WE need to do is to try to figure out how to make the system work better and fairer so that it can be a positive factor in our society rather than one which puts us at each others. throats.

Ok, those are my initial thoughts. What can anyone else contribute? How can anyone else make these ideas better or give us different ideas which are better? What can we do with this?

Recommended Readings for people interested in this topic are:

1.)For Good and Evil (Second Edition): The Impact of Taxes on the Course of Civilization
By: Charles Adams (Tax Scholar and Historian, Cato Institute Fellow) http://www.amazon.com/Good-Evil-Second-Impact-Civilization/dp/1568332351/ref=sr_1_1?ie=UTF8&s=books&qid=1224912619&sr=1-1

2.)Those Dirty Rotten taxes: The Tax Revolts that Built America
By: Charles Adams (Tax Scholar and Historian, Cato Institute Fellow) http://www.amazon.com/Those-Dirty-Rotten-taxes-Revolts/dp/0684871149/ref=sr_1_1?ie=UTF8&s=books&qid=1238470625&sr=1-1

Rhys M. Blavier
Romayor, Texas

© 2009 by Rhys M. Blavier

Thank you for reading this article. Please read my other articles and let me know what you think. I am writing them not to preach or to hear myself think but to try to create dialogs, debates and discussions on the nature of our government and how we can build upon and improve it based on what we have seen and learned over the course of the 225 years of The American Experiment.

To discuss this topic, the discussion thread is going on here: http://blavier.newsvine.com/_news/2009/04/15/2688338-the-powers-to-raise-and-to-spend-taxes-liberal-libertarian-discussion-topic-01

John Stossel Takes On the Bailouts

In Drug War, Economics, Immigration, Media, Medical Marijuana, Spending, Taxation, US Government on March 17, 2009 at 8:56 pm

This past Friday, 20/20 had a special report titled “Bailouts and Bull,” explaining why stimuli and bailouts will do nothing to jump-start the economy.

More than 300 economists earlier this year signed a petition declaring their view that “more government spending is [not] a way to improve economic performance” and that “[t]o improve the economy, policymakers should focus on reforms that remove impediments to work, savings, investment and production.  Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.”

Eighteen of these economists were interviewed for Stossel’s special report.  Among those interviewed are two of my own professors, Dr. Howard Baetjer (back row, second from the viewers’ left) and Dr. Joe Pomykala (front row, on the viewers’ right), both of whom were lucky enough to get face-time.

I spoke to Prof. Baetjer this past Wednesday.  He explained that Stossel interviewed the eighteen economists both as a group and on a one-on-one basis.  Baetjer said he enjoyed the experience, and would love to do further televised interviews in the future.  In my own experience, I find Baetjer to be a very upbeat guy who is quite gifted at explaining economic concepts.

In watching the special, one can see that not everyone was lucky enough to have her or his interview used.  Baetjer, for example, said that when Walter Williams was interviewed, Williams allegedly said, “I don’t even know why we’re discussing the economics.  These bills are unconstitutional!”

For those that missed the 20/20 special, the Mises Economics Blog has made the entire episode available.

In addition to explaining that bailouts and “stimuli” are not the solution, the special report also (A) explains why privatising roads is an effective means of alleviating road congestion, (B) details how the federal government is oppressing medical marijuana retailers even in states that have legalised the medicine, (C) shows that universal pre-K is not a desirable government programme, (D) explains why building a fence between México and these United States is a huge waste of money, and (E) posits how a destitute person with no college degree can gain wealth in America.

—Alexander S. Peak

It’s the Economy, Stupid!

In Barack Obama, Corruption, Democrats, Economics, George Bush, Pork, Republican, Spending, Taxation, US Government on March 17, 2009 at 6:51 pm

The Mercantus Center at George Mason University released yesterday an overview of the Bush spending policies.  And as any libertarian can tell you, those eight years were not pretty.

According to the data (Table 1), spending under Bush increased each and every year.  The smallest budget increase, from ’06–’07, was one of $75,000,000,000, while the largest budget increase, from ’08–’09, was $955,000,000,000.  Overall, the budget increased from 2002 to 2009 from $2,011 billion to $3,938 billion.  That’s a total increase of $1.93 trillion.

Entitlement spending and discretionary spending both also increased each and every year Mr. Bush was president.  Net interest and deficit spending fluctuated over this same period, but deficit spending took place each of Bush’s eight years, between $158 billion in 2002 and $1.75 trillion in 2009.

The data also tell us that government spending increased under the Bush regime more than under any of the previous six presidents, including the Johnson regime (Table 2).  It is estimated that in Bush’s second term, real total outlays increased by 48.6%, exceeding that of Johnson’s 35.8%. Bush’s first term saw an increase of 18.9%, the biggest increase since Johnson, beating Carter’s 17.2%.

I recognise that not everybody is going to be familiar with the term outlays; it’s not a term used often.  The website of the U.S. Senate describes outlays as follows: “Outlays are payments made (generally through the issuance of checks or disbursement of cash) to liquidate obligations. Outlays during a fiscal year may be for payment of obligations incurred in prior years or in the same year.”  Wikipedia probably gives a better definition for layman use. According to Wikipedia, the term “outlays” is usually synonymous with “expenditure” or “spending” (cited 17 March 2009, 4:36 PM).

Total outlays can be divided into two general camps: (1) entitlements and net interest payments and (2) discretionary spending.

Entitlement spending is any spending the government thinks it has to make, and includes such things as Social Security, Medicare, and the like.  The idea is that the government has already established these programmes and informed citizens that they are supposedly entitled to this money; thus, the government says, it must spend its money on these things in accordance with the already-established policies of the programmes.  To eliminate or alter this spending, the government would not merely need to alter the budget, but would also have to alter the programmes themselves, say for example by raising the age necessary to receive the Retirement Insurance Benefits of Social Security from 62 to 64.

Discretionary spending is all other spending, from military expenditures to earmarks for wood utilisation research.  (And, yes, Bush did approve spending for wood utilisation research.)  Thus, discretionary spending is itself divided usually into two camps: (1) defence spending and (2) non-defence discretionary spending.

The data are not in yet for these two types of discretionary spending under Bush’s second term, but it is estimated that his total second term discretionary spending entailed an increase of 29%, the highest since Johnson’s 33.4% increase (Table 2).  And in these past ten terms, who had the third highest increase in discretionary spending, following Johnson’s one term and Bush’s second term?  Why, once again it is Mr. G. W. Bush, with his first term (2001–2005), with his increase of 27.7% over Clinton’s second term.

Some may find this surprising, but of the past ten terms, it appears the most responsible President (at least as far as spending is concerned) was Bill Clinton, at least in his first term where total outlays only increased by 4.2% and discretionary spending actually decreased by 8%! This isn’t to say that Clinton was an ideal president, but if I had to choose between Bush and Clinton in the realm of spending, I’d choose Clinton in a heart-beat.  (Figure 1 makes a direct comparison between Mr. Clinton and Mr. Bush, showing the actual spending in millions of dollars between the two men.  According to the source, “Adjusted for inflation, in eight years, President Clinton increased the federal budget by 11 percent.  In eight years, President Bush increased it by a whopping 104 percent.”)

Although the specific numbers are not yet available for Bush’s second term, we can still analyse his first term discretionary spending.  In doing so, we find that his defence spending increase at the dramatic rate of 36.0%, more than any president in the pat ten terms, even beating out Johnson’s 33.1% and Reagan’s 26.1% (Table 2).  We can also see that his first term non-defence discretionary spending increased by 20.7%, the highest increase since Nixon’s 25.5% increase, beating Clinton’s second-term 14.4% and his own father’s 13.9%.

Figure 3 compares the cumulative real discretionary spending of Bush, Clinton, and Reagan over each of their eight years.  What I find most remarkable about this is the paragraph that follows:

President Bush outspent both Reagan and Clinton.  President Reagan boosted defense outlays by 41 percent during his terms, but he also cut real nondefense outlays by 10 percent.  Overall, total discretionary spending increased by 15.8 percent during Reagan’s terms.  During Clinton’s first term, real discretionary spending actually decreased by 8 percent.  During his second term, with the Republicans in control of Congress, it increased by 8.8 percent.  Over Clinton’s eight years then, real discretionary spending increased by 0.1 percent.  During his two terms in office, however, President Bush increased real discretionary spending by 44 percent.

Figure 9 is also quite interesting.  It depicts Congressional pork from 1994 to 2009.  1994 is the last year that the Democrats held control of Congress before the Republican Revolution of ’94.  After that point, we see the number and cost of earmarks skyrocket, especially in the years Bush was president, culminating in $29 billion dollars worth of pork in 2006, the last year Republicans held control over Congress.  Following the Democratic Revolution of ’06, the Democrats seem to have briefly attempted to abide by their libertarian mandate (remember, it was libertarian-leaning Republicans voting for Democratic candidates to protest the high spending and unnecessary wars of the GOP that enabled Democrats to win all those new seats) by reducing pork to $13.2 billion, the lowest it had been since 1999.  But the Democratic reforms did not last, and Democrats have since fallen into the same nasty habit as their Republican allies, increasing pork expenditures back up to $17.2 billion the following year.

The publication concludes with the following remarks:

Republicans often claim to be the party of smaller government.  Many Republicans would express support for Ronald Reagan’s observation:  “Growth, prosperity and ultimately human fulfillment, are created from the bottom up, not the government down.”  Unfortunately, once Republicans are elected to political office, they tend to fall into the Washington trap of assuming that more federal spending will solve the nation’s problems.  Certainly, President Bush appears to have fallen into this trap.  So did the Republicans in Congress.

Harvard economist Jeffrey Frankel argues that we should not be surprised by the discrepancy between the rhetoric and the actual policies of Republicans.  Frankel even argues that “the Republicans have become the party of fiscal irresponsibility, trade restriction, big government, and bad microeconomics.”  Frankel is incorrect about the microeconomics—Republicans generally pursue sounder tax policies than Democrats, for example—but when it comes to big government spending, the Bush Administration seems to have gone out of its way to confirm Frankel’s point.

Perhaps there’s an easy way to summarise the approaches to government of the two major parties:  Democrats want big government, while Republicans want to supersize government.  This isn’t true across the board, of course; the GOP does have a few noble, small-government friends, such as Dr. Ron Paul and Mr. Walter Jones, but they seem unfortunately few in number.

This is not to be taken, of course, as a ringing endorsement of the Democratic Party or the current president.  I have maintained in the past, and continue to maintain, that Mr. Obama is just as bad as Mr. Bush.  Ultimately, time will tell.

Nor is this to be taken as a justification for the Clinton years.  Clinton’s willingness to starve innocent Iraqis through embargo, and his administration’s authoritarian mishandling of the Waco Massacre, go to show that Mr. Clinton was by no means a man of honour.

Rather, I believe this serves another purpose: it serves as a warning about trusting Republican politicians and their talking-head partisans.  Republicans talk a good game regarding smaller government, but they never seem to deliver (with the rare exceptions mentioned above).  Thus, I recommend always taking what politicians say with a grain of salt.

—Alexander S. Peak