Monthly Archives: October 2011

Federal government loves to eat up our money: “Yum Yum Eat em up”

October 25, 2011 – 2:27 pm

The federal government loves to eat up more and more of our money. Back in the first few years of the 20th century our federal government usually spent about 3% of our money per year unless we were involved in a war, but now the percentage of GDP is up to almost 25%. It reminds me of the “Yum Yum Eat em up” short film I saw many years ago.

Federal Spending Is Outpacing Inflation

Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute.

Prices of goods and services normally rise year to year, but federal spending has risen even faster. Although spending grew substantially after 9/11, less than half of the increase can be attributed to defense and homeland security spending.

YEAR-TO-YEAR PERCENTAGE CHANGE

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Federal Spending Is Outpacing Inflation

Source: U.S. Bureau of Labor Statistics and White House Office of Management and Budget.

Chart 4 of 42

In Depth

  • Policy Papers for Researchers

  • Technical Notes

    The charts in this book are based primarily on data available as of March 2011 from the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). The charts using OMB data display the historical growth of the federal government to 2010 while the charts using CBO data display both historical and projected growth from as early as 1940 to 2084. Projections based on OMB data are taken from the White House Fiscal Year 2012 budget. The charts provide data on an annual basis except… Read More

  • Authors

    Emily GoffResearch Assistant
    Thomas A. Roe Institute for Economic Policy StudiesKathryn NixPolicy Analyst
    Center for Health Policy StudiesJohn FlemingSenior Data Graphics Editor

Wild Man From Borneo – YUM YUM EEAAAAT EM UP!

By Everette Hatcher III | Posted in Current Events, spending out of control, Taxes | Tagged , , , | Comments (0)

Obamacare at the Supreme Court

October 25, 2011 – 12:56 pm

Obamacare at the Supreme Court

The time is finally here for the Supreme Court to hear this case.

Hans von Spakovsky

September 28, 2011 at 11:00 am

The National Federation of Independent Business (NFIB) stole a march on the Obama Administration this morning by filing a petition with the U.S. Supreme Court appealing the 11th Circuit’s Obamacare decision.

The Department of Justice (DOJ) had announced on Monday that it was not going to ask all 11 judges of the 11th Circuit Court of Appeals to review en banc the August 12 decision of a three-judge panel of the 11th Circuit that found the individual mandate unconstitutional. This opened up a path to an appeal by DOJ to the Supremes.

Dan Mitchell gives 12 reasons Obamacare will fail.

__________________

However, with this petition, the NFIB jumped ahead of Eric Holder’s slow-moving DOJ (which until Monday had done everything it could to slow-walk this case filed by 26 states and the NFIB). The NFIB is obviously not appealing the three-judge panel’s opinion about the unconstitutionality of the individual mandate. But the NFIB is appealing the portion of the panel’s decision that held that the unconstitutional individual mandate could be severed from the Obamacare legislation.

The NFIB is asking the Court to overrule this holding, since “Congress itself deemed [the mandate] ‘essential’ to the Act’s new insurance regulations.” Given that the 11th and 6th Circuits have issued “directly conflicting final judgments about the facial constitutionality of [Obamacare’s] mandate,” the case is one that the Court should obviously take up given its interest in eliminating conflicting opinions in the courts of appeal.

What also differentiates this particular case from the many other lawsuits that have been filed against Obamacare is the “all star” lineup of Supreme Court litigators that the NFIB and the 26 states have lined up to argue their case before the Supreme Court. It includes Michael Carvin, a former DOJ official who has argued (and won) numerous cases before the Court; Gregory Katsas, a former DOJ official who was a clerk to Justice Clarence Thomas; Kevin Marshal, another former DOJ official and Thomas clerk; Hashim Mooppan, a former Justice Antonin Scalia clerk; and Randy Barnett, a nationally recognized constitutional scholar and professor at Georgetown.

The lawyers for the states include Paul Clement, former Bush Administration Solicitor General; Lee Casey, another former DOJ official who clerked for Alex Kozinski, who is now the Chief Judge of the Ninth Circuit; and David Rivkin, another Supreme Court litigator with wide experience in the government, including in the White House and the DOJ.

The government lawyers in the DOJ’s Office of the Solicitor General who will be arguing the constitutionality of Obamacare will have their work cut out for them.

By Everette Hatcher III | Posted in Healthcare, President Obama | Comments (0)

Each American’s Share of National Debt Is Growing

October 25, 2011 – 11:52 am

Each American’s Share of National Debt Is Growing

Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute.

As Washington continues to spend more than it can afford, future generations of taxpayers will be on the hook for increasing levels of debt. The amount of debt per citizen will skyrocket.

INFLATION-ADJUSTED DOLLARS (2010)

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Each American's Share of National Debt Is Growing

Source: U.S. Census Bureau and Congressional Budget Office (Alternative Fiscal Scenario).

Chart 21 of 42

In Depth

  • Policy Papers for Researchers

  • Technical Notes

    The charts in this book are based primarily on data available as of March 2011 from the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). The charts using OMB data display the historical growth of the federal government to 2010 while the charts using CBO data display both historical and projected growth from as early as 1940 to 2084. Projections based on OMB data are taken from the White House Fiscal Year 2012 budget. The charts provide data on an annual basis except… Read More

  • Authors

    Emily GoffResearch Assistant
    Thomas A. Roe Institute for Economic Policy StudiesKathryn NixPolicy Analyst
    Center for Health Policy StudiesJohn FlemingSenior Data Graphics Editor

By Everette Hatcher III | Posted in spending out of control | Comments (0)

Video clip of Michele Bachmann in interview after October 11, 2011 Republican debate

October 25, 2011 – 9:48 am

I do like Michele Bachmann a lot and I love what she has to say in the article below too.

Slate.com vs. Tea-Party/Christians/Bachmann

Posted by Andrew J. Coulson

Slate worked itself into a lather yesterday over the insidious education policy implications of Michele Bachmann’s Iowa Straw Poll victory:

As recently as a decade ago, Republicans like George W. Bush, John McCain, and John Boehner embraced bipartisan, standards-and-accountability education reform…. Now we are seeing the GOP acquiesce to the anti-government, Christian-right view of education epitomized by Bachmann…. Against a backdrop of Tea Party calls to abolish the Department of Education and drastically cut the federal government’s role in local public schools….”

To support this narrative, Slate asked Bachmann what the federal government’s role was in education, to which she replied, “There is none; Education is a matter reserved for the states.”

Oh, whoops, sorry. Got that last quote wrong. That wasn’t Bachmann‘s answer, it was the answer of the FDR administration.

This answer rests squarely on the Tenth Amendment, which reserves to the states and the people powers not expressly enumerated and delegated to Congress by the Constitution. It was published by the federal government in 1943, under the oversight of the president, the vice president, and the speaker of the House.

Though it might come as a surprise to Slate‘s writers, our nation was not founded on state-run schooling. And, until very recently in historical terms, the idea that the federal government had a role to play in the classroom was unthinkable. It may have required some theorizing to evaluate the merits of Congress-as-schoolmarm prior to the feds getting involved in a big way in 1965, but now… now we can just look in the rear-view mirror (see chart below).

With nearly half a century of hindsight, advocating a federal withdrawal from America’s schools does not seem “anti-government.” Just anti-crazy.

Related posts:

Video clip of Michele Bachmann in interview after October 11, 2011 Republican debate

I do like Michele Bachmann a lot and I love what she has to say in the article below too. Slate.com vs. Tea-Party/Christians/Bachmann Posted by Andrew J. Coulson Slate worked itself into a lather yesterday over the insidious education policy implications of Michele Bachmann’s Iowa Straw Poll victory: As recently as a decade ago, Republicans […]

Rick Perry’s answer in Republican debate of October 11, 2011 (with video clip)

I really like Rick Perry because he was right when he called Social Security a “Ponzi Scheme” which it is. How did he do in the last debate? You be the judge by watching his response above. Rick Perry’s Moment Posted by Roger Pilon Last night POLITICO Arena asked: Who won the Reagan debate? My […]

Romney attacked in Republican debate of October 11, 2011 (with video clip)

I am not too pleased with Mitt Romney and the article below shows one good reason to oppose him. Can Mitt Romney Escape His Romneycare Albatross? by Doug Bandow Doug Bandow is a senior fellow at the Cato Institute. A former special assistant to Ronald Reagan, he is the author of Foreign Follies: America’s New […]

Barney Frank and Chris Dodd mentioned in October 11, 2011 Republican debate with video clip

Dodd and Frank are the real villians of the mortgage mess and I knew that 3 years ago after reading this article below. Who did the Democrats get to clean up this mess? You guessed it. What a joke. Who Are the Villains of the Mortgage Mess? by Daniel J. Mitchell  Daniel J. Mitchell is […]

Reagan’s 1982 tax increase mentioned during the Republican debate of October 11, 2011 with video clip

Reagan’s statement concerning 1982 tax increase is responded to by Republican Candidates in this clip below: Washington Could Learn a Lot from a Drug Addict Concerning spending cuts Reagan believed, that members of Congress “wouldn’t lie to him when he should have known better.” However, can you believe a drug addict when he tells you […]

Ron Paul on Fed during the Republican debate of October 11, 2011 with video clip

I really like Ron Paul a lot and the reasons I like him are in this article below and in the clip above. Ron Paul’s Success Posted by David Boaz The Washington Post reports that Ron Paul “is enjoying a surge in support and the most high-profile campaign of his life. ” Paul’s unwavering ideals […]

Cain’s 9-9-9 plan center stage at Republican debate of October 11, 2011 (with video clip)

Herman Cain’s 9-9-9 plan did steal the show at the Republican debate of October 11, 2011. Take a look at this article below: The Republican presidential debate in Hanover, N.H. (AP) There was one clear winner from Tuesday’s Republican presidential debate, based on the simple metrics of name recognition: businessman Herman Cain’s “9-9-9 Plan.” Virtually […]

Romney not conservative enough (clip from Republican debate of 10-11-11)

Mitt Romney is not a true conservative. Exhibit #1 Romney wants to start trade wars. Romney for Panderer-in-Chief? by Gene Healy  Gene Healy is a vice president at the Cato Institute and the author of The Cult of the Presidency: America’s Dangerous Devotion to Executive Power. Added to cato.org on October 11, 2011 This article […]

Ron Paul speaking at Values Voter Summit

Ron Paul speaking at Values Voter Summit In this speech above Ron Paul repeats his view that we should not have a Dept of Education and the article below does the same thing. Beating Back Big (Ed.) Brother? Posted by Neal McCluskey It certainly seems quixotic to try to reverse the federal invasion of American […]

Mitt Romney’s religion is becoming an issue

This issue concerning Mitt Romney’s religion is heating up. Baptist pastor taken to task Russ Jones and Chad Groening – OneNewsNow – 10/10/2011 11:05:00 am Popular radio and television commentator Glenn Beck wrapped up the Values Voter Summit in Washington, DC, Sunday in a wave of anti-Mormonism comments lodged towards GOP presidential hopeful Mitt Romney.   […]

By Everette Hatcher III | Posted in Uncategorized | Tagged , , , , | Comments (0)

Cato Institute grades Perry’s flat tax

October 25, 2011 – 9:15 am

I really like to read Dan Mitchell’s opinions.

Grading Perry’s Flat Tax: Some Missing Homework, but a Solid B+

Posted by Daniel J. Mitchell

Governor Rick Perry of Texas has announced a plan, which he outlines in the Wall Street Journal, to replace the corrupt and inefficient internal revenue code with a flat tax. Let’s review his proposal, using the principles of good tax policy as a benchmark.

1. Does the plan have a low, flat rate to minimize penalties on productive behavior?

Governor Perry is proposing an optional 20 percent tax rate. Combined with a very generous allowance (it appears that a family of four would not pay tax on the first $50,000 of income), this means the income tax will be only a modest burden for households. Most important, at least from an economic perspective, the 20-percent marginal tax rate will be much more conducive to entrepreneurship and hard work, giving people more incentive to create jobs and wealth.

2. Does the plan eliminate double taxation so there is no longer a tax bias against saving and investment?

The Perry flat tax gets rid of the death tax, the capital gains tax, and the double tax on dividends. This would significantly reduce the discriminatory and punitive treatment of income that is saved and invested (see this chart to understand why this is a serious problem in the current tax code). Since all economic theories – even socialism and Marxism – agree that capital formation is key for long-run growth and higher living standards, addressing the tax bias against saving and investment is one of the best features of Perry’s plan.

3. Does the plan get rid of deductions, preferences, exemptions, preferences, deductions, loopholes, credits, shelters, and other provisions that distort economic behavior?

A pure flat tax does not include any preferences or penalties. The goal is to leave people alone so they make decisions based on what makes economic sense rather than what reduces their tax liability. Unfortunately, this is one area where the Perry flat tax falls a bit short. His plan gets rid of lots of special favors in the tax code, but it would retain deductions (for those earning less than $500,000 yearly) for charitable contributions, home mortgage interest, and state and local taxes.

As a long-time advocate of a pure flat tax, I’m not happy that Perry has deviated from the ideal approach. But the perfect should not be the enemy of the very good. If implemented, his plan would dramatically boost economic performance and improve competitiveness.

That being said, there are some questions that need to be answered before giving a final grade to the plan. Based on Perry’s Wall Street Journal column and material from the campaign, here are some unknowns.

1. Is the double tax on interest eliminated?

A flat tax should get rid of all forms of double taxation. For all intents and purposes, a pure flat tax includes an unlimited and unrestricted IRA. You pay tax when you first earn your income, but the IRS shouldn’t get another bite of the apple simply because you save and invest your after-tax income. It’s not clear, though, whether the Perry plan eliminates the double tax on interest. Also, the Perry plan eliminates the double taxation of “qualified dividends,” but it’s not clear what that means.

2. Is the special tax preference for fringe benefits eliminated?

One of the best features of the flat tax is that it gets rid of the business deduction for fringe benefits such as health insurance. This special tax break has helped create a very inefficient healthcare system and a third-party payer crisis. It is unclear, though, whether this pernicious tax distortion is eliminated with the Perry flat tax.

3. How will the optional flat tax operate?

The Perry plan copies the Hong Kong system in that it allows people to choose whether to participate in the flat tax. This is attractive since it ensures that nobody can be disadvantaged, but how will it work? Can people switch back and forth every year? Is the optional system also available to all the small businesses that use the 1040 individual tax system to file their returns?

4. Will businesses be allowed to “expense” investment expenditures?

The current tax code penalizes new business investment by forcing companies to pretend that a substantial share of current-year investment outlays take place in the future. The government imposes this perverse policy in order to get more short-run revenue since companies are forced to artificially overstate current-year profits. A pure flat tax allows a business to “expense” the cost of business investments (just as they “expense” workers wages) for the simple reason that taxable income should be defined as total revenue minus total costs.

Depending on the answers to these questions, the grade for Perry’s flat tax could be as high as A- or as low as B. Regardless, it will be a radical improvement compared to the current tax system, which gets a D- (and that’s a very kind grade).

Here’s a brief video for those who want more information about the flat tax.

———-

The Flat Tax: How it Works and Why it is Good for America

Uploaded by on Mar 29, 2010

This Center for Freedom and Prosperity Foundation video shows how the flat tax would benefit families and businesses, and also explains how this simple and fair system would boost economic growth and eliminate the special-interest corruption of the internal revenue code. www.freedomandprosperity.org

________________________

Last but not least, I’ve already receive several requests to comment on how Perry’s flat tax compares to Cain’s 9-9-9 plan.

At a conceptual level, the plans are quite similar. They both replace the discriminatory rate structure of the current system with a low rate. They both get rid of double taxation. And they both dramatically reduce corrupt loopholes and distortions when compared to the current tax code.

All things considered, though, I prefer the flat tax. The 9-9-9 plan combines a 9 percent flat tax with a 9 percent VAT and a 9 percent national sales tax, and I don’t trust that politicians will keep the rates at 9 percent.

The worst thing that can happen with a flat tax is that we degenerate back to the current system. The worst thing that happens with the 9-9-9 plan, as I explain in this video, is that politicians pull a bait-and-switch and America becomes Greece or France.

By Everette Hatcher III | Posted in Cato Institute, Taxes | Tagged , , , , | Comments (0)

The Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 22)

October 25, 2011 – 8:33 am

The Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 22)

This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, but from a liberal.

Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the  debt limit “a sugar-coated satan sandwich.”

“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011.

Labrador Statement on Budget Control Act

Aug 1, 2011 Issues: Budget and Spending
 
 
 

Washington, D.C.—Idaho First District Congressman Raúl R. Labrador today issued the following statement following the passage of the Budget Control Act of 2011.

“The debt ceiling agreement that was considered by Congress today represents a good plan to resolve the uncertainty surrounding the debt ceiling debate.  It immediately cuts federal spending and implements new spending caps to prevent government expansion when our economy begins to recover.  While this bill has the potential to reduce the size of our budget and the trajectory of government spending, this bill doesn’t go far enough to make the changes necessary to get us out of our fiscal mess.

“I promised my constituents that I would come to Congress to fundamentally change the way the federal government operates. While this legislation is a good first step towards that goal, it also relies on the time honored Washington tradition of delegating problems to commissions instead of solving them ourselves. It places more confidence in its Super Commission than is warranted.  The legislation also lacks a rock solid commitment to passage of a balanced budget amendment, which I believe is necessary to saving our nation. With the help of the new members of Congress, the standard operating procedure in Washington has begun to change from spending recklessly to cutting spending sensibly, but there is a lot more that needs to change.  ”

By Everette Hatcher III | Posted in spending out of control | Comments (0)

“Tip Tuesday” Advice to Gene Simmons (Part 16)

October 25, 2011 – 12:40 am

 

gene simmons and shannon tweed picture1

Gene, 61, and Shannon, 54, have been together for 27 years and have two children, Nicholas, 22, and Sophie, 19.

I READ THIS ARTICLE BELOW A FEW MONTHS AGO. MAYBE THINGS HAVE CHANGED SINCE THEN.

Fans of Gene Simmons’ Family Jewels may be asking themselves “Are Gene Simmons and Shannon Tweed engaged or what?” This comes after a rocky season for the high profile couple on the show and a shocking proposal during last night’s finale.

While it was a touching moment to see the KISS frontman actually open up and commit fully to his longtime love (something she’s been wanting from him for a while), the moment may be bittersweet considering it happened months ago and a lot has changed since they filmed that scene.

In a recent interview with PEOPLE, Tweed revealed that she had moved out of their home and that the chances of them getting back together were “slim.”

As the finale aired last night, Tweed opened up to her Twitter followers with a few messages like “Thank you for watching and supporting me. It means the world” and “We are taking it day by day. Stay tuned.”

The real question in the back of everyone’s minds is whether the whole breakup/proposal situation was simply a storyline for the show and an attempt to draw publicity to a show that’s ratings may have been seeing a decrease.

If that was the plan, it worked.

In the photo above, taken on July 18 and posted by Tweed on Twitter, she seems to have a ring on her engagement finger (although it is bright pink – I didn’t get to see the finale last night, did they show the ring?). I’m sure she wouldn’t be wearing an actual engagement ring at that time with the risk that some might notice and ask but wearing any type of ring on that finger is very symbolic and may be a hint that they’re still together.

By the looks of this photo – Shannon and Gene are still very happy.

Seems like they’re definitely still together, although exact wedding plans may be put on hold. Gene tweeted, “Shannon and I work on our relationship every day. One day at a time. Thanks for watching. When we figure out our lives, you will know.”

Do you think Gene and Shannon are better off together or apart?

_______________________

It is obvious that Gene has been guilty of affairs all during the last 28 years. Will he straighten up and realize what he has in his family and be faithful to his wife?

In the sermon at Fellowship Bible Church at July 24, 2011, teaching pastor Brandon Barnard made a great point about the two choices that you have. You can walk down the pathway of purity or impurity. The pathway of impurity is both persuasive and inviting. 

Proverbs 5:3

English Standard Version (ESV)

3For the lips of a forbidden[a] woman drip honey,
and her speech[b] is smoother than oil,

Proverbs 6:24

English Standard Version (ESV)

24to preserve you from the evil woman,[a]
from the smooth tongue of the adulteress.[b]

Proverbs 7:10-20

English Standard Version (ESV)

  10And behold, the woman meets him,

dressed as a prostitute, wily of heart.[a]
11She is loud and wayward;
her feet do not stay at home;
12now in the street, now in the market,
and at every corner she lies in wait.
13She seizes him and kisses him,
and with bold face she says to him,
14“I had to offer sacrifices,[b]
and today I have paid my vows;
15so now I have come out to meet you,
to seek you eagerly, and I have found you.
16I have spread my couch with coverings,
colored linens from Egyptian linen;
17I have perfumed my bed with myrrh,
aloes, and cinnamon.
18Come, let us take our fill of love till morning;
let us delight ourselves with love.
19For my husband is not at home;
he has gone on a long journey;
20he took a bag of money with him;
at full moon he will come home.”

___________________________

After his marriage to Shannon will he be faithful? Is Gene Simmons going to continue to have affairs with other women that are evil? However, the Bible calls her an “evil woman.” What kind of future will have with an evil woman that is not your the wife of your youth?  Later in chapter 7 Solomon says, “All at once he follows her,    as an ox goes to the slaughter, or as a stag is caught fast[c]  23till an arrow pierces its liver; as a bird rushes into a snare;    he does not know that it will cost him his life.27Her house is the way to Sheol,    going down to the chambers of death. ”

Related posts:

Advice to Gene Simmons Part 5, Fellowship Bible Church sermon on purity

Gene Simmons Proposes To Shannon Tweed Kiss singer/bassist Gene Simmons proposed to his longtime girlfriend Shannon Tweed in Belize recently, TMZ reports. The couple has been together 28 years and share two children, 22-year-old son Nicholas and 18-year-old daughter Sophie. Simmons popped the question on the A&E reality show ‘Gene Simmons Family Jewels,’ which has followed the life of the Simmons brood since […]

Advice to Gene Simmons Part 3, Fellowship Bible Service July 24, 2011

Last Tuesday night I watched Gene Simmons Family Jewels and I commented how I  was struck by the good advice that his son Nick gave him. He told him that he grew up thinking that his father was the best. However, now that the marital infidility has come out, it has made Nick think long and hard […]

Does Gene Simmons need advice? (Part 2)

Last night I watched Gene Simmons Family Jewels and I was struck by the good advice that his son Nick gave him. He told him that he grew up thinking that his father was the best. However, now that the marital infidility has come out, it has made Nick think long and hard about what […]

Advice for Gene Simmons

I watched with great interest the first episode of Gene Simmons show two days ago when his wife left him because of his repeated unfaithfulness. Nerve editors are divided on the subject of Chelsea Handler, by which I mean that I find her kind of funny and Ben made a barfy face when I said […]

 

By Everette Hatcher III | Posted in Current Events | Comments (0)

Cato Institute looks at Herman Cain’s 9-9-9 plan (Republican Debate 10-19-11 Part 4 and 5 video clips)

October 25, 2011 – 12:37 am

Cato Institute looks at Herman Cain’s 9-9-9 plan

pt 4

pt 5

Herman Cain has a lot to say about his 9-9-9 plan as do others in the debate above. I also enjoyed Cain’s comments on the Occupy Wall Street crowd in the clips above. Below is closer look at it.

Cain 9-9-9: Huge Tax Haul from VAT

Posted by Chris Edwards

The Herman Cain campaign released details of the revenue expected to be collected from his 9-9-9 tax plan. Here are the estimates for 2010:

  • $701 billion from the 9 percent personal income tax.
  • $753 billion from the 9 percent retail sales tax.
  • $863 billion from the 9 percent business VAT.

Yikes! By far the largest tax haul under the Cain plan would be from the business VAT—a tax which would be hidden from most voters.

By the way, the Cain business tax is not a tax on “corporate income,” as some media stories are identifying it. The new revenue data makes it clear that it is a tax on all value added by all businesses in the nation—corporate, partnership, and proprietorship.

Sorry Mr. Cain, I think your tax plan gives the federal government far too much room to grow in coming decades as entitlement cost pressures increase. I’d suggest dropping 9-9-9 and going with my 15-15-15 tax plan. After that, you could move on to proposing a detailed plan for spending cuts, as candidate Ron Paul has delivered.

By Everette Hatcher III | Posted in Cato Institute, Taxes | Tagged , , , , | Comments (0)

99th anniversary of Milton Friedman’s birth (Part 15) (“Free to Choose” episode 3 – Anatomy of a Crisis. part 1of 7)

October 25, 2011 – 12:02 am

99th anniversary of Milton Friedman’s birth (Part 15)

Milton Friedman was born on July 31, 1912 and he died November 16, 2006. I started posting tributes of him on July 31 and I hope to continue them until his 100th birthday. Here is another tribute below:

Milton Friedman’s Free to Choose (1980), episode 3 – Anatomy of a Crisis. part 1

FREE TO CHOOSE: Anatomy of Crisis
Friedman Delancy Street in New York’s lower east side, hardly one of the city’s best known sites, yet what happened in this street nearly 50 years ago continues to effect all of us today. Wall Street. Most of us know what happened here 50 years ago. Inside the Stock Exchange on October 29, 1929, the market collapsed. It came to be known as Black Thursday. The Wall Street crash was followed by the worst depression in American history. That depression has been blamed on the failure of capitalism. It was no such thing but the myth lives on. What really happened was very different.
Although things looked healthy on the surface, business had begun to turn down in mid 1929. The crash intensified the recession. So did continuing bank failures in the south and Midwest. But the recession only became a crisis when these failures spread to New York and in particular to this building, then the headquarters of the Bank of United States. The failure of this bank had far reaching effects and need never have happened.
It was something of a historical accident that this particular bank played the role it did. Why did it fail? It was a perfectly good bank. Banks that were in far worse financial shape had come under difficulties before it did and had, through the cooperation of other banks, been saved. The reason why it wasn’t saved has to do with its rather special character. First its name, Bank of United States, a name that made immigrants believe it was an official governmental bank although in fact it was an ordinary commercial bank. Second its ownership, Jewish, both its name and the character of its ownership which had so much to do with attracting the large number of depositors from the many Jewish businessmen in the city of New York. Both of them also had the effect of alienating other bankers who did not like the special advantage of the name and did not like the character of the ownership. As a result, other banks were all too ready to spread rumors, to help promote an atmosphere in which runs got started on the bank and which it came into difficulty. And they were less then usually willing to cooperate in the efforts that were made to save it.
Only a few blocks away is the Federal Reserve Bank of New York. It was here that the Bank of United States could have been saved. Indeed, the Federal Reserve System had been set up 17 years earlier precisely to prevent the worst consequences of bank failures.
The Federal Reserve Bank of New York, whose directors today meet in this room, devised a plan in cooperation with the superintendent of banking of the State of New York to save the Bank of United States. Their plan called for merging the Bank of United States with several other banks and also providing a guarantee fund to be subscribed to by still other bankers to assure the depositors that the assets of the Bank of United States were safe and sound. The Reserve Bank called meeting after meeting to try to put the plan into effect. It was on again, off again. But finally, after an all night meeting on December 10, 1930, the other bankers, including in particular John Pierpont Morgan, refused to subscribe to the guarantee fund and the plan was off. The next day the Bank of United States closed its doors, never again to open for business. For its depositors who saw their savings tied up and their businesses destroyed, the closing was tragic. Yet when the bank was finally liquidated, in the worst years of the depression, it paid back 92.5 cents on the dollar. Had the other banks cooperated to save it, no one would have lost a penny.
For the other New York banks, they thought closing the Bank of United States would have purely local effects. They were wrong. Partly because it had so many depositors, partly because so many of the depositors were small businessmen, partly because it was the largest bank that had ever been permitted to fail in the United States up to this time, the effects were far reaching. Depositors all over the country were frightened about the safety of their funds and rushed to withdraw them. There were runs. There were failures of banks by the droves. And all the time the Federal Reserve System stood idly by when it had the power and the duty and the responsibility to provide the cash that would have enabled the banks to meet the insistent demands of their depositors without closing their doors.
The way runs on banks can spread and can be stopped is a consequence of the way our bank system works. You may think that when you take some cash to a bank and deposit it, the bank takes that money and sticks it in a vault somewhere to wait until you need it again to turn it back over to you.
Bank teller: Okay, how would you like this? Two tens, one five and five ones. Okay.
Friedman: The bank does no such thing with it. It immediately takes a large part of what you put in and lends it out to somebody else. How do you suppose it earns interest, to pay its expenses, or pay you something for the use of your money? The result is that if all depositors in all the banks tried all at once to convert their deposits into cash, there wouldn’t be anything like enough cash in the banks of the country to meet their demands. In order to prevent such an outcome, in order to cut short a run, it is necessary to have some way either to stop people from asking for it, or to have some additional source from which cash can be obtained. That was intended to be the purpose of the Federal Reserve System. It was to provide the additional cash to meet the demands of the depositors when a run arose.
A classic example of how this system could and did work properly can be found over 2,000 miles from New York near the great Salt Lake in Utah.
In the early 30’s some banks in Salt Lake City and surrounding towns began to get into difficulties. The owners of one them were smart enough to see what had to be done to keep their banks open and courageous enough to do it. When fearful depositors began to clamor to withdraw all their money, one of George Eccles jobs was to brief his cashiers on how to handle the run.
By Everette Hatcher III | Posted in Milton Friedman | Comments (0)

Senator Pryor responds to my “Thirsty Thursday” series of emails to him concerning the Balanced Budget Amendment

October 24, 2011 – 9:57 pm

I have been blogging for 10 months now and have had over 110,000 hits on my blog. Posts encouraging Senator Pryor to cut spending have been responsible for more posts than any other subject. It has got the most hits too. I am hopeful that Senator Pryor will either pay attention to the people or get voted out. Below is the email that I received today from Senator Mark Pryor:

October 24, 2011

Dear Mr. Hatcher,

Thank you for contacting me regarding a Constitutional amendment requiring a balanced federal budget. I appreciate hearing from you.

I am deeply concerned about current spending levels and our ever-growing national debt, and I believe Congress can and should balance the federal budget. As a nation, we have been living beyond our means for a long time. Balancing the budget will require both parties to work together to achieve this goal.

Amending the Constitution is a step that should never be taken lightly. A poorly drafted balanced budget amendment could prevent the federal government from being able to respond appropriately to national emergencies, cause drastic cuts to important programs, such as Social Security and Medicare, and result in an automatic tax increase. However, I remain open to considering a balanced budget amendment, and will give my full attention and thought to any balanced budget amendments the Senate considers.

In the meantime, I will continue to introduce legislation to eliminate ineffective and unnecessary programs, and use my position in Congress to further reduce wasteful spending. I appreciate hearing from you. Your input helps me make better decisions, and I will be sure to keep your specific comments in mind as I work to come up with better fiscal solutions for the American people.

Again, thank you for contacting me. I value your input. Please do not hesitate to contact me or my office regarding this or any other matter of concern to you.
Sincerely,

Mark Pryor
United States Senate

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Please Note, this is not a monitored email account. Due to the sheer volume of correspondence I receive, I ask that constituents please contact me via my website with any responses or additional concerns.

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By Everette Hatcher III | Posted in spending out of control | Tagged , , , | Comments (0)