The Politics of Bribery

"Many states believe there is little choice involved when the federal government has the power to tax citizens in the states, returning that money only if states comply with ever-increasing... mandates."

And that right there is the problem in a nutshell.  The Founding Fathers were clear that the Federal government would only have the power to spend money on the common defense and the general welfare and that it would only be able to raise funds expressly to pay those bills.  "General welfare" meaning for the benefit of all; not the majority, not the special interests, but for all.

Unfortunately, the result has been a government of good intentions, spending money on whatever program will help a politician curry votes.  Ironically if everyone plays beggar-thy-neighbor politics, we all get equally robbed!  The only difference is that people tend to be irresponsible with "free" money, with the predictable result of blossoming Federal spending.

The State governments themselves are even worse about helping themselves to the public trough; they get to fund programs without appearing responsible for the taxes.

The 16th Amendment allowed the Federal government to reach past the States, directly into the pockets of the citizens and then use that money to bribe the States into compliance with any number of unconstitutional mandates claiming it was just using the authority to "tax."  Fortunately more and more States are realizing that there is no such things as a free lunch and that these dollars come at a cost; to our freedom and our sovereignty.  However many people are already hooked, and the withdrawel symptoms won't be painless.  Let's hope we have the fortitude to stick it out; otherwise the States will continue to be puppets of the Feds instead of the check-and-balance they were intended to be.

Freedom of Consent

We have to remember that the people in government are just like people in the corporate world.  They're ultimately self-interested.  They need to feel the connection between their actions and their consequences to make good decisions.  The difference is that we've entrusted them with coersive power; the authority to use force to compel us to do or not do certain things.  And power once ceded is rarely given back.  We really ought to remember that before inviting them into every aspect of our daily lives:

The problem... is that government is no different from any other organization in society -- it seeks its own aggrandizement. AT&T, General Motors, and Microsoft would love to have world monopolies, controlling all the resources and expanding into every corner of people's lives. But they are limited by competition, the dynamics of the marketplace, and the need to win people's consent in order to market their products.

Government is different. It expands by fiat, through legislation, through taking advantage of emergencies, and by declaring that private entities can't be trusted and government intervention is necessary. Most of all it grows by raising taxes and hiring more and more people so that soon its voter base approaches a majority of the electorate.
http://spectator.org/archives/2011/09/26/the-moochers-credo/

Let's face it.  It's easier to convince a majority of 435 people in Washington D.C. than it is to try to win the consent of millions of consumers exercising their freedom in the market.

Financing a $447 Billion Stimulus Injection

A recent article phrased the new stimulus plan as “injecting $447 billion into the economy,” which made me stop and think. Where exactly is this money coming from? I doubt the politicians in Washington are going to pay for it out of the vaults at Fort Knox (which would only cover about $278 billion or a little over half the bill anyway). That just leaves us with the three usual suspects; taxes, treasuries and the printing press.

Raiding private investment capital, ie: raising taxes, in order to “create jobs” is absurd. If the money was actually directed towards funding projects, it would simply mean diverting money from privately planned investment into politicians’ pet projects (a time-honored way of ensuring reelection). This plan will also use that money to extend unemployment checks, which is just as foolish. I would rather let someone buy a boat, thereby paying someone for building the boat, then tax the money away and hand it out as an unemployment check. However, this plan also includes tax cuts (without accompanying spending cuts), which leaves us with the other two options.

For the past few decades, we’ve gone to foreign investors to finance our government spending. The problem with this approach is two-fold. First, by competing for foreign investment dollars we crowd out private investment. In other words, businesses that are looking to finance expansion and real job creation are competing with the Federal government for the same scarce resource of investment capital. Secondly, those bonds incur interest payments down the road. That interest will have to be paid in the future from the same three sources (taxes, debt or inflation) which is the sort of kick-the-can politics that Washington D.C. loves.

That leaves the final source of funding; the printing press. The treasury prints the cash to cover the portion of the debt financed by the Federal Reserve. In simple terms, printing new money makes the money in savings and circulation worth less. Some people support this, since it makes our products cheaper for export. However, it makes everything we import (which is quite a lot these days) more expensive. It also hurts people living on fixed incomes and makes a joke out of long-term investment planning. In other words, it contributes to job-killing instability.

“Injecting” $447 billion really means deciding between taking domestic investment capital, competing for foreign investment capital, and pillaging our remaining savings. Instead of reactionary short-term fixes and more government controlled pork-barrel projects, we need to be thinking long-term. Stop spending taxes frivolously. Stop jerking the economic steering wheel by meddling with the currency. Return control (and money) to consumers and small businesses.  Let them drive the economy the way they’ve driven it since our national inception. They don’t need to be “stimulated” to make that work.

Mom & Dad and the Credit Downgrade

The recent credit downgrade shouldn’t come as a surprise to anyone who has ever had to run a household budget. This probably explains why it’s absolutely shocking to politicos in Washington, but I digress. The media claims that the downgrade shouldn’t have happened because Congress ended up increasing the debt limit and that it was really caused by the debate that took place beforehand, shaking investor confidence. It actually happened because raising the debt ceiling did practically nothing to address our fundamental inability to pay for our bloated government.


Imagine Dad (Republicans) and Mom (Democrats) are faced with a dilemma; they’ve maxxed their credit cards. Naturally, a debate ensues (which probably includes some accusations and name calling, ignoring all the times they both agreed to spend more money). Mom tells Dad he needs to get a second job to pay for the credit card bills. Dad tells Mom she needs to start spending less money. Neither suggestion is well received. Finally, with the due date to pay the bills rapidly approaching, they reach a compromise. They agree to call the credit card company and increase their credit limit. In return they agree to consider establishing a balanced budget and they agree to consider maybe possibly spending less money… next year.

After watching this whole episode, the neighbors are well aware that Mom and Dad have made no attempt to live within their means. Furthermore, they’ve done absolutely nothing to reduce the likelihood of having this same argument next year when they max out their cards… again.

Why the downgrade after raising the debt ceiling? Because for once it looked like having a deadline was going to force the politicians to roll up their sleeves and face the grim reality that Uncle Sam spends like a drunken sailor (no offense; sailors are much more responsible even when intoxicated). Instead, they made some vague promises about the future and failed to make any fundamental changes today, kicking the can down the road. S&P downgraded the US of A because Congress just missed a huge opportunity to demonstrate real fiscal discipline.

Thomas Paine on War and Taxes

[Excerpts from Common Sense and from Rights of Man regarding war and taxes] 

Our plan is commerce, and that, well attended to, will secure us the peace and friendship of all Europe; because it is in the interest of all Europe to have America a free port.  Her trade will always be her protection...

[The government appears] to say to itself: "If nobody will be so kind as to become my foe, I shall need no more fleets or armies, and shall be forced to reduce my taxes."

...taxes were not raised to carry on wars, but that wars were raised to carry on taxes.

...if [the King] rashly declares war as a matter of right, and [Parliment] peremptorily withholds the supplies as a matter of right, the remedy becomes as bad, or worse, than the disease.  The one forces the Nation to combat, and the other ties its hands; but the more probable issue is that the contest will end in a collusion between the parties, and be made a screen to both.

[It is interesting to note that our Founding Fathers expressly vested the authority to commit the military in the Legislative to avoid this situation.

Congress shall have Power... To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;

For the past sixty years, however, the President has had the ability to commit the Armies, while the Legislative simply approves funding.  Supposedly this is a "check" on the President committing us to wars that are not in the best interest of the Nation, however as Mr. Paine points out, this is rarely the case in practice, since once committed it would be a churlish man indeed who denied supplies to Troops already engaged in combat.]

Thomas Paine on Congress

[Excerpts from Common Sense and from Rights of Man regarding legislators]  

 ...that the elected might never form to themselves an interest separate from the electors... On this depends the strength of government, and the happiness of the governed.

...a body of men, holding themselves accountable to nobody, ought not to be trusted by any body.

When money is to be obtained, the mass of variety apparently dissolves, and a profusion of parliamentary praises passes between the parts.  Each admires with astonishment, the wisdom, the liberality, and disinterestedness of the other; and all of them breathe a pitying sigh at the burdens of the Nation.

Whether a combination acts to raise the price of any article for sale, or the rate of wages, or whether it acts to throw taxes from itself upon another class of the community, the principle and the effect are the same; and if the one be illegal, it will be difficult to shew that the other ought to exist.

It is from the power of taxation being in the hands of those who can throw so great a part of it from their own shoulders that it has raged without check.

...the portion of liberty enjoyed in England is just enough to enslave a country more productively than by despotism, and that as the real objective of all despotism is revenue, a Government so formed obtains more than it could either by direct despotism, or in a full state of freedom, and is, therefore, on the ground of interest, opposed to both.

[All courts and courtiers] form a common policy... detached and separate from the interest of Nations; and while they appear to quarrel, they agree to plunder.

What at first was plunder, assumed the softer name of revenue.

It is not because a part of the Government is elected, that makes it less despotism, if the persons so elected possess afterwards, as a Parliament, unlimited powers.

A man of moral honor and good political principles cannot submit to the mean drudgery and disgraceful arts by which such elections are carried.  To be a successful candidate he must be destitute of the qualities that constitute a just legislator; and being thus disciplined to corruption by the mode of entering Parliament, it is not to be expected that the representative should be better than the man.