An open letter to President Obama, Nancy Pelosi, and Harry Reid:

I am writing this letter to help you understand the opposition to your healthcare reform, since your statements make it clear that you “just don’t get it.” Allow me to introduce myself.

I am not a right-wing nut case. I believe that you, President Obama, are an American citizen. I do not think you are the anti-Christ. Nor do I think that any of you are evil. You just have very different ideas about what this country should look like and how our government should work – different from mine and a lot of other people’s, that is.

I graduated summa cum laude from the University of Georgia, so I am not stupid. I taught high school government and economics before I retired last year, so I know a little about how our government works.

I do not believe your reform means that death squads will pull the plug on grandma. I fully understand that the public option in this reform bill is different from a government takeover of health care.

I am not lacking in compassion for the poor. I would like for every person to have access to adequate health care. I realize that there are inequities in our healthcare system that need to be addressed.

What I am is scared – and worried about the future of this country I love so much.

Why am I opposed to this bill? Simple – we cannot afford it. President Obama, you said so yourself; you said that the government has no money. Americans are still reeling from the $780 billion stimulus bill, the bail-out of the auto industry, and the record-breaking 1.2 trillion dollar deficit. Our economy may or may not be recovering from the worst financial crisis since the Great Depression, housing prices have fallen as much as 20%, and the jobless rate is still in the double digits. We are worried about our jobs and our investments. In the midst of all this, you propose that the government insure over 40 million people. Your suggestion that this could be done in a “budget-neutral” fashion would be laughable if the situation were not so serious. Absolutely nothing in the government’s past or present programs offers any hope of doing such a thing.

Medicare, Medicaid, Social Security, and the post office are broke or soon will be. With these great examples of government-run entitlements, why on earth should we trust you to run even more of our healthcare system? You are continually asked this question, and you continue to ignore it because you, of course, have no answer.

Given the government’s past performance, we have every reason to fear a bill with over 1000 pages of legalese few people, including our legislators, can read or understand. There’s just too much room for the devil to hide in the details. And we are not getting details. We hear lots of generalizations about what the reform must do, but very little specifics about how it will be paid for or how it will be administered. You expect us to support something when we don’t even know what it is.

We also feel that a bill of this magnitude, one that will affect all of our lives in matters of life and death, should not be rushed. And you are definitely trying to rush it through, because you feel that is the only chance you have of getting it passed. I want to know that experts from every part of the healthcare industry and the insurance industry have sat down together to talk about ways to reduce costs and make sure people receive the care they need. And I want those experts to come from different sides of the political spectrum so all viewpoints will be considered.

I am tired of the back-and-forth arguments that only touch the surface of this debate. You keep telling people they can keep their insurance. I heard you. I KNOW that is what the bill says. The question you do not answer is, will our insurance policies still be available to us after all this reform takes place? Will insurance companies be able to meet your requirements and compete with the public option? And what will happen to our premiums when insurance companies are forced to cover preexisting conditions?

You argue that costs will be brought down by cutting out waste. Well, for crying out loud, if all that waste could be cut so easily, why haven’t we already done that? We all know that Medicare is wrought with fraud, but no one has been able to stop it. More government insurance will just mean more fraud as unscrupulous people rush to take advantage of “free” money.

You say that Medicare can be reduced by “reallocating” money, but you never explain what that means. Can you blame people for thinking that means less care for old people? What else could it mean?

It is very unwise to dismiss me and others like me as “angry mobs” orchestrated by Republican leaders and FOX News. Of course these town hall meetings are organized; aren’t all meetings? No one forces people to attend; they come because they are concerned. The fear and anger people express at these meetings is genuine, and if you don’t know that, you really are living in a bubble up there in Washington. I hear it everywhere I go – stores, restaurants, and doctors’ offices. It comes up at every social gathering. In fact, I have never seen an issue galvanize public opinion the way this one has. You can listen to us now, or listen to us at the polls come the next election.

Here is what I want: Slow down. See if there are other ways to address inequities without so much government control or expense. Work together with the Republicans. This is so important that we truly need a bipartisan plan. Find ways to bring down medical costs, since these rising costs are what will break the system eventually, whether it is public or private. Do everything in your power to take the politics out of this; stop the rhetoric. Tell us the truth; we can handle it. Please listen to our concerns.

Sincerely,
Paula Canup, Hayesville, NC

Insurance companies - do they deserve to die?

Normally, I write my own material. Sometimes, however, I find an article that already says exactly what I wanted to say! I am reprinting one here from Investors Business Daily, a newspaper my father subscribes to. It explains the situation with insurance companies better than I ever could.


Real Debate Is Individualism Vs. Collectivism
By ROBERT TRACINSKI | Posted Tuesday, August 11, 2009 4:20 PM PT

The goal of the Democrats' plan for health care reform is coming more and more out into the open: They want to eliminate health insurance.

This is the line of attack the Democrats have chosen as they've gone into the August recess:

Private health insurance companies are evil, and big government is here to save us from them.

According to the New York Times, President Obama is planning an "August offensive against the insurance industry." It is "a campaign of increasingly harsh rhetoric" that is "intended to drive home the message that revamping the health care system will protect consumers by ending unpopular insurance industry practices, like refusing patients with pre-existing conditions."

That part about pre-existing conditions gives the game away. Health insurance companies refuse to cover pre-existing conditions for the same reason that you can't insure your automobile after you crash it.

Insurance is a form of financing for the unexpected and unpredictable. It is not a mechanism to force somebody else to pick up the tab for expenses you have already incurred.

Do the Democrats even understand what insurance is? Insurance is a form of financing. It is a contract under which a health insurance company agrees to pay for medical bills that could run into the tens of thousands of dollars, if you are hit by a bus or are diagnosed with cancer, so that you don't have to pay for those bills out of your income or savings.

So let's ask the question the left never asks: How is it possible for an insurance company to pay for these giant medical bills?

Welfare, Not Insurance

For every person who needs open-heart surgery or chemotherapy, there have to be a certain number of other people who are paying their premiums but haven't gotten seriously ill. If the insurance company has gotten its calculations right, the expenses for any one person's catastrophic care are balanced out by the premiums other people pay "just in case."

You can see how Obama's demands undermine all of these calculations. To ask insurance companies to cover a patient after the tumor is diagnosed is to ask them to take on a known expense. Combine that with another of the president's demands — that insurance companies can't charge higher rates for those who are at higher risk of getting sick.

So if insurance companies have to take on a known expense and can't charge a higher rate for it, how are they going to pay for it? By raising everyone else's premiums, redistributing their wealth to the new freeloaders.

This isn't insurance, it's welfare. And that's the whole point.

Government regulations and enormous government spending have already distorted the health care market for decades, but the current legislation is the coup de grace. Its whole point is to force insurance companies to act as if they are government welfare agencies.

And when the insurance companies collapse under that artificial burden, the government will drop the pretense and have the welfare agencies, under the banner of the "public option," take over.

Don't be fooled by labels. The "public option" is not insurance, because it is deliberately designed not to balance premiums against risk.

Precious Right

And instead of choosing how much coverage you are willing to pay for, everyone is forced into a plan designed by an Orwellian "Health Choices Commissioner." When you get sick, you don't have a contract with a private company that you can enforce. You are dependent on benefits that are doled out uniformly to everyone by the government.

There are no independent individuals in this system. It is designed to make everyone dependent on the collective will of the government — which can decide to reduce your care or pay less for it when costs spiral.

The Democrats oppose health insurance because it's based on an opposite idea: that people are independent individuals who should be expected — and have the right — to pay their own way. It is a system in which people decide what level of coverage they want and how much they are willing to pay for it, and insurance companies balance an individual's premiums against his health risks.

Paying your own way is a demanding responsibility, but it is also a precious right that few people want to give up. He who pays the piper calls the tune, and when it comes to health care, our lives depend on being able to call the tune.

Will we be independent individuals with some control over our own fate — or will we be cogs in the collective, forced to be dependent on government for the most important needs of our lives?

Tracinski writes daily commentary at TIADaily.com. He is the editor of The Intellectual Activist and TIADaily.com.

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Where I Stand

In yesterday’s blog, I made the comment that I was probably more moderate than many of my ultraconservative students. I thought I would explain exactly where I stand in today’s blog.

I do not wish to be a member of any political party. I consider myself independent, though I have voted Republican in every presidential election I have voted in – and that’s all of them since I turned eighteen. I am not inclined to join political action groups of any stripe, primarily because they are almost always more radical in their beliefs than I am.

I consider myself moderately conservative. As a Christian, I hold certain family values that are extremely important to me, and as a rule, Republicans have tended to uphold those values more than Democrats have.

I also value my freedom and feel that the less government control we HAVE to have, the better. However, I also know that some control is absolutely necessary for an orderly and functioning society. It is a matter of degree. It is not a question of all regulations or none at all, but a question of how much regulation is needed to provide for an efficient economy and a fair society. It is this belief that makes me more moderate than many.

I am a firm believer in capitalism and free enterprise, but I recognize the evils of unrestrained greed. Wall Street has demonstrated that quite well in the past decade. Clearly, more oversight and regulation could have prevented the housing debacle. The trick now is to institute enough control to prevent another crash without stifling growth. It won’t be easy, and it will require reasonable minds willing to work together and compromise to make it work.

I do not put stock in conspiracy theories. There are well-known and respected conservatives in the media who would reveal such nefarious goings-on if they did, in fact, exist.

I also get frustrated with people who see devils behind every tree. To them, everything the opposition does has some sinister meaning. For example, much has been made in the past week about the President asking people to forward emails to the White House if they contain criticism of his healthcare reform. Suddenly people are convinced that he is creating some kind of enemy list, red-flagging American citizens who need “watching.” A far more likely explanation is that he simply wants to know what people are saying so he can refute it, and that is exactly what he is doing with his “reality check” web site.

I do not hate Barack Obama. I do not think he is evil, nor do I believe he is the anti-Christ. That alone places me squarely to the left of many of my friends and family. I feel he is quite genuine in his liberal beliefs and honestly thinks he is changing this country for the better. I just don’t agree with him.

I do not get my kicks from bashing the President. I was appalled by the vitriolic hatred directed at President Bush by the left, and find it just as appalling when such hatred is directed at Obama. I still have the old-fashioned belief that we should respect the office even if we don’t respect the man himself.

While humor is an acceptable way to make political points, many of the off-color jokes, especially the racial ones, directed at Obama are inappropriate. I don’t appreciate it when they show up in my email box. A good, clean joke is another matter. I happen to think that “Obamanation” is a very clever play on words.

I do think that Obama is much more liberal than the average American and, therefore, does not represent us well, even if we did elect him. (That can be explained by demographics and the anger towards Bush.) He also has no real experience in governing, and none whatsoever in business or the military. Because I believe a person CAN be judged by the company he keeps, I have serious concerns about many of his past associations. I cannot believe that he sat under the teachings of the radical Reverend Wright without being influenced by him. I know I would not stay in a church for over twenty years if I did not agree with the pastor on important matters. I also wonder how a man without big money and connections rose to the top of the Chicago political machine, which is historically one of the most corrupt governments in the United States.

I also do not feel that Obama can be trusted to do what he says he will do. He has already done a complete about-face on several issues. I think he has a very liberal agenda and will do whatever it takes to put it into action.

I, like many Americans, am frightened by the huge deficit Obama is creating. I love my country, but I am very, very worried about its future. We are naïve if we think that our economy cannot come crashing down – it can. And then who knows what would happen? I can’t even go there.

I do not like the way crucial legislation is being rushed through Congress. Issues such as healthcare reform are much too important to get wrong.

My final point is that we have very real and serious issues that need to be addressed in a reasonable fashion. The hatred, unfounded suspicions, and name-calling get us nowhere.
Let’s get past all that and start talking to one another, no matter what our political leaning.

Now That We’ve Got Everyone’s Attention…

I taught government and economics to high school seniors for about ten years. There were always a few students who were up on current events and ready for lively debate. Needless to say, I enjoyed those students most of all, even if they didn’t always behave or make the highest grades. What caused me great despair were those students who just didn’t care about anything outside of their own little teenage world, and there were way too many of those. But they were not alone. I found that most of the adults I conversed with knew little about how our government works and didn’t care to learn. Economics was a giant bore to almost everyone I knew. I have always been interested in current events, politics, and economics, thanks in large part to my Dad’s influence and watching Walter Cronkite every night as a child. I learned, however, that while I had opinions on many issues, most people were not really interested in hearing them. I learned to talk shopping and football.

All of that has changed. All it took was the election of a controversial President and an issue that people are genuinely upset about – health care reform. It’s all people are talking about, and I hear it everywhere I go – the stores, restaurants, and, of course, doctors’ offices. I waited in line in one store while the cashier carried on a rant with several customers gathered round the counter. Complete strangers bring it up when I am out and about. It is amazing how much people are finally paying attention to a political issue.

And well they should. Our current health care system is probably unsustainable and does need reform, but if we don’t do it right, the “cure” could be much worse than the disease. This is an issue that affects every single American, and one that will hit us where it hurts – in the pocketbook. Whatever Congress and our President decide to do will have a tremendous impact on our lives, and not just financially. Our health and well-being are at stake. An issue this important and potentially life-changing needs to be studied, debated, and weighed very carefully before any kind of action is taken. American citizens need to be informed about the changes that will take place and should have the opportunity to voice their concerns. Particularly when our economy is in such a precarious state, we need to proceed with caution and not rush through legislation where the “devil is in the details.”

What we need is a calm, deliberate, and factual conversation between all interested parties – and that pretty much includes everybody. Unfortunately, that is not what we are getting. This issue, like every other, is thoroughly politicized, and people on both extremes of the liberal-conservative spectrum are throwing out all sorts of disinformation, making it almost impossible for people to know what is really going on. Without correct information, how can any of us know how to voice an opinion to our leaders? The White House has responded by establishing a web site, www.whitehouse.gov/realitycheck, that purports to lay out all the facts, but of course, it is biased toward the more liberal, Democratic view. You can read it and then get the opposite, Republican-biased view from the Limbaugh crowd and wind up not having a clue what the actual truth is.

As a teacher in a small Christian school in the South, most of my students came from quite conservative backgrounds. They, like most young people, believed what they had been taught all their lives and gave their opinions very little real thought, nor did they question their own beliefs. As a conservative myself, though perhaps more moderate than some, I generally tended to agree with them. However, I wanted them to seek truth, think for themselves, and form their own opinions. Getting them to do that was not easy. I often told them that when people argue from two extreme positions, the truth is usually somewhere in the middle. I designed projects where they would have to gather and study opposing opinions on various issues and write reports giving both sides before reaching their conclusions. Then they would report their findings before the whole class and take questions. Very seldom did anyone change their original viewpoint, but they always came away with a better understanding of where those that differed with them were coming from. If they learned to research and think, I felt the project had been a success. American citizens need to do that now.

Doing the research on healthcare reform is difficult. Oh, there is a wealth of information out there, but much of it is biased and/or inaccurate. You have to look for the impartial and knowledgeable sites that have good information. If all you have are the letters flooding your email box, you probably aren’t getting a very good picture of things. We all need to check out the information that comes our way at such sites as Factcheck.org, Truthorfiction.com, or Snopes.com. I try to do this with any email I receive before forwarding it on.

Our Congressmen are back home where they are currently holding the now-infamous town hall meetings to try to inform us and answer questions about healthcare reform. They have been shocked by the numbers of people and the passion of the crowds that have turned out. Some Democrats have unwisely tried to dismiss the dissenters as “angry mobs” whose protests has been orchestrated by those who wish to “destroy the President.” That is almost laughable when you see the videos of halls filled with senior citizens. They, especially, are frightened and upset about the reform. They have many questions and concerns and deserve to be heard – you know, free speech and all that.

On the other hand, the representatives also deserve to be heard, and crowds that boo and hiss and drown out the speakers are denying THEM free speech and accomplishing nothing except making themselves look bad. Everyone just needs to chill out. We don’t need shouting matches; we need reasoned conversation that can actually lead to understanding. I urge each of you to do your homework and then join in such a conversation.

A Way of Life

JOY – Jesus, others, yourself; I’m sure everyone has heard that acrostic that has been around for a very long time. In fact, it is so old that we probably hear it and don’t give it any real thought anymore. For some reason, however, it was on my mind this morning, and it occurred to me that those three words encapsulate a worldview, a whole way of life. The idea, of course, is that living that way of life is the path to true and lasting joy.

The acrostic would mean nothing to the unbeliever, but the truth is, I haven’t spoken with any avowed atheists since I left the University of Georgia. There aren’t too many of them here in the rural South. Most everyone around here at least gives lip service to a belief in Jesus as Lord and Savior. Unfortunately, what we do have a lot of are people who acknowledge Jesus verbally but live as if He doesn’t exist. At least there is nothing in their lifestyle that would reflect such a belief. Ask them if they are a Christian, and they will tell you yes, cause that’s what they were taught to believe from the time they were crawling on all fours. But then you watch the choices they make from day to day, and it’s clear they aren’t asking themselves what Jesus would do.

Many people, however, and I put myself in this category, really do try our best to live a life pleasing to God. Our faith informs our decisions, and so we are decent, moral people. It’s just that we get distracted and forget to keep Jesus the major focus in our lives. So many things in the visible, material world demand our attention that we can too easily neglect the unseen, spiritual world. I let this happen way too often. The daily routine of life takes over, the trivial becomes urgent, and the truly important things get put off until a more convenient time.

Because we are all prone to the sin of selfishness, we tend to get that JOY thing out of order. I would much rather paint a picture than go clean my mother’s kitchen. I have to make myself trudge up the hill to her house to clean up her mess. But I won’t always have her with me. If I can’t look back years from now and see that I was there for her when she needed me, I can never be truly happy. Besides, the love and appreciation she gives me makes it all worthwhile.

There are some people, and we probably all know one or two, who knowingly and deliberately choose to put self before all else. These are the people who always do exactly what they want to do, when they want to do it - regardless of the effect it has on others. They no doubt believe that doing so will make them happy – and it will momentarily. The problem is they never recognize how they push people away, denying themselves the love and respect that would bring them the greatest joy life has to offer. They miss out on the joy that comes from helping those in need and knowing that they bring love and happiness to the lives of those around them. They may never know the sheer pleasure that comes from seeing someone’s face light up because they met that person’s deepest needs.

The key, I think, is to remember that that which brings us momentary pleasure is not what gives us lasting joy. That little acrostic turns out to be rather profound.

Hope in the Midst of Fear

We live in scary times. North Korea test fires nuclear weapons and the missiles to deliver them while renouncing their peace agreement with South Korea. The Taliban makes further advances into nuclear-armed Pakistan, while Iranian leaders seem hell bent on creating their own weapons of mass destruction. Nearly eight years after 9/11, al Qaeda is still out there, plotting to kill even more Americans.

Among our more immediate concerns, the economy worries us most of all. Every day we hear of new lay-offs, long-time businesses shutting down, and corporations going into bankruptcy. Incomes are slashed as workers are given unpaid furloughs. Credit card bills mushroom out of control, and the card companies raise rates on money already borrowed. Grocery and fuel prices rise while income falls. Predictably, theft and break-ins are on the increase. Local and state governments, facing huge shortfalls, cut services at a time when they are needed most. We stand by helplessly as our federal government spends incomprehensible amounts of money, mortgaging our future and our children’s future.

In light of these very real threats to our way of life, FDR’s famous pronouncement that “All we have to fear is fear itself” seems somewhat Pollyannaish. The dangers we face are all too real. But just because fear is not the only thing to be feared does not mean it should not be feared. (You may need to read that sentence twice.) When fear grips a nation, ugly things happen. People look for someone to blame and simplistic solutions to their problems. They demonize those who think differently about the problems we face rather than cooperate with them to find real answers. Our fears divide us into enemy camps where we hunker down, at a time when we need to unite and take action. The news media, loving nothing better than a good fight, perpetuates the problem by focusing on the extremists and their sound bites.

Fear causes us to forget. We forget that others have been through worse times and emerged stronger than ever. WWII must surely have seemed like the end of the world to those who lived through it. Our current crisis pales beside The Great Depression our grandparents somehow survived. We also forget all the many blessings we enjoyed when times were better. We forget to be thankful for what we’ve still got – which is plenty.

Fear causes us to over-react, taking actions we would never consider in better times. We allow our government leaders to assume ever-greater control, forgetting the words of Benjamin Franklin, who said, “Those who would sacrifice liberty for security deserve neither.”

Fear immobilizes us. It steals our joy, and blinds us to all that is still good and right in the world. I should know, because I’ve battled with this demon for most of my life, and I like to think I’ve learned a few things about how to deal with it. Sometimes we just need to turn off the television and walk out into the sunshine. As the psalmist said, “I will lift up mine eyes unto the hills, from whence cometh my help.” We here in western North Carolina are fortunate to see those hills on a daily basis. Sometimes I just have to sit in my porch rocker and stare out at the blue mountain range surrounding me. Those mountains are eternal, just like the God who made them, and He will always be with me, no matter what happens in the future. Those hills have stood through wars, riots, and financial crises. They will continue to stand throughout the course of time, and so can we.

Myths about Congressional Retirement

There are so many emails going around the Internet right now complaining about government, and that's understandable. I'm mad, too! However, I also want to argue with the facts, not myths or rumors. Much of what you read is simply not true, and we appear ignorant and lose credibility if we spout information that is just wrong. I always try to check these emails by doing a simple search to find more reliable information. I also check Snopes.com, which is a web site set up just to check the facts behind "urban myths." I highly recommend it.

Just today, I got an email about the "outlandish" retirement benefits received by our United States congressmen. I checked it out, and it was way off base. Here is an excerpt from a government site that explains the benefits paid to Congressmen.

"Congress: Benefits

You may have read that Members of Congress do not pay into Social Security. Well, that's a myth.

Prior to 1984, neither Members of Congress nor any other federal civil service employee paid Social Security taxes. Of course, the were also not eligible to receive Social Security benefits. Members of Congress and other federal employees were instead covered by a separate pension plan called the Civil Service Retirement System (CSRS). The 1983 amendments to the Social Security Act required federal employees first hired after 1983 to participate in Social Security. These amendments also required all Members of Congress to participate in Social Security as of January 1, 1984, regardless of when they first entered Congress. Because the CSRS was not designed to coordinate with Social Security, Congress directed the development of a new retirement plan for federal workers. The result was the Federal Employees' Retirement System Act of 1986.

Members of Congress receive retirement and health benefits under the same plans available to other federal employees. They become vested after five years of full participation.

Members elected since 1984 are covered by the Federal Employees' Retirement System (FERS). Those elected prior to 1984 were covered by the Civil Service Retirement System (CSRS). In 1984 all members were given the option of remaining with CSRS or switching to FERS.

As it is for all other federal employees, congressional retirement is funded through taxes and the participants' contributions. Members of Congress under FERS contribute 1.3 percent of their salary into the FERS retirement plan and pay 6.2 percent of their salary in Social Security taxes.

Members of Congress are not eligible for a pension until they reach the age of 50, but only if they've completed 20 years of service. Members are eligible at any age after completing 25 years of service or after they reach the age of 62. Please also note that Member's of Congress have to serve at least 5 years to even receive a pension.

The amount of a Congressperson's pension depends on the years of service and the average of the highest 3 years of his or her salary. By law, the starting amount of a Member's retirement annuity may not exceed 80% of his or her final salary.

According to the Congressional Research Service, 413 retired Members of Congress were receiving federal pensions based fully or in part on their congressional service as of Oct. 1, 2006. Of this number, 290 had retired under CSRS and were receiving an average annual pension of $60,972. A total of 123 Members had retired with service under both CSRS and FERS or with service under FERS only. Their average annual pension was $35,952 in 2006."

Doug and I are well aware of the CSRS plan because that is what Doug is covered by as a former federal employee. The government really pushed him to change to the newer FERS plan in 1983, and boy is he glad he didn't! He would have lost much of his retirement in this bear stock market like so many others have. Instead, he has a regular pension. Pensions are almost a thing of the past, with 401K plans taking their place. Many people are now putting off retirement because those plans have taken such a hit in the market.

Back to AIG:

Back to AIG: As I said before, AIG is an insurance company that is worldwide in scope, operating in 130 countries. You have certainly heard that it is “too big to fail.” It may well be. According to Time Magazine, AIG insures 180,000 entities, which together employ 106 MILLION people worldwide. Those entities include banks, farms, hospitals, and nonprofits among other things. AIG is the country’s largest life and health insurer. If AIG goes down, the companies they insure could also fail, resulting in more unemployment and a stock market crash. Some believe our recession would become a depression.

A few critics are saying that if AIG had gone into bankruptcy, the economy could have withstood the repercussions. It’s just that no one has been willing to put it to the test. After all, would you want to make the decision that could potentially bankrupt the world? And that is a distinct possibility, should the company fail. Geithner may be wrong or right in what he is doing, but he must certainly have the most stressful job in America, and I wouldn’t have it for anything. Besides, he definitely knows far more about what is going on than any of us do!

The point is, we may be “mad as hell” about the bonuses paid to fat-cat executives, but we better be very careful that, in punishing AIG, we don’t bring the whole economy down around our ears! Right now, my major concern is that Congress may do just that. They know very little about high finance, but they do know what will cost them reelection, so they are probably more likely to listen to the ignorant masses than people who know something. (At least we hope they know something; at this point, I’m not sure anyone really knows what to do.)

It’s not just that AIG is a big company; it’s that they are so systemic. They are intertwined in financial institutions all over the world. Their failure could create a domino effect. No one knows where it would end, and no one particularly wants to find out!

AIG got in this situation for the same reason our whole economy got into such a mess. It all goes back to the housing market. Somehow, the idea that everyone deserves a home of their own whether they could afford it or not caught on among politicians in Washington. This really got pushed during the Clinton administration. The requirements for getting a home loan became less stringent, often requiring no down payment at all, and interest rates were kept low by the Federal Reserve. It finally got to the point that people did not even have to provide proof that they had a job! Not only that, but mortgage companies were pushing adjustable rate mortgages that started off at a low interest rate that could increase later on. People who didn’t know any better were sometimes misled into buying more home than they could afford, and other people who did know better figured they could always sell the house at a profit before their payments went up. They gambled – and lost.

You may wonder why mortgage companies would make such risky loans. Don’t they want to get paid back? The problem is, they did not keep the loans and so had nothing to lose. They made their money up front with fees charged to the buyer and then turned around and sold the loan on the secondary mortgage market. About 60% of that market is controlled by Fannie Mae and Freddie Mac.

Fanny Mae and Freddie Mac are government sponsored businesses. They are owned by stockholders like any other corporation. However, they get special protection and financial backing from the government. Fannie Mae was started by FDR during the Depression to increase home ownership. The company buys mortgages from lenders and then turns them into securities that can be bought and sold on Wall Street. Anyone can buy these. If you have a 401K or mutual fund, it’s possible that you own some and don’t even know it! If you own these securities, you will make money on them as long as people continue to pay for the houses they bought. If, however, people cannot afford to make their payments and their houses go into foreclosure, your bonds rapidly decline in value, and may even be worthless.

The party lasted for years. People were flipping houses and making a small fortune. With so many people buying houses, demand pushed the prices of homes much higher than they were actually worth. This is what is called a “bubble.” And like any bubble, it was bound to burst sooner or later. Eventually, interest rates rose on those adjustable rate mortgages, and many people could not afford the higher payments. When they tried to sell their homes, they found that many other people were also trying to sell. Builders had overbuilt as well, creating a housing glut. With too many homes for sale and not enough buyers, the only way to sell a house was to lower the price significantly. We personally experienced this, as we decided to move right before the bubble burst. Some people were really in trouble, however, because they owed more on their house than they could get for it! Many of these people just walked away and let the house go into foreclosure. This brought the prices of houses even lower. Loans were defaulting all over the place, and those mortgage-backed securities were rapidly losing value. Many banks owned these, and suddenly found themselves with huge deficits on their books. They couldn’t loan money. When they stopped loaning money, few people could get a loan to buy a house or car, and the housing and automobile industries suffered even more. As these industries and others suffered from an inability to get credit, they were forced to lay off workers. Unemployed workers have no money to buy goods and so retail stores were hit as well. It has just kept spiraling downward.

As for AIG, they had insured many of those mortgage-backed securities and were now having to pay out. They were bleeding billions. That’s when the government stepped in to the tune of 182 billion dollars, in an attempt to stop the bleeding. In helping AIG, they were also helping all the banks they had insured.

Somehow, someone has to figure out a way to get the banks in better financial shape so they can start lending money again. That is Geithner’s terrible job. Like I said, I don’t envy the guy.

So what is AIG, and why is everyone so mad at it?

If you’ve heard any news at all in the past week, you know that lots of people are steamed about bonuses paid to executives at AIG. But what exactly is AIG, and how did this happen? Since you and I own controlling interest in the company, we really ought to know that.

What, you didn’t know you owned it? Well, you do. When the company was on the verge of collapse and came crawling to the government for help, they got it – big time. So far, AIG has received over $182.5 BILLION in bailouts from the federal government. We, the taxpayers will foot the bill for this. In exchange for our generous donations, AIG had to hand over about 80% of the stock in their company to the government – that’s us, remember. We now have controlling interest in AIG. We, therefore, feel we should have some say in how it is run. So does Obama. In effect, the company was nationalized, though no one calls it that.

AIG originally stood for American International Group, but these days people believe it stands for Arrogant, Incompetent, and Greedy. In my opinion, that pretty well sums it up. This humongous corporation is actually an insurance company with fingers in lots of other enterprises as well, such as financial services. It’s the financial services division that screwed up the entire company. Some of the executives in that division received part of the $218 million in bonuses the company paid out recently. These are the same people that were stupid and greedy enough to cause the company to nearly collapse. Now, in the world where most of us live, bonuses are paid to people as a reward for good work. Apparently, that is not how Wall Street operates. On Wall Street, salaries are kept relatively low with the expectation that bonuses will be paid each year. A typical executive might have a set salary between 200 and 300 thousand a year, but receive an end-of-the-year bonus of 2 to 10 million. The amount is based on the volume of business they brought into the firm over the year. (One of the problems has been that they have been rewarded for the quantity of their investments, not the quality.) These executives see themselves as entitled to this money, as though it was really part of their regular salary. It is even written into their contracts. So part of the outrage is caused by the fact that we define a bonus one way, and Wall Street execs define it another.

It seems to me that these rich financial guys live on another planet and really don’t have a clue how the ordinary American taxpayer sees this situation. In 2007, the median household income in the Unites States was $50,233. That means half the households in American somehow manage to get by on around $50,000 while Wall Street executives make six figure salaries and expect additional bonuses in the millions. Of course the average American is going to be outraged! Especially when these fat cats have nearly devastated our economy and expect us to bail them out. Not only that, but they retire with their “golden parachutes” while the rest of us are the ones who suffer from their mismanagement. These people have lived in a bubble for so long they don’t even know how an ordinary person lives anymore.

So we are mad, and for good reason. But Obama said one thing I actually agree with. He said that we shouldn’t govern out of anger. I’m sure most of us have said or done really stupid things when we were angry, so that makes sense to me. Right now, Congress is trying to do just that. The House has already passed a bill that would tax those Wall Street bonuses at a rate of 90%! That is the only way they can figure out to get the money back that they carelessly let get gone in the first place. After all, they passed the original TARP legislation and the stimulus bill. Now we learn that language in the bill allowed these bonuses to be paid. What a surprise! Congress passed a bill without knowing what was in it! Now they have the nerve to act all hot and bothered about it. If they are allowed to pass a punitive, compensatory, retroactive tax aimed at a specific group of people, (which is probably unconstitutional), it sets a dangerous precedent for the rest of us. Sure, we hate what AIG has done. But anytime government acts, we must beware of the Law of Unintended Consequences.

I agree with Mike Huckabee, who says that if Congress wants to punish AIG by taxing them at 90%, they should tax their own salaries at 90%, since they also had a lot to do with getting us in this mess.

I personally believe the President could use his influence to get the executives to voluntarily return most of the money. Instead of cracking jokes on Leno, he needs to be leading right now. He needs to personally call these executive to account and appeal to their sense of patriotism and love of country, if they have any, to do the right thing.

And it's worse than you think...

So, since I started writing this blog, the debt clock has passed the eleven trillion mark. But here is the real shocker – our true debt is at least 53 trillion and will likely surpass 56 trillion before the end of this year! How is that, you may ask.

Well, remember – the 11 trillion is a combination of public debt and intragovernmental debt. Just to recap, public debt is the money the government owes to people, states, institutions, and foreign investors who hold United States treasury bonds, bills, and notes. (From now on, I will use the word “securities” to denote all types of investments.) Intragovernmental debt is what the government owes itself as a result of raiding the Social Security trust fund. That part is not included when the government tells us the current year’s deficit. It’s a very convenient way for politicians to cover up the true scope of their borrowing and spending. The kicker is, it will eventually have to be paid back when more people start drawing Social Security.

But that’s just part of it. The government has many other future obligations to be paid as well. For example, pensions for retired federal workers and military personnel. (Doug and I are owed some of that!) Then there are all the future Medicare pay-outs. That one is the true budget buster. Then you have to figure the effect of compounding interest on the growing deficit and bail-outs. Add it all up, and you get that 53 trillion in debt and future obligations. It’s mind-blowing.

Some people don’t worry about it too much. They point out that we can and will fix Social Security when we have to, and they believe the health care system will be reformed as well. As for the debt, we just keep rolling it over, never really needing to “pay it off.” As long as our economy grows, we will take in enough taxes to pay the interest on the debt. Of course, that has been the big worry recently – the economy has been shrinking instead of growing. Hopefully, that will turn around soon.

However, some pretty knowledgeable people believe our current situation is unsustainable. I’m afraid I agree with the pessimists.

"So just print more money!"

My students always had answers for our economic problems, which I would shoot down one after the other. When they realized that we owed real money to real people and we had to pay it back, their next question was usually, “Well, can’t we just print more money?” That’s when they got The Helicopter Story. It goes like this:

Suppose we are sitting here in class one day when we hear the roar of helicopters outside – lots of helicopters. Naturally, we all jump up and run over to look out the window. Staring up into the sky, we are amazed to see a dozen helicopters dumping baskets of hundred dollar bills onto the ground below. You know what happens next! There is a mass stampede as we rush outside to start scooping up all the bills we can stuff into our pockets, shoes, whatever. Suddenly, we are rich!

Overjoyed, we immediately start planning what to do with our newfound wealth. Let’s say you decide you are going to Best Buy to get that $2500 big-screen TV you’ve had your eye on for months. As soon as school gets out, you hop in the car and head on over. You are shocked when you find the parking lot full and people lined up outside the door, trying to get in. You are even more shocked when you finally get in and find the price of your TV has jumped to over $100,000! What happened?

Well, apparently, helicopters were dropping money everywhere, and now many, many people have lots and lots of money to spend. The store owners know this and reason that they can get a lot more money for their goods. After all, there are only so many TV’s, so you would be willing to pay more to be sure you get one of them. You have just experienced what we call inflation.

When lots of money chases after fewer goods and services, the prices of those goods and services go up. It is kind of like we are outbidding each other to get what we want. Who is willing to pay the most? The highest price that enough shoppers are willing to pay will become the market price of that item. In a free market economy like ours, that (price) is how we determine who gets what.

By now it should be obvious what would happen if the government just prints more money. Inflation would be the result. There would be more dollars, but they wouldn’t be worth as much. Remember, the more there is of something, the less it is worth – that old sand and diamonds analogy.

If your dollars aren’t worth as much as they were before, it will take more of them to buy that car you want. Maybe you won’t even be able to afford it. Maybe lots of people won’t be able to afford a car, and the demand for cars will decrease. Manufacturers will stop making more cars than they can sell and probably lay off workers. The economy will eventually slow down – again. So, printing more money definitely has its drawbacks!

Still MORE dangers of debt...

Proverbs 22:7 The rich ruleth over the poor, and the borrower [is] servant to the lender.

Our government cannot borrow enough money from American investors to cover its budget. Remember, there is a limited amount of money and credit available. One reason the government cannot get enough money from American institutions and investors is that Americans have, in recent decades, spent everything they earned instead of saving and investing it. In fact, until the recent financial crisis, Americans spent MORE than we earned. We had what is called a negative rate of savings. This is not good for individuals, and it is not good for the country.

Think about it this way. Banks can only loan out a certain amount of money based on their holdings. The more of people’s savings they have, the more they can loan out. Less savings means less money available for investing in economic growth. Of course, this is offset to some degree by the fact that our spending also leads to economic growth. The more we consume, the more factories will sell and the more they will produce. The point is, both saving and spending are important for our economic well-being, so we need a good balance of both.

As an interesting aside, for the first time in a long time, we are saving too much! Americans are worried about the future of our economy, and they are worried about their jobs. Logically, they are holding on to their money. This is the smart thing for individuals to do, but it is not helping end this recession. The government would like very much for us to go on a spending spree! (Don’t do it, though – you may be sacrificing your own well-being for the economy. Frankly, I don’t think ANYONE’S job is safe!)

OK, back to my original topic: the government needs more money than it can get from American investors. So what does it do? It turns to foreign investors. That is why China holds over 700 billion in U.S. securities, and Japan holds over 600 billion. Many other countries have invested in America as well. This has been a good thing so far. It has helped hold interest rates down and it has financed our ever-growing deficits. However, some economists and government officials worry that there is a danger involved, especially where China is concerned. Although we are heavily entwined with China from a trade and financial point of view, no one would say that our governments are the best of friends! In fact, China is a major competitor and one of the few remaining Communist countries. China is growing at a remarkable rate, and would no doubt like to dominate the world stage much as we have in modern history. You have to wonder, how much leverage do we want to give a nation like that?

How, you may ask, have we given them leverage? Well, as best as I can understand, the danger is that China could suddenly sell off a large amount of its U.S. holdings, in other words, dump them on the world market. With dollars flooding the market, their value would go down. (The more there is of something, the less it is worth. Grains of sand are plentiful and worth very little; diamonds are a whole different story!) If the value of the dollar depreciates (declines), we would have to pay more for all those goods we import from China and other nations. The clothes you buy at Kohl’s would cost more. So would a lot of other things, so we would probably experience inflation and, as a result, a lower standard of living – at least in the short run. In the long run, it might actually be good for American industries, as they would get more of our business. That could be good for our economy.

ON THE OTHER HAND – if foreign countries are no longer buying U.S. securities, how will we finance our government? In order for our govt. to entice new buyers, they will have to pay them higher interest rates. That means EVERYONE who borrows money will pay higher interest rates, including businesses that want to invest in new factories and growth, and you and me. So that could be bad for the economy! Pretty confusing, huh?

At any rate, the very possibility or threat that China could do this gives them leverage over us. They have threatened to dump securities if we come up with trade policies they don’t like. In a recent interview, officials from two Chinese government think tanks stated that China has the power make the U.S. dollar collapse. While it is doubtful they would actually do that, they don’t mind reminding us that they could. Does this have an effect? Yes. In a recent visit to China, Secretary of State Hillary Clinton did not make an issue of their human rights violations, in part because “How do you get tough on your banker?”

Most experts believe that China would not suddenly dump U.S. securities because our economies are so intertwined that we rise and fall together. Anything they do to hurt us would ultimately hurt them. That makes sense to me, so I am not terribly worried about our foreign debt from that standpoint. What does concern me is that this source of revenue might eventually dry up. Especially with our economy in trouble, other countries might lose confidence in us and the value of our assets. Then how we would finance our deficit? Furthermore, I don’t like being dependent on other countries!

There are other options for dealing with our deficits, but big problems exist with those options as well. I’ll look at those in my next post.

More Trouble With Debt

Another problem many economists see with an ever-increasing national debt is that the federal government must compete with other privately issued securities. (Think company stocks and bonds.) Money that goes into U.S. treasury notes does NOT go into private companies that would hopefully invest in growth and job creation. Theoretically, this would slow the economy down. We would then see a drop in GDP (gross domestic product), the measure most commonly used to assess our nation’s economic well-being. GDP measures the value of all goods and services produced in a nation in one year. When GDP drops, that means factories and businesses are not producing as much and therefore need fewer workers, thus leading to higher unemployment. As we all know, this can lead to a vicious cycle, as unemployed workers have no income with which to buy goods and services, so even fewer goods and services will be produced, meaning even more workers are laid off, and on it goes. When GDP drops for two consecutive quarters, we are in a recession. That, of course, is where we are now. Some would even argue that we are in the beginning of a depression, but that is the subject of a future post.

Not only can federal borrowing slow economic growth, it can also raise interest rates, which eventually slows economic growth as well. If the government is borrowing lots of money, and so are businesses and individuals, there is a very high demand for credit. The Law of Demand kicks in. When the demand for something goes up, so does the price. The price for credit is interest. So, more demand for credit leads to higher interest rates. This definitely affects anyone who wishes to buy expensive goods, such as a house or a car. In fact, higher interest rates may just make that house unaffordable. If fewer houses are selling, there will be less need for carpenters, supplies, and all the people that provide supplies. Again, the result is lower GDP and higher unemployment.

Not all economists agree that the government competes with private industry, but it makes sense to me.

So, what happens if there is more demand for credit than there are people who are willing to provide it? Well, then the government must go outside the country to find people who will buy treasury bonds and notes. That is just what they have done, so that we now are in debt to China to the tune of over 700 billion dollars and Japan for over 600 billion. My next post looks at the possible dangers associated with this type of debt.

So What's So Bad About Debt?

“A trillion is not a ‘bleak’ number, per se. It's just a number. We might need two trillion,” said the University of Texas’s James Galbraith in an email. “Deficits have to grow. They will grow. Please get used to it.”

As the quote above indicates, not all economists are concerned about our rapidly growing deficits. Some believe that the only way to make our economy grow again is for the government to infuse huge amounts of money into it. In other words, we can spend our way out of this mess we are in.

You and I know, if we have one iota of common sense, that we can NOT spend our way out of debt. Nor can we go on borrowing forever – we will eventually run out of other people’s money!

In fact, such official sounding agencies as the OMB (Office of Management and Budget), the GAO (Government Accountability Office), and the CBO (Congressional Budget Office) have all issued statements to the effect that our current budgetary practices are unsustainable. Well, even a fifth grader should be able to figure that out!

So what is the problem with debt? One of our biggest problems is the fact that it keeps growing, and will continue to grow exponentially into the foreseeable future. Why? Because the government has certain debt obligations mandated by law that are certain to grow – namely Social Security, Medicare, and Medicaid, programs known as entitlements. (We Americans have been promised these payments and have paid into the system by having part of our income deducted from our pay checks. Therefore, we are “entitled” to them.) The reason entitlements will certainly grow is because of the existence of people like me – baby boomers. You remember that generation that came into being shortly following WWII; returning soldiers made babies, and lots of them! Now we, a very large generation of Americans, are beginning to retire and grow old. Soon, by 2017, there will be more of us drawing retirement checks than there will be young workers paying into the system. Then watch the debt really grow! Our health care needs will grow rapidly as well, requiring ever greater Medicare payments.

Other spending HAS to take place. Remember, the government is obligated to pay interest on our growing debt. Since our debt has exploded in the past few years, so has the amount of interest we are obligated to pay.

Entitlement spending and interest paid on the debt are known as mandatory spending, meaning we are required to spend this money. It’s kind of like when we sit down to do our personal budgets. Some things are just a given. We have to pay our mortgage if we want a roof over our heads, we have to buy food, we have to pay taxes or we’ll wind up in jail. And we have to pay our debts, you know, those credit card bills, or we will find ourselves in a world of trouble. We really don’t have much choice about those things. So what we do is set aside enough money to cover those mandatory things before we decide what we have left for things we would just like to have. Spending we don’t HAVE to do is called discretionary spending. Obviously, the more mandatory spending we must do, the less discretionary spending we can do. This is true for us individually, and it is true for our government as well.

Therein lies the trouble with debt. The more money we owe because of past spending, the less we have for current wants and needs. Our life style must be seriously downsized because of our past indiscretions. Eventually, our government will face the same problem. There will be less money for building roads and bridges, providing education, and keeping us safe. Programs will have to be cut; there will be great wailing and gnashing of teeth. People will not be happy with their government. (Yeah, I know, we’re not too thrilled with it now, but it can get a WHOLE LOT WORSE!)

There are other problems with debt as well, but I want to keep these posts short, so I will save them for another day.

So who do we owe it to?

As I said in my previous post, our government owes real money to real people. Who are those people? Well, you might be one of them! Do you have a United States Savings Bond? If so, the government owes you the face value of that bond. That bond is simply an IOU from the federal government. Every time you buy a bond, you are loaning the government money that it can use for things like building bridges and paying someone’s welfare check. Of course, you do not loan the government money out of the kindness of your heart or because you are feeling especially patriotic. You expect to get your money back and then some. The extra money you get back is the interest the government pays on your bond.

Besides bonds, the government also sells securities known as treasury notes, bonds, or bills. You can go to the nearest Federal Reserve Bank and buy these. A short-term treasury bill will require a minimum investment of $1000, and will currently cost you around $99 per $100 face value. You don’t make much money on these, but it pays better than just letting it sit in your bank, and treasury bills are considered one of the safest investments you can make. After all, they are backed by the full faith and credit of the Unites States government. As long as our government is secure, your money should be also.

The government sells its securities to individuals, institutions, corporations, and even other countries. The Chinese currently hold around 700 billion in U.S. securities, and the Japanese hold another 600 billion. That eleven trillion dollar debt is really spread around!

When I explained to my students that the government owes money to real people and not to itself, someone would always ask, “Well, can’t the government just refuse to pay it back?” Theoretically, they could. But that would be a disastrous mistake! Our government would lose all credibility and makes lots and lots of people very, very mad. How happy do you think the Chinese would be if we reneged on that 700 billion? Think there might be some ramifications? Besides, canceling all the debt would make it extremely difficult for the government to continue future operations, because it would be so difficult to raise money. After all, if you lost $1000 on a U.S. treasury bill, would you buy another one?

So the debt continues to grow – and grow, and grow, and grow! What’s the harm in that? Some people, but not many, would argue that there really is no harm. We can just keep on going the way we have been for the past few decades. Most economists are not so optimistic. They see many problems with an ever-increasing debt. I will address those in my next post.

Debts and Deficits

Doug and I were watching the local news on FOX the other night, when the anchor woman gave a lead-in for a story that made me laugh – scornfully. She said that Obama has promised to get us out of debt in four years! Doug even backed up the DVR box to be sure that was what she had said. It was. Wow! That would be quite a feat, since our current national debt is nearing 11 trillion dollars! ($10,895,353,832,730.22 to be exact – that’s over $35,000 per U.S. citizen!) You can keep up with this growing monstrosity at http://www.brillig.com/debt_clock/, where you will find the National Debt Clock.

The anchor woman made a common mistake, though it shouldn’t be common for a journalist – she confused debt with deficit. What Obama actually promised was to cut the DEFICIT in half in four years. That promise is incredible enough in itself, given our current level of spending.

Each year the government takes in a huge amount of money (revenue) in the form of taxes, tariffs, and various fees. Unfortunately, most years the government spends an even larger amount of money (expenditures). When it does so, we have a deficit for that year. The amount of the deficit is equal to the difference between revenue and expenditures in one fiscal year. (The government’s fiscal, or financial, year begins on October 1st of one year and ends on September 30th of the following year.)

It is possible, of course, that the government could take in more revenue than it spends in a year’s time. When it does, the difference is called a surplus. You have probably heard that we had a surplus at the end of the Clinton administration. In one sense, this is true. Due to the dot.com bubble, we took in lots and lots of money in the form of income and social security taxes. The social security money was invested in government bonds, giving the government lots of money to spend on other projects, which it did. Unfortunately, that money will all have to be paid back to the Social Security fund, starting around 2017, when there will be more retirees drawing checks than there will be workers paying in. Basically, what the government did was “borrow” from the Social Security Trust fund and call it revenue, even though the money will eventually have to be paid back. That is how the government had a surplus.

In fact, the government has had a deficit budget every year since 1969. And all those deficits pile up. The accumulation of all the deficits over the years makes up our national debt – that eleven trillion monstrosity. That is an incomprehensible amount of money. (See my previous post, “So How Much Are We Spending?”) No one is going to pay that off anytime soon, if ever.

Whenever I told my students about the size of our national debt, someone would always ask, “But don’t we just owe it to ourselves?” I’m afraid many adults probably think the same way. In fact, we owe real money to real people, and it has to be paid back. I’ll address that in my next post.

Who am I and why am I doing this?

People who stumble across this blog may wonder who I am and why I would write on current issues, especially our economic situation. After all, I am not an "expert." I'm not an economist, a journalist, a financier, or a politician. I'm just an ordinary American citizen who is trying to make sense of what I see and hear on the news every day. The fact that I taught high school government and economics may give me a little more knowledge in these fields than your average citizen, but only a little. I'm just as lost as most people when I pick up a copy of Forbes Magazine and read about derivatives, hedge funds, the declining dollar, and financial markets. That, I think, is what makes my blog unique. I am writing about my struggle to understand what is happening in our nation. I don't pretend to have any answers; I am looking for answers. I just want to make some sense of the complex mess our country is in. (I know, I know - it doesn't make sense!)

I even ask myself what motivates me to do this. I know part of it is my insatiable desire to learn. I was born with it. I love researching issues and finding new information. Understanding something I didn't understand before excites me. If that makes me a complete nerd, so be it.

Also, I want the truth. The truth can be very hard to find sometimes, and we may refuse to recognize it if it doesn't fit with our preconceived ideas. My goal in writing this blog is NOT to promote my personal agenda, but to seek truth wherever it may be found. While I could be described as a moderate conservative, I want to be open to new ideas. I want to really hear the opinions of others. If I find something that I believe to be true, I want to spread the word, while humbly acknowledging I could be wrong. I will try not to state my opinions with Limbaugh arrogance.

I guess another reason I do this is that I am a teacher without a class. I have teaching in my blood. I may be retired, but I still have a tremendous need to pass whatever knowledge I have onto others. I hope to take complicated issues and explain them in a way that anyone can understand. If just one person reads this blog and learns something, my goal will have been accomplished.

I also love to write. Writing helps me to think and organize my thoughts. I figure if I can put it into words on paper, I have a pretty good grasp of a concept.

Another reason - I am a confessed news junkie and have been since the first Gulf War. I don't think that is necessarily a good thing, and I am trying to watch the news less and live my life more. I will, however, continue to check in with CNN and FOX News every day. I don't like ignorance. I am appalled when Leno goes out on the street and finds people who can't recognize the vice-president of the United States. I believe a responsible citizen keeps up with what is happening in his government so he can be an intelligent participant in our democratic republic.

And finally, I love this country and want a great future for my son and any future grandchildren. Simply put, I am concerned. I used to tell my students they should get down on their knees every day and thank God they were born in the United States of America. I still believe that even with the problems we face today. We aren't perfect, but we've got the greatest country in the world, and we need to take care of what we've got.

So How Much Are We Spending?

All of us are aware of the latest stimulus bill and its cost of 787 billion. But that is just one part of the bailouts our government has been funding. CNNMoney.com is keeping a running record of government spending on bailouts. Since December of 2007, the government has allocated 10.8 TRILLION in rescue spending and has actually spent 2.1 trillion of that so far. So how much is a trillion? A noted mathematician has said that if you spent a million dollars a day since the birth of Christ, that would equal about three-fourths of a trillion. One trillion seconds equals 32,000 years. If you stacked a trillion dollar bills on top of each other, the stack would reach 68,000 miles into space, or one third of the way to the moon.

Our national debt is just under ELEVEN TRILLION DOLLARS! Think about that.

On another, equally dismal note,money spent to rescue failing banks has NOT been successful, and now even conservative Republicans are thinking that nationalization of the banks is the only answer. Fear of this sent the DOW tumbling to a six-year low on Friday as private investors dumped their bank stocks. If the banks are nationalized, stock owners of bank shares will lose their investments. They are getting out while there is still time.

However, we should be happy. We will see an increase of about $13 a week in our paychecks, possibly as early as next week. Now, doesn't that make you feel better?

Hopeless Complexity

On Tuesday, February 17, the American Recovery and Reinvestment Act of 2009, better known as “the stimulus bill” became the law of the land when President Obama affixed his signature to it. I surmise that few of us know much about the bill, beyond the fact that our government is about to spend 787 billion dollars it doesn’t have to create or save up to four million jobs. Doing the math, that amounts to a cost of $196,750 per job created. Assuming that these are not going to be jobs for CEO’s, the actual salaries paid will, of course, be far less than that. Of course, money will be spent on materials and other costs associated with job creation, but even accounting for that, it is clear that some “extras” were thrown into this bill. “The devil is in the details” has never been so true, and those details are too numerous and complicated for the average person to understand.

I suspect the bill is too complicated even for the Congressmen who passed it. After all, the final version comes in at 1,071 pages! The people who voted on it didn’t have time to read it even if they wanted to, and if they had, they still wouldn’t know what they were doing. Of course, we can read the bill for ourselves. In the interest of transparency, the White House has placed the full context of the bill on the Internet. I have included an actual excerpt here. Since we live in a rural area where agriculture is important to the lives of many, I chose part of Section 102, the Agricultural Disaster Assistance Transition. Please read carefully.

SEC. 102. AGRICULTURAL DISASTER ASSISTANCE TRANSITION. (a)
FEDERAL CROP INSURANCE ACT. Section 531(g) of the Federal Crop
Insurance Act (7 U.S.C. 1531(g)) is amended by adding at the
end the following:
‘‘(7) 2008 TRANSITION ASSISTANCE.—
‘‘(A) IN GENERAL.—Eligible producers on a farm
described in subparagraph (A) of paragraph (4) that failed
to timely pay the appropriate fee described in that subparagraph
shall be eligible for assistance under this section in accordance with
subparagraph (B) if the eligible producers on the farm—
‘‘(i) pay the appropriate fee described in paragraph
(4)(A) not later than 90 days after the date of enactment
of this paragraph; and
‘‘(ii)(I) in the case of each insurable commodity
of the eligible producers on the farm, excluding grazing
land, agree to obtain a policy or plan of insurance
under subtitle A (excluding a crop insurance pilot program
under that subtitle) for the next insurance year
for which crop insurance is available to the eligible
producers on the farm at a level of coverage equal
to 70 percent or more of the recorded or appraised
average yield indemnified at 100 percent of the
expected market price, or an equivalent coverage; and
‘‘(II) in the case of each noninsurable commodity
of the eligible producers on the farm, agree to file
the required paperwork, and pay the administrative
fee by the applicable State filing deadline, for the noninsured
crop assistance program for the next year for which a policy is available.

There! How’s that for transparency? I would explain it, but I would first need to assemble a team of lawyers, economists, politicians, and academics to explain it to me. Of course, they wouldn’t agree on its meaning, and I wouldn’t trust any of them to tell me the truth anyway. Therein lies the problem with government – it has become too big and complicated for any of us to understand. How can we have a government by the people when the people don’t have a clue what is going on? Of course, that would not be such a terrible problem if we could trust our elected representatives to make wise decisions for us – a laughable proposition at best. After all, we are talking about a legislative body that couldn’t pass a budget, one of their most important functions, or address the energy crisis when Americans were being squeezed for $4 a gallon gasoline. Now these same people are supposed to fix the greatest economic crisis of our lifetimes, when their policies and lack of oversight helped get us into this mess in the first place. Forgive me if I am not optimistic.

As for the Democrats in Congress, it is Christmas in D.C. They see this bill as the opportunity to include every social program they have lusted after in the past twelve years of Republican control. Never mind that our government is already 11 trillion dollars in debt. We’ll just print more money or pass additional debt on to our grandchildren. What could be the harm in that??? Well, as they say, a trillion here, a trillion there, and pretty soon you are talking about real money.

I see the problems, but alas, I have no answers. The scary thing is, I’m not sure anyone does. Obama seems to be throwing everything at the wall and hoping something sticks, much like FDR did during the Depression. Many economists believe that none of those New Deal programs brought us out of the Depression anyway; WWII did that. After all, if you conscript the entire population of young men and send them off to war, that pretty much solves your unemployment problem. I don’t think any of us would like to solve our current problems with WWIII.

If this is beyond the scope of mortal men to fix, I have one suggestion: PRAY without ceasing!