The President Has Poor Posture

It’s all fine and good if President Obama wants to have a beer and wax philosophical with his friends about how the world would be a better place without nuclear weapons. The topic would even make for a nice speech at a Miss America pageant. The reality, however, is that nuclear weapons do exist. They’ve been invented—the Pandora’s Box is opened! We can’t uninvent them. They’re here, they’re nuclear, get used to it.

American nuclear policy should reflect reality. Unfortunately, last week President Obama reversed our country’s longstanding nuclear policy which had effectively secured peace for sixty-five years.

The previous policy, supported by every president since Harry Truman, was designed to give potential aggressors pause before attacking the United States or one of our allies. Mess with us, and anything may happen—you might even get nuked. A case study in the effectiveness of this policy is illustrated by former Secretary of State James Baker in his memoir, The Politics of Diplomacy. Baker wrote that in a meeting with Iraqi Foreign Minister Tariq Aziz on the eve of the Gulf War he “purposely left the impression that the use of chemical or biological agents by Iraq could invite tactical nuclear retaliation.” No chemical weapons were confirmed to have been used during the war.

Under the new Obama policy, we’ve lost the “calculated ambiguity” that Secretary Baker credits with preventing the use of chemical weapons in the Gulf War. We’ve put all of our cards on the table. The policy states: “the United States will not use or threaten to use nuclear weapons against non-nuclear weapons states that are party to the [Nuclear Non-Proliferation Treaty] and in compliance with their nuclear non-proliferation obligations.” So if anyone who’s treaty-compliant and not openly nuclear wants to gas any of our major cities, the official U.S. stance is “That’s okay.” We’ll still respond to be sure, but it’ll be a slower, more tepid, limited response of conventional bombs and bullets. Obama’s new policy sucks the “super” out of “superpower.”

Ohio Congressman Mike Turner, senior Republican on the House Armed Services Subcommittee on Strategic Forces, has it exactly right:

When it comes to defending the United States against a devastating attack, our message should be clear and simple: If our nation is attacked, we will use all means necessary to defend ourselves. Period. This is the essence of nuclear deterrence: The message should be that the cost of attacking the United States will be greater than the benefit.

Obama’s slumped nuclear posture not only gambles with our safety in the present, it gambles with our nation’s safety in the future as well. Under the new policy, the United States “will not develop new warheads or add military capabilities.” So as China and Russia advance we’ll be staying back in the past. We’ll be fighting with the equivalent of spears and stones as the rest of the world advances. God forbid another war breaks out; we’ll have to change our national anthem to “Livin’ on a Prayer.”

Foreign relations are unpredictable. During World War II, the Russians were our allies. Shortly thereafter we were facing off against them in the Cold War. We don’t know what tomorrow will bring. There’s no crystal ball to gaze into to know what dangers we may face. We do know, however, that it’s best to be prepared. In his first annual message to Congress (the “State of the Union” by today’s terms), George Washington advised, “To be prepared for war is one of the most effectual means of preserving peace.” Peace through strength. The first forty-three presidents understood that.

Barack Obama promised us change. He’s definitely delivering.

Obama Advisor: Throw the Country Into a VAT

Our country might be getting pushed into a VAT, the dreaded state of a tax on everything productive. At a New York Historical Society event yesterday Paul Volcker, Chair of the President’s Economic Recovery Advisory Board, said that the United States should consider a European-style value-added tax (or VAT) to help tackle the soaring government budget deficit.

A value-added tax is basically a tax levied at every level of the manufacturing process on the amount of value added to the product by each additional producer. So if the end product is widgets, one producer is taxed for the “w,” the next producer is taxed for adding the “i,” another for the “d,” and then another, another, and another for the “g,” “e,” and “t,” respectively. And then, at the end of the production cycle, all these taxes are passed on to the end consumer--you, me, and everyone else. However, when a consumer buys goods in a VAT system the true depth of the value-added tax doesn’t show up on the receipt because the bulk of the tax has already been paid by producers.

It’s a particularly appealing tax to big-government politicians because, as Ronald Reagan put it back in 1985, “a value-added tax actually gives a government a chance to blindfold the people and grow in stature and size.” “The Great Communicator” went on to warn of the insidious nature of the tax: “[I]t’s hidden in the price of a product. And that tax can quietly be increased, and all the people know is that the price went up, and they don’t know whether the price went up because somebody got a raise, or whether the company wanted to increase profits, or whether it was government.”

So if the government imposes a VAT system on us, politicians will have a clandestine vehicle for raising taxes. (Yikes!) In a VAT, our economy will be damned to slow growth for decades and every manufacturer in the land will be trapped in a morass of paperwork and government bureaucracy. The European Union’s VAT laws are so complex they had to create an eLearning course to help their citizens and bureaucrats navigate the tax code.

And folks, the VAT isn’t replacing a current tax; it’s just more gasoline being poured onto the fire.

How did it come to this? What happened to the Obamacare deficit reduction? Congresswoman Kilroy promised we were going to spend a bunch of money we don’t have and, as the money rolled out, it would lower the deficit. Hard to believe that line of reasoning, but she said it would be so. The Democrats rolled out their “Mission Accomplished” banner and told us they had deflated the ballooning budget deficits. So why, then, do we need a value-added tax?

Apparently, we were lied to--and by those bastions of trustworthiness in Congress no less. The outrage! The shock! The… total predictability.

Speaker Nancy Pelosi hinted that this was phase II of the Obamacare plan back in October 2009 while appearing on the Charlie Rose program. “[European governments] get a tax off of [a value-added tax] and they use that money to pay the healthcare for their own workers… Somewhere along the way, a value-added tax plays into [American healthcare reform],” and then as an afterthought, “Of course, we want to take down the healthcare cost, that’s one part of it.”

So throwing the taxpayers into a VAT has been the plan all along, apparently. The Democrats certainly weren’t very forthcoming about that.

The new tax burden to pay for Obamacare doesn’t end there, unfortunately. Mr. Volcker also said that it may be necessary to develop a carbon or other energy-related tax.

Hopefully, when Obamacare kicks in it’ll cover backs broken by the tax burden.

Would anyone else rather have a Congress that adds value than a value-added tax? I know I would. Let’s toss the bums out!

What's Not to Like About a Massive Deficit?

Mary Jo Kilroy is a Democrat and a lawyer. Historically that demographic tends to require clarification for what the definition of “is” is. Even if I parse the definition of “is” it befuddles me to explain what Congresswoman Kilroy meant when she said of Obamacare, “It is paid for and will lower the deficit. What is not to like about that?” Not a single part of her statement is true. Which, I guess, is what's not to like about it.

When will Mary Jo learn that it takes more than a plastered-on smile to pull the wool over our eyes? Claiming Obamacare is paid for is like if I swiped my credit card to buy a luxury yacht and then boasted to my friends, “Yep. That sucker’s bought and paid for… assuming I win the Mega Millions.” Although, in order to pay for Obamacare the U.S. Government would have to win the Mega TRILLIONS.

Unfortunately, no such lottery exists. However, if it did, I’d rather play the odds on winning that than believe that Congress is going to follow through with all the actions its members would have to take in order for Obamacare to actually reduce the deficit.

The other big fib in Congresswoman Kilroy’s statement is that Obamacare will lower the deficit. The entire argument that Obamacare will reduce the deficit is constructed around estimates from the Congressional Budget Office. Due to the constraints placed on the CBO by the Congress, these estimates didn’t take into account several major elements of the Democrats’ healthcare reform package.

Despite the previous poor track record of government cost estimates (the actual cost of Medicare was nearly nine times the estimate), for the purpose of this blog entry, we’ll pretend that the CBO estimates are accurate. After making that enormous departure from reason, let’s take a look at what the CBO estimates don’t take into account.

First, the oft-cited CBO estimates do not include a $208 billion increase in reimbursements to physicians for treating Medicare patients. This repayment plan referred to as the “doc fix” was a part of the original House healthcare reform bill but was removed because of its high cost. Speaker Pelosi has stated that the “doc fix” is “very important” to Democrats, and that they “have made a commitment to do this.” If passed, the “doc fix” would, according to the CBO, cost an additional $208 billion for a net increase in the deficit of $59 billion dollars.

Second, the Congress must cut $523 billion from Medicare spending—and keep it cut. According to the National Center for Policy Analysis, a non-partisan public policy research organization, thirty-three million people will be at risk of losing Medicare access as a result of the proposed cuts. Senior citizens have the highest voter turnout rates of any demographic. In an election year, I seriously doubt the Democrats are going to want to antagonize thirty-three million senior citizens by eliminating their Medicare; it tends to be an issue very near and dear to their hearts.

Time will tell how deep the Medicare cuts actually go. However, it’s a safe bet the cuts won’t be $523 billion dollars deep. That leaves us in an even deeper deficit than the $59 billion dollar deficit the “doc fix” will have us in.

Congresswoman Kilroy’s statement, “It is paid for and will lower the deficit,” leaves me wondering: How can she really believe we're that gullible? I can't wait to give her a reality check in November.

Henry Waxman is an Economic Chupacabra

Rep. Henry Waxman reminds me of a chupacabra, the legendary Latin American cryptid that supposedly stalks the night sucking the blood out of farmers’ livestock. Except instead of sucking the life out of farm animals, he sucks the life out of our economy. He also has an insatiable thirst for media attention that he staves off by holding congressional hearings. It seems every time there’s a government witch hunt or proposed government witch hunt, he’s the John Hathorne-wannabe thirsting for blood.

Pulitzer Prize-winning Washington Post columnist William Raspberry once likened him to Joseph McCarthy. A quick look over Waxman’s career makes it hard to deny the accuracy of the observation. In 1998, Rep. Waxman created a Special Investigations Division of the House Government Reform Committee to “conduct investigations of any matter” at “any time.” Waxman has used this inquisitorial squad to investigate everything from Valerie Plame to colored contact lenses to Holocaust-era insurance restitution. If you’ve read about it in the paper, heard it on the radio, or seen it on TV there’s a good chance Henry Waxman has thrown your tax dollars at investigating it.

As discussed in this blog’s last posting, the Congressional Chupacabra’s next victims will be CEOs of companies that have lost value as a result of Obamacare. The premise of this latest Henry Waxman hearing was aptly summed up by The Wall Street Journal: “The White House claims CEOs are reducing the value of their companies and returns for shareholders merely out of political pique.” It’s a far-fetched premise, but the Democrats have to grasp for something; the truth is too dangerous for them.

The reality is that if these corporations left the Obamacare writedowns unreported they’d be running afoul of the Securities and Exchange Commission. This isn’t some game corporate America is playing because they’re spoilsports. Even the AFL-CIO predicted Obamacare would “impose a dramatic and immediate impact on company financial statements.”

The Democrats hope they can silence reality though. They think a Waxman hearing is the way to go. He’s got a history of browbeating everyone from Roger Clemens to Big Tobacco into submission.

I’m going to make two predictions:

1) Waxman’s hearings are going to backfire. In calling the farmers back to the chupacabra’s lair, Waxman is providing the CEOs a prominent national forum to have their voices heard. With the well-documented truth on their sides, the CEOs are going to eviscerate the Democrats’ ill-conceived, fantasyland arguments over how Obamacare would bring costs down. The Congressional Chupacabra is going to get a pitchfork in his side.

2) If, in a couple of years, Henry Waxman catches wind that any companies failed to report their Obamacare writedowns, he’s going to haul their CEOs in for a hearing to browbeat them for violating SEC disclosure requirements. It’s what he does.

Hopefully someday soon the Congress will get serious and start tackling the issues Americans are truly worried about: our crippled economy and stagnant job growth. Hey! Here’s a thought: why not provide some of our unemployed citizens jobs building a coliseum to house all 3,500 CEOs Henry Waxman’s going to feel compelled to bully for giving the lie on Obamacare.

Obamacare Kills Jobs

In their desire to make history with a cradle to grave healthcare program the Democrats (Mary Jo Kill-jobs included) have further devastated the economy without even understanding their blunder. It seems in their preoccupation with passing Obamacare, Democrats failed to take a great many factors into account. One of which was the effect raising taxes on businesses would have on job growth. In recent years Democrats seem to have developed a skewed view of corporations as needlessly greedy and self-serving. The Democrats have lost perspective. Corporations have a fiduciary responsibility to make a profit so they can provide a return on investment to their shareholders. Corporations aren’t made up of nameless, faceless suits with sardonic grins; they’re made up of regular people. The executives, shareholders, managers, and employees alike are all human. When the government raises taxes on a corporation, they’re raising taxes on people.

Part of the Democrats’ plan to make Obamacare appear affordable is to close what White House Press Secretary Robert Gibbs calls a “loophole” which allowed corporations to deduct the full amount spent on prescription drug benefits for retirees from the corporation’s taxable income. This “loophole” was originally created in 2003 to incentivize employers to provide drug benefits to retirees in order to prevent the public system from being overwhelmed. Now, in the aftermath of the Obamacare legislation’s passage, companies of all kinds are facing an increased tax burden as a result of their decision to provide prescription drug benefits to retirees.

In the long term, this means many companies will terminate their retiree prescription drug benefits programs, leaving their retirees to rely on Obamacare and, thus, creating additional costs not factored into the estimates that claimed Obamacare would reduce the deficit. In the short term, employers are taking the increased tax burden right on the chin. Black-letter financial accounting rules require that corporations must immediately restate the present value of their earnings when a material change has been made. As the increased tax burden of Obamacare constitutes a material change, corporations have been announcing massive writedowns as a result of the Obamacare tax hikes:

AT&T -- $1 billion

Deere & Co. -- $150 million

Caterpillar -- $100 million

AK Steel -- $31 million

3M -- $90 million

Valero Energy -- up to $20 million

And those writedowns are just the tip of the iceberg; the consulting firm Towers Watson estimates that the total number of Obamacare writedowns will reach nearly $14 billion by year end. That’s $14 billion of wealth disappearing from the economy--$14 billion that could’ve been used for job growth: gone. It’s an obvious fact that too many Americans know all too well: when employers are faced with increased costs and economic downturn, they lack the resources to hire new workers. The state of our economy was already dire, now it’s worse.

Are the Democrats concerned? Yes, but not because of the implications for job growth. They’re concerned because in announcing the writedowns, employers have voiced an inconvenient reality the Democrats would prefer be kept silent: Obamacare is a job killer.

Infuriated by the audacity of corporate America in speaking the truth, Henry Waxman (D-CA), Chairman of the House Committee on Energy and Commerce, and Bart Stupak (D-MI), Chairman of the Subcommittee on Oversight and Investigations, will haul the CEOs of Deere & Co., Caterpillar, AT&T, and Verizon before Congress for a hearing on April 21. Apparently, the Congressional Democrats would prefer for CEOs to cook the books to make their balance sheets appear healthier than they are. The Democrats really ought to think through the aftereffects of using intimidation to bully CEOs into muddying the truth. It could wind up being even worse than that time they forgot to think through the aftereffects of passing a massive, shoddily-contrived healthcare reform bill.