Cost-Cutting Suggestions for Federal Budget

Rep. Neugebauer recently asked for specific suggestions on Federal cost-cutting. I sent him the following:

This responds to your recent Roundup in which you asked for proposals on Federal spending cuts.

1. Shutdown the wars in Afghanistan and Iraq.

The Afghanis don't want us there. They have been preconditioned by the Russians to avoid accepting foreign intervention. With the American presence, they foresee continued pressure to reduce/eliminate poppy (opium) production, which is their main source of income. If the population wishes the Taliban to take over, so be it. If we feel this is the source of terrorism in the US, use indirect methods of warfare, such as CIA agents on the ground and long-range bombing of bases with airplanes or missiles. This will be a much cheaper control than maintaining ground forces for an indeterminate period.

The situation with Iraq is similar. They now have considerable internal violence, which is not our business to control. We should not be nation building. Our compassion should not force us to help the "poor and unfortunate" Iraqis. The public is never innocent. They have the option and responsibility to control their own destiny.

2. Stop persecution of small businesses through taxes and regulations.

We developed this country on a capitalistic basis, which was very successful in our achieving a standard of living greater than any other country. We have been declining into socialism, with a simultaneous distraction of our economic base and personal liberties.

Rich people make jobs. I don't know of anyone who was employed by a poor person. Rich people always desire to get richer. They then give their money away through charities and trusts.

As our military personnel returns from Afghanistan and Iraq and attempts to enter the labor force, they need job opportunities. These job opportunities must come from businesses and those businesses in turn must have reasons to hire, rather than being persecuted by the Federal government

3. Stop bailouts

Private enterprises will never do their best to operate in a healthy profitable manner, so long as they have a fallback position of being "saved" by the federal government for ridiculous risks they may have taken.

This includes bailouts of foreign countries, such as our recent contribution to the Greek catastrophe. We are not part of the European Union. In fact, we should be competing with them. While they may not be our enemy in the traditional sense, they are certainly our competitors in world markets. If you don't believe this, ask the Boeing executives about Airbus.

4. Stop subsidies.

Most federal subsidies involve tax credits or grants to particular industries, such as wind energy, photovoltaics, cotton production, and to various local operations, such as schools.
An industry, which is unable to compete in world markets, should be allowed to fail, since it is economically impractical. The converse to this is to support inefficiency, which your gut feeling should tell you is wrong.

Federal subsidies to local schools indirectly grant to federal authorities the right to control local educational programs. This should be the responsibility and right of parents, who elect their school boards, which in turn appoint educational administrators.

Subsidies also include grants to individuals for specific actions. Examples are "cash for clunkers" and tax credits for home insulation. Additionally, the "earned income" status in the IRS regulations should be eliminated. Aiding the poor is the responsibility of the public, including organizations such as churches, other charities, and individuals. It should not be the responsibility of government to hide charity under the guise of special names such as "earned income". Such action only leads to an entitlement mentality.

The big item for cost reduction is the general group involving entitlements. This includes Social Security and Healthcare. It should be the responsibility of every citizen and his family to take care of costs involving medical care and the subsequent living costs of retirement for those unable to continue employment. Government should not apply any age restrictions on employment nor subsidize inactivity at any age.

5. Reduce the size of federal government.

In these days, the greatest opportunities for employment are with the federal government. As numbers of employees increase, the total payroll increases. Government payroll should be cut by reducing new employment and shutting down departments for which no obvious need exists. Ex-government employees should seek positions in private industry.

6. Give up globalization

Globalization means to put the populations of all countries on an equal economic basis. This is contrary to the desires of the American public. They have had the justified advantages of capitalistic hard work in previous generations and feel no desire to give away those advantages to their own detriment. The populations of other countries have the same opportunity and should exercise it.

We have given away manufacturing jobs to many other countries, because their labor costs are lower than those of the US. An abusive compassion would say that it is justifiable. However, most citizens would agree that the federal government should not be penalizing its citizenry through exercise of a globalization theory.

The handmaiden of globalization and the reason why jobs can be exported is the US's "free trade" policy. This has had the disadvantage of closing down whole US industries, such as the textile industry. US citizens can now go to Sears, JCPenney's and purchase articles of clothing at relatively low prices. In fact, the racks of those stores are filled with Chinese, Guatemalan, and Korean goods. The problem is that textile job elimination in the US has reduced the ability to purchase. Several years ago, the federal government applied a special tariff against imported steel. This gave an opportunity for the US steel industry to reestablish itself, with availability of local production and increased US jobs. This program needs to be extended, which will increase federal government revenues similar to cost reductions.

Used Home Sales up 10%

E-mail to Congress:

Television news is reporting this morning that used home sales are up 10%. They also say that this is based on the fact that there is a home purchase federal tax credit, which expires at the end of this month.

Here we have another example of stupid government meddling, and I use the word "stupid" advisedly. People who were considering purchasing a new home have rushed into the market for purchases this month. What does this mean for the total used home market? Nothing. Those people who would have bought next month or the month thereafter will have completed their purchase this month and the market will then revert to a lower sales-level to re-establish an annual average. In effect, the government credit meddling has made the used home market a yo-yo operation; up and down. US business and the general public are very interested in stability. They will take a good bargain when they see one, but they know that an unstable market is not good for business. It is counterproductive to hiring personnel and the carrying of inventory.

This housing credit fiasco is akin to the automobile clunkers program, which encouraged people to upgrade their motor vehicles with a cash grant available for a short time. They did so and were then quite happy with the upgrades, such that they saw no need to re-upgrade in subsequent months. In effect, the cash for clunkers program created a yo-yo up and down market.

Let's take a typical hypothetical case which may make the situation clearer. I know that my computer is getting somewhat out of date in comparison with the faster models now available at reasonable prices. I have anticipated that I will purchase a new computer sometime before the end of the year. However, I just saw in the Sunday newspaper advertisements that Best Buy has a half-off sale on new computers, and the sale will last for a week. I rush down to Best Buy, lay out my credit card and pick up a new computer. I've now purchased a computer in April, which I would've bought in December. Am I still interested in buying another in December? No. In the long-term, say 10 years, I may have increased my monetary outlay for a computer by a small amount by purchasing early, but this is offset by the fact that I saved money on the sale purchase. Nothing much has changed from a monetary a point of view.

One might ask the question why Best Buy would be offering new computers on sale for half price. There could be several reasons. It might be a loss-leader to bring people into the store for other purchases, such as TVs. It could also be that the manufacturer has misjudged his inventory and is loaded with computers on which he must pay financial carrying charges. The manufacturer may have generally over-expanded and needs cash to pay his bills.

Would any of these factors apply to government? No. There is absolutely no reason why government should apply any short-term credits for the purchase of any consumer product or service. In fact, to do so, skews the market to create instability and discourage normal business investment.

Britain As a Leader in Going down the Tube Financially

E-mail to Congress:

EIN News says, "Britain's Debt Set to Be Higher Than That of Greece. Britain's public finances may end this year in a worse state than those of Greece, economists warned yesterday, raising serious fears over the economic stability of the country. (telegraph.co.uk)".

For us it's a simple question. Europe has been leading the way on social benefits and is heading toward bankruptcy. The US has been following that lead. Should it continue, and also move toward bankruptcy? I think most Americans are smart enough to recognize we should not be following that route. However, there is a considerable segment of the US population that has no knowledge or concern concerning basic economics. They merely have their hands out, and unfortunately could continue to vote us into a state of insolvency.

I would like to bring back the poll tax, which would eliminate many ridiculous voter positions. Alternatively, I saw on the March 2 ballot for Lubbock a question of whether a photo ID should be required for voting. This is a step in the right direction.

In a Financial Crisis Guard Against a Grab for Power

E-mail to Congress:

EIN News says, "EU President to Grab Power Over National Budgets. The new President of the European Council, Herman Van Rompuy, is using the financial crisis sweeping the eurozone to launch an audacious grab for power over national budgets, leaked documents reveal. An EU source explained: "It has become clear to everyone that this economic crisis can't be solved by individual member states, such as Germany helping out Greece. What we need is the same kind of mechanism that we have now imposed on Greece in order to monitor and survey eurozone countries. So the idea is to put all European economies under surveillance. (independent.co.uk)"

This is exactly what has been happening in the US. The Dictator's Handbook says to never waste a financial crisis, when it can be used as an instrument to grab power. I know you are astute enough, such that I need not give you historical examples.

The question is whether you and your associates are willing to expend the energy to thwart the takeover and preserve the Republic.

Chinese Forcing US Economic Collapse

E-mail to Congress:

EIN News says, "China PLA Officers Urge Economic Punch Against U.S. Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan. The calls for broad retaliation over the planned U.S. weapons sales to the disputed island came from officers at China's National Defense University and Academy of Military Sciences. (reuters.com)".

This is basically how Reagan forced the collapse of the Soviet Bloc. He increased significantly US military spending. The Soviets tried to keep up but did not have the resources. They overspent and their whole economic system collapsed.

The present situation is reversed and a little different. The US of its own volition has decided to overspend on various projects unrelated to the military. This makes it especially easy for the Chinese. With the US teetering on the edge of economic collapse. The Chinese will increase their own military spending, which will force us over the edge in an effort to keep up. An economically collapsed US will have no ability to assist Taiwan in its defense, no matter how many inoperable war machines it may have. Forget the punishment aspect. It is all opportunistic against an enemy that is already in a weakened condition.

New National Debt

E-mail to Congress:

I have just read Randy Neugebauer's latest Roundup.

Part of it was, "Last week, Congress voted to increase the government’s credit card limit by $1.9 trillion, bringing the national debt limit to $14.294 trillion." Randy then asked redundantly, "Who is going to pay the bill?".

I replied to Randy that he and I know it was his associates in Congress who passed this bill. It doesn't matter who will pay. The damage is done and payment will be made by someone or all in one form or another. We don't know now who that will be.

Randy was personally opposed to the bill and voted against it. I congratulated him, but pointed out that he is still not doing his job. His job is to convince his associates to do the right thing.

This may be too big a job for him. Up until now he and you have been failing miserably. Congress continues to do the wrong thing, compounding error upon error, with apparently little deterrence from any action you may be taking. We pay for results, not intentions.

Slower Frittering Away of Our Money

E-mail to Congress:

EIN News says, "Bureaucracy Slows DEO Stimulus Spending, Chu Says. Energy Secretary Steven Chu expressed frustration that most of the roughly $37 billion in stimulus money Congress gave his agency last year had yet to be spent due to the complexity of the review process the DOE must follow. (wsj.com)".

Wonderful news! This is almost akin to hearing that Sec. Chu had been fired.
Bureaucracy has slowed down the spending of money we don't have and was inappropriately authorized by Congress. I normally am opposed to bureaucracy for slowing down progress. In this case, it appears to be slowing down damage. Hooray!

Perhaps I have also misjudged Congress. Did they intentionally add bureaucratic details to the stimulus fund in order to have a semblance of control over a Marxist Administration, or was it all accidental?