Revenue isn’t the problem

Yesterday’s post dealt with the precarious financial situation Uncle Sam is in.  Interestingly, today I happened to stumble onto U.S. News and World Report’s ranking of the “Best States for Fiscal Stability.”

The top three are Tennessee, Florida, and South Dakota, in that order.  What do all of these have in common?

They are three of the eight U.S. States that still don’t have a personal income tax.  Tennessee does tax dividend — investment — income, but not wages.  But it relies mostly on sales taxes to pay its bills.  So why is it so stable?

For one thing, its Constitution requires a balanced budget.  Spending in a given year cannot exceed revenue collections and reserves.

Maybe Uncle Sam should take a trip to Nashville before he has to face the music.

UPDATE: as I was saying

That which can’t continue, doesn’t

The fiscal day of reckoning may be close at hand for the United States:

According to the U.S. Treasury Department’s Office of Debt Management, the U.S. government is just five years away from the point where every new dollar it borrows from the public will go toward funding interest payments on the national debt.

That is the main takeaway from the Debt Management Office’s Fiscal Year 2019 Q1 Report, which featured the Office of Management and Budget’s latest projection of the U.S. government’s borrowing from the public…

Net interest on the national debt has become one of the fastest growing segments of federal spending. When the national debt reaches the point where all newly borrowed dollars must be used to pay this mandatory expenditure, the U.S. government will have passed the event horizon that marks the boundary of the national debt death spiral.

Cities and territories in the United States that have crossed that crisis point have either gone through bankruptcy proceedings or their equivalent, or they have implemented major fiscal reforms that reversed their fiscal deterioration, wherein the best-case scenarios, they acted to restrain the growth of their previously out-of-control spending to restore their fiscal health.

Interest on the national debt is going up quickly for two reasons.  Obviously, the government continues to spend waaaaaaaaay more than they squeeze out of the economy (us) through taxation, adding to the total amount it owes.  More importantly, however, the many record deficits recorded over the past 10 years were done so at historically low interest rates (engineered by the Federal Reserve, which in the process robbed productive citizens of some of the proceeds they would normally have earned through their savings).  Inevitably, those rates have begun to climb again.  It may seem incremental on a chart, but keep in mind that just one percent of $22 trillion is $220 billion.

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A one-way ticket

Democrats must be concerned about internal polling indicating Trump’s policy successes are pulling away minority votes:

Democratic New Jersey Sen. Cory Booker introduced a bill Monday that would establish a commission to study the impact of slavery on the black community and propose slavery reparations initiatives.

Sen. Booker tweeted in reference to the bill he will be backing in the Senate, saying, “I am proud to introduce legislation that will finally address many of our country’s policies—rooted in a history of slavery and white supremacy—that continue to erode Black communities, perpetuate racism and implicit bias, and widen the racial wealth gap.”

Senator Spartacus” obviously doesn’t see the irony inherent in a Black U.S. Senator complaining that blacks just can’t get ahead in this country, less than three years after a Black man left the Oval Office.  That said, let’s examine his complaint:

Few things “erode Black communities” like the twin scourges of welfare and abortion. Both are practically sacraments to leftists.  And both have devastated the nuclear family, which study after study shows is vital to social and economic mobility.  The advocacy of abortion in America, in particular, has demonstrably racist origins.  As for the welfare legacy of the Great Society, let’s review the thoughts of its architect, Democratic President Lyndon Johnson:

These Negroes, they’re getting pretty uppity these days and that’s a problem for us since they’ve got something now they never had before, the political pull to back up their uppityness. Now we’ve got to do something about this, we’ve got to give them a little something, just enough to quiet them down, not enough to make a difference.

No amount of monetary compensation can undo the damage that two generations of government paternalism has caused the Black community.  Only by leaving Uncle Sam’s plantation and its slave mentality of perpetual victimhood, and taking personal ownership of their community’s fate, is there any chance for improvement.  (The same is true for all Americans, not just Blacks.)  Reparations are the exact opposite of that.  It’s “enough to quiet them down, not enough to make a difference.”  Of course, it’s good for buying votes, though, which is the real point.

At the same time, reparations represent an injustice to the rest of Americans.  Inevitably, it will open the door for demands by the Native Americans, Hawaiians, the Chinese and others, each with their own legitimate historical grievances.  The fabric of our society will become even more frayed as each group jostles for its share of the loot.

And where will that loot come from?  Largely from the White Devils, of course.  After all, we pale skins are the root of all evil — our college professors told us so.  Sarcasm aside, I’m the first in my family history ever to go to college.  My ancestors were hardscrabble, not wealthy, and none ever owned slaves, even though they were eeeeeeeevil Southerners.  It wasn’t my white skin that got me through college.  It was my parents ensuring I made use of my high school education, and instilling the work ethic that allowed me to work and go to school at the same time.  If he had any sense, Spartacus would see why I’m less than enthused at the prospect of being taxed to pay for others’ historical sins.  Apparently to the Democrats, I’m a “deplorable,” a “bitter clinger,” and a cash cow for redistribution schemes.  I wonder why they’re having a hard time connecting with my demographic these days.

We need a different vision if this country is to survive, a century and a half after it nearly tore itself apart.  (Today, by the way, is the anniversary of the effective end of that cataclysm.)  I’m reminded of a line from the movie Kingdom of Heaven:

“We fight over an offense we did not give against those who were not alive to be offended.”

We are at a crossroads.  Either we acknowledge our shared history — good and bad — has led all Americans to where we are now, which is a place of privilege beyond compare to most of the world’s population.  Or we begin fighting over the scraps of that heritage, and in the process tear apart what remains of it.  We can no longer afford would-be leaders who use grievance-mongering for personal advancement (I’m looking at you, Southern Poverty Law Center).

Which is why I’ll say this: there is one form of reparation I would support, and one only.  The original offense of the slavers was to forcefully remove Africans from their home and transport them to the Americas.  If any slave’s descendants truly believe this country is irreparably unjust to them, I support funding a one-way ticket to whatever African country they choose.  I don’t expect a mad clamor to take up such an offer, however.  Anyone with eyes can see that even the poorest of families in the most violent of Democratic-run cities like Chicago or Baltimore still has more opportunity and more to be thankful for than the vast majority of their distant relatives overseas.  Deep down, Senator Spartacus and his ilk know it.

And that, I submit, is reparations enough.  If it isn’t, by all means book the flight, bill Uncle Sam, and leave your U.S. passport on the way out the door.

A view from the ground

Given that a large portion of the ‘migrant caravan’ crashing against our southern border is from Honduras, it might be useful to hear from someone familiar with conditions in that country:

I am not involved in politics but would like to present to you a new perspective in regards to the current immigration crisis based on our daily life and experiences on the northern coast of Honduras. I speak fluent Spanish and live alongside Hondurans every day in the workplace, in the local community and in the most intimate corners of my own home. Although I will never be able to change the color of my skin or re-write my cultural history, I do know and love the Honduran people and have lived in this culture my entire adult life…

Some are indeed refugees seeking legitimate asylum. But others are simply fleeing generally difficult (but not dire) conditions, or have simply chosen what seems to be the easier route of escape. It is not impossible to forge a humble living in Honduras (over 9 million Hondurans survive in this culture every day), although it is true that much corruption, lack of opportunities and violence abound…

We who are on the frontlines in Honduras have offered high-quality free education and character formation in the Living Waters Ranch school we operate out of our rural homestead to over 100 at-risk Honduran youth in the past five years. More than half have walked out because they admittedly had no interest in studying or preparing for the future. This type of apathetic attitude is common among youth in our area…

Honduras is in desperate need of reform and an effective judicial system as it is overwhelmingly true that injustice and violence reign. But that does not mean that the solution is for Hondurans to flee the country illegally…

If the United States accepts the several thousand immigrants in the caravan, there are still over 9 million Hondurans living in what those who have fled claim to be unbearable circumstances on Honduran soil. What good can be brought about by extending help to a very small percentage who present themselves as refugees unless wide-scale change will be brought about by and for the masses who have stayed behind?

The natural bent of human beings is to travel the path of least resistance.  That’s why upholding standards is important — to incentivize desired outcomes and deter undesirable ones.  Right now our squishy enforcement of immigration law means that for many, trying to jump the fence in Tijuana is far easier than organizing to try to improve conditions at home.  A major problem is that this wave of invaders is bringing with it the very cultural patterns that facilitate those conditions in the country they left, such as a lack of planning for the future, a disregard for law and order and a willingness to step on others to achieve what one has not earned on their own.

None of that is to say that individual Hondurans are somehow subhuman or unworthy of a better life.  (For the record, my wife and I sponsored three children in Honduras for about a dozen years through Compassion International).  The problem here is collective culture.  The roots of Latin American culture are inarguably different from those that resulted in the formation of the United States.  Indeed, the cultural path from which the United States descended is different from just about every other part of the world, save certain portions of Europe (which, tragically, are even farther along in the process of abandoning it).  We are justified in saying to those sneaking in for the benefits that, in the words of a former President, “you didn’t build that.”  They don’t sustain it, either.

Politics, it is said, is downstream from culture.  That’s why the emphasis on multiculturalism in the U.S. over the past half century has been so destructive: it is eroding the foundation upon which our social norms and system of governance rest.  We have been inundated with new arrivals who do not understand why our nation has been so successful, and have little to no desire to learn.  They just want the U.S. to subsidize a lifestyle their own cultures couldn’t produce.  Trouble is, as more such people arrive, it is transforming our own culture in such a way we may not be so successful for much longer.

Being a compassionate nation is praiseworthy.  But there is no compassion in taking away the birthright of one to hand it to another.  Those who profess sympathy for the plight of Hondurans have other options available to them.  The author of the linked piece is far from being the only American to forego the comforts of home to invest their life with another people.  Missionaries have done so for decades — centuries, even.  The difference is that in the past a consciously Christian West was sending them out and sustaining them to bring to others the light of Christ, from Whom all other lasting blessings flow.

Now, however, the “bleeding hearts” follow their own path of least resistance: “it’s easier to help by just letting in anyone who wants to come.”  That attitude is indicative of the same short-sightedness and willingness to step on the rights of others that hobbles many other countries around the world.  It is treating the symptoms, not the problems.  For many, it’s also a cynical move to “elect a new people” more amenable to their political agenda.

Everyone has the right to take personal action to help another.  No one has the right to subsume an entire country in aliens just to feed their self-esteem or lust for power.

Slowing traffic both ways

Since the 2016 election Americans have been focused on the debate over whether to build a wall on the southern border to staunch the flow of illegal immigrants into the country.  (For those new here, this is a proposal I wholeheartedly support.)  The debate, however, usually fails to note the significance of what is leaving the country at the same time:

Asylum is in large part a colossal scam designed to provide Latin American countries with both a safety valve and a cash cow of foreign exchange.  In 2017, remittances sent back to Honduras totaled $4.33 billion and make up a significant part of the Honduran economy… Remittances comprised 17 percent of the nation’s gross domestic product (GDP) in 2011, according to World Bank estimates, the second largest share of any country in Latin America or the Caribbean…

Overall,

Immigrants in the United States in 2016 sent home ((worldwide)) more than $138 billion – a sum that exceeds the entire gross domestic product of Kuwait – according to a new report from the Pew Research Center[.]

This is essentially involuntary foreign aid from the United States — on a scale three times larger than the official foreign aid budget! — to a host of nations that are less inclined to reform their basket-case economies because of this parasitical safety valve.

Since both flows — inward and outward — need to be addressed, today’s linked article makes a solid case for taxing these remittances to build the wall, noting one Congressman has already proposed to do just that:

Rep. Mike Rogers (R-Ala.) sponsored a bill in March that would slap a 2 percent tax on all money transfers from the United States to Mexico, Central America, the Caribbean, and South America.

If Rogers expanded the idea to include all transfers to countries outside of the United States, it would generate $2.76 billion, based on the 2016 remittance totals.

“Over 10 years, there it is… There’s your wall.”

The means to achieve better national security and control of our own sovereignty exist.  The question is whether we will exercise the will to use them.  I don’t support building the wall because I hate foreigners (far from it).  I support it because I love my country, and can see what lawless immigration and economic colonization are doing to it.  I can also see how other nations in the world are less motivated to solve their own problems when they can simply shift their most restless populations to the U.S., all while taking a cut of their economic good fortune.  All of this needs to come to a stop, for everyone’s long-term sake.

 

By the purse strings

Since leaving the military, former Chairman of the Joint Chiefs Admiral Michael Mullen has spoken often about what he considers to be the biggest danger to U.S. security: the national debt.

China may be about to give us an object lesson in that assessment:

China added to bond investors’ jitters on Wednesday as traders braced for what they feared could be the end of a three-decade bull market.  Senior government officials in Beijing reviewing the nation’s foreign-exchange holdings have recommended slowing or halting purchases of U.S. Treasuries, according to people familiar with the matter.

China holds the world’s largest foreign-exchange reserves, at $3.1 trillion, and regularly assesses its strategy for investing them. It isn’t clear whether the officials’ recommendations have been adopted. The market for U.S. government bonds is becoming less attractive relative to other assets, and trade tensions with the U.S. may provide a reason to slow or stop buying American debt…

Most Americans who pay attention to government spending habits are happy merely to see the deficit fall.  But even if the deficit were brought to zero (i.e. the government miraculously balanced its budget) the outstanding debt still has to be renegotiated periodically, as old bonds mature and new ones are issued.  When there is less demand for new bonds, the yield (interest) has to rise in order to become more attractive.  Thus, even with a balanced budget, our roll-over debt is a potential time bomb.

For the last decade, the U.S. has been able to take advantage of record low bond yields as the Federal Reserve held interest rates at historic lows in the wake of the mortgage debt crisis in 2008.  This, incidentally, is why your bank pays you next to nothing on your savings any more — the same policy that keeps the government’s borrowing costs low essentially robs individual savers.  Unlike taxes, people don’t immediately recognize this fiscal effect the debt has on them.

If forces beyond the government’s control — say, the largest holder of U.S. debt decided not to roll over its holdings — caused bond yields and interest rates to rise faster than desired, the results would bankrupt the U.S. Treasury overnight:

Given its sheer size, if the interest rate on that debt were to rise by even 1%, the annual federal deficit rises by $200 billion. A 2% increase in interest rate levels would up the federal deficit by $400 billion, and if rates were 5% higher, the annual federal deficit rises by a full $1 trillion per year.

The only way to begin mitigating this risk is to not just balance the budget but to start paying down the debt.  Think that will happen?

Me neither.  The day may be fast approaching when the government, in order to service its creditors, has no choice but to cut many of the programs people have become entirely dependent upon.  It may also impose confiscatory taxation, seizing the property of those who’ve managed to save and invest during these irresponsible years.  In both cases, the social consequences will be enormous.

As the Instapundit likes to say, “things that can’t go on forever, don’t.”  The exponential rise of our national debt can’t go on forever.  It’s simply a question of when an event will occur that undeniably shows the emperor has no clothes.

Two words for the United Nations

…and they ain’t “Merry Christmas.”  The UN General Assembly today voted 128-9 to condemn the U.S. decision to move its embassy in Israel to Jerusalem.  Some of those 128 countries don’t have a lot of room for criticizing anybody, as Jake Tapper admirably points out:

It’s time these folks were sent packing. Ironically, though, by ignoring Nikki Halley’s warning two days ago, the UN may have given Americans an unintended Christmas gift:

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These are the top 10 recipients of U.S. foreign aid.  Israel (as expected) did not support the UN resolution against the U.S.  Of the others, Nigeria abstained, and the rest voted literally to bite the hand that feeds them!

Here’s what I find interesting about this: If you add up all the assistance aside from Israel’s, it comes to $10.2 billion dollars.  In 2016, the United States also gave the United Nations about $10 billion in total contributions.

Earlier this year, the Department of Homeland Security publicly estimated construction of Trump’s promised enhanced border with Mexico (“the wall”) would cost around $21 billion.

Ditch the ingrates, and the wall is paid for without adding a penny to the deficit.  Thanks, UN!

THIS is what an American-first administration looks like.  Let’s see what President Trump does with Ambassador Haley’s “list of names.”  The “bully pulpit” could make continued Congressional funding of these international leeches a lot less palatable than has been the case in the past.