Barack Obama cracks the foundation of American success: Trust

One of the beauties of a free society, particularly one built on the rule of law, free markets and individual liberty is that people are often free to pursue things that are simply not possible elsewhere. Entrepreneurship in the United States thrives like it does in no other place. From restaurants that let you choose how you want your food cooked to more cable channels than your cable box can handle to the frivolity of branded apparel and Christmas antlers, the United States is a study in the science of the division of labor.

Over the course of our American history, the division of labor has grown ever more important. While 150 years ago most people would have hunted or grown their own food, built their own houses and made their own clothes, today virtually none of us do any of those things. That’s because of the division of labor. We have come to depend on one another to do what we do best. Whether as individuals or as cogs in the wheel of a corporate machine, the division of labor allows us to live far richer lives than we ever could if we had to do everything for ourselves.

A key element of that reliance on the division of labor is trust. I will only purchase food from a vendor if I am confident they are not going to poison me. I will only fly with an airline if I’m confident they are sufficiently attending to safety that the plane will not crash. I will only allow a doctor to operate on me if I trust him not to come to work drunk and kill me.

So too it is with the government of free nations. The United States is one of, if not the most free country in the world when it comes to speech – except for college campuses of course. Citizens have put their trust in the Constitution and the government it created. It is that trust that allows them to go about that making widgets or doing whatever they do. They trust and expect – perhaps foolishly – that their elected officials will at least run the government with objectivity and honesty if not with competency and efficiency. Because the citizens trust the public servants to enforce laws and do so with detachment, the citizens themselves don’t have to enforce them or scrutinize official’s every move.

A complementary element of that trust in government is the First Amendment’s protection of the Freedom of Speech. A trust that you can speak your mind and the government will not penalize you for it. Nowhere else in the world is freedom of speech protected like it is here. Try standing on a street corner in Saudi Arabia and badmouthing the Koran. Try speaking out against the government in Russia or Venezuela. Insult some protected group in Canada or Europe and you’ll likely find yourself in court or shackles.

Free speech, particularly as it relates to opposition of government officials is as American as apple pie. Despite the vile and contemptible things said about him with great regularity and impunity, George Bush was hardly the first president to feel the sting of slings and arrows – John Adams and Thomas Jefferson also withered viscous storms of opposition – but he may end up being one of the last. And America will be much worse off for it. Why? Because Barack Obama has succeeded in destroying the trust the American people have in their government.

President Obama’s use of the IRS to tilt the election playing field in his direction is repugnant to everything Americans hold dear. Americans don’t mind a spirited fight, and even expect minor examples of local irregularities, after all, you can’t expect an election where over 100 million people vote to come off without a hitch.

Barack Obama however has done something that no American can condone. As he was getting ready to have his rear end handed to him in 2010 Congressional elections, he decided to use the police power of the government to ensure that he would be victorious two years later.

Of course he was not so transparent as to send in New Black Panther party stormtroopers to “encourage” voters into pulling the Obama lever. No, instead he clandestinely used what is possibly the single most intimidating organization in the United States, the IRS. To be clear, the IRS is far from an efficient bureaucracy, but there is a difference between a dysfunctional tax code and a tax enforcement agency that is explicitly political. This is the latter: not only did his IRS delay or refuse tax exempt status for 500 tea party and conservative organizations across the country, the agency also targeted conservatives and Romney donors for intense scrutiny and public backlash.

Barack Obama won election by a total of over 6 million votes – 5 million of which came from California and New York alone. The election would have gone the other way however if just three states had changed from blue to red: Florida, Ohio and Pennsylvania. Together they cast 19.7 million votes and Barack Obama won the three by a total of 550,000 votes. Not coincidentally, the epicenter of the IRS scandal was Cincinnati Ohio.

To put the magnitude of this malfeasance in perspective, had each of those 500 organizations swayed a mere 500 citizens each in either Florida, Ohio or Pennsylvania, Barack Obama would have lost the election. But they were not able to do so because the IRS violated the public trust by becoming an extension of the Obama campaign. How many other organizations never formed because conservatives could see the writing on the wall and were not willing to jump through hoops just to be stonewalled? How much money was not donated to these organizations and others because donors feared for their livelihoods?

Whether Obama directed this travesty himself, or he merely pointed out the targets for others to harass, he is responsible for the destruction of the American trust. By turning the IRS into the arm of a police state, where one’s associations, donations, speeches and friends are scrutinized in order to stifle dissent and harm your business, he has undermined the single most important element of American society: Trust.

Americans have always looked at the actions of government with a critical and often partisan eye, but for the most part they have bought into the idea that whether it’s the Corps of Engineers, the Department of Education or even the IRS, most of government is run in a largely objective, if often inept, fashion. By using the IRS to intimidate opponents and guarantee himself a second term, Barack Obama has opened a fissure in the American body politic. One wonders how big it will grow and whether the republic can survive. If citizens begin to see the IRS as a thought police, they will begin hiding income and cheating on their taxes, rationalizing that they will be unfairly targeted regardless. And it won’t be limited to the IRS. If citizens begin to believe that the Justice Department is but the enforcement arm of whoever is in power they may begin to react differently when targeted. If citizens believe that the EPA or the Department of Energy have become political vehicles for the reward of friends or the restraint of enemies of the regime in power, they are likely to begin to disregard their rules or edicts.

At the end of the day a free society depends on the willing trust and voluntary participation of the citizens. Barack Obama has broken that trust in a big way. The question is, can the fissure be repaired so that citizens remain willing to openly engage in political debate rather than scheme under the cover of darkness with designs on upending a system they feel is no longer fair? The country survived a relative vaudvillesque version of this scandal forty years ago that ended up in a president’s resignation. Before that FDR, JFK and LBJ were experts at using the agency to pressure opponents, but their misdeeds rarely saw the light of day thanks to a servile press happy to carry their water. Barack Obama isn’t so lucky however and thanks to the Internet and a conservative press his crimes are difficult to deny, even for the blindest of followers. Whether he serves out his term or not, Barack Obama should be seen as the pernicious narcissist he is who sacrificed the public trust for his own self-aggrandizement. For anyone who has been paying attention, none of this is a surprise.

Will big government be felled by big government overreach, arrogance and overconfidence?

One of my favorite shows is a program called “Person of Interest’ on CBS. The story revolves around a government computer that knows when someone somewhere is in danger and passes that information along to a team of ex government types who go on to save that particular Person of Interest. The show’s device is that the machine can tap into virtually every piece of electronic data on the planet and harness the video feed from every surveillance camera in the world.

While the heroes saving the day makes for a feel good show, it’s never a cakewalk. Besides the bad guys targeting each week’s Person of Interest, the good guys have to deal with the ongoing threat from a cabal of dirty cops as well as the machinations of the government agency that used to control the machine.

It all makes for great entertainment, because the good guys always win and all the scariness is limited to sixty minutes on the small screen. In the real world such government stories are rarely that entertaining. What makes them lack entertainment value in the real world is that the good guys don’t always win and there’s that small issue of who gets to decide who are the good guys in the first place.

Although Person of Interest is fiction, the idea of a Machiavellian government that seeks to manipulate events, extinguish opposition and deceive its citizenry certainly isn’t. In real life we are seeing just such a government emerge right in front of us. Not that it hasn’t been there for years, because it has, but up until now it was largely cloaked from sight for those depending on the fourth estate to tell them what to see.

Now the onion is beginning to peel. Today Washington is overwhelmed with scandals of the Obama administration seeking to use bully pulpit and the police power of government to effect its political ends. From the constantly shifting talking points of the Benghazi story to the Justice Department seizing AP records, to the EPA head seeking to hide her correspondence to the IRS muzzling groups opposing President Obama, it seems like every day brings a new story of deceitfulness and manipulation.

As much as I’d love to see the Obama administration run out of Washington, they are largely footnotes in the bigger story here. That bigger story is actually quite simple: Big government.

Big government is a bad thing. Big government in the hands of manipulative, pernicious, vain and self righteous bureaucrats and politicians is a worse thing. That is exactly what we have today with a giant all powerful government and an administration that sees itself as all knowing, infallible and beyond scrutiny or accountability.

While part of the solution may be holding Barack Obama and his minions responsible for their despicable actions, that alone does not solve the problem. The same machine with a different operator is just as dangerous, just perhaps to different people. Indeed, the citizens of the United States should not be at the mercy of one man’s or one administration’s propensity for honesty in order to exercise their rights and pursue their happiness. And that idea should apply to everyone, whether a progressive or a libertarian and everyone in between.

The solution to solving the problem we are currently facing is not to be found in throwing the rascals out. The solution is to pare back government to its Constitutional limits, pare it back to such a degree that it does not hold in its arbitrary hands the keys to a citizen’s success or failure or their ability to live their lives or exercise their rights.

The IRS can only threaten citizens because it controls the tax code and has the police power of the government to enforce its capricious rulings. Not only does it control the tax code, it has made that code so byzantine that no one – including its own agents – knows how to interpret it. Replace the income tax with the Fair Tax and you eviscerate the IRS’s ability to intimidate and coerce citizens.

Similarly, the EPA can only dictate a citizen’s prosperity or poverty because it too has the police power of government to enforce its arbitrary judgments. What’s more, over its forty year history the EPA has morphed itself from regulating pollution to regulating virtually anything in the economy that moves, manufactures or energizes. Similar unbounded overreach can be found throughout the government from the SEC to OSHA to the Justice Department.

Across the board the federal government should be winnowed to its bare Constitutional bones. Getting the unaccountable government out of the politics and patronage businesses will once again allow citizens to pursue happiness as they define it without making them hostages to the capricious whims of bureaucrats and politicians.

Might it not be fitting that the Obama administration was brought down by the weight of its own arrogance? That the IRS was felled by its own illegal attempts to hobble groups opposed to IRS overreach? That the march to ever bigger government was reversed as a result of big unaccountable government?

Samuel Adams once said: "If ever time should come, when vain and aspiring men shall possess the highest seats in Government, our country will stand in need of its experienced patriots to prevent its ruin." He was no doubt talking about the Tea Party movement.

Barack Obama and Benghazi: What is the body count that separates a president from a candidate?

There have been three different parts to the Benghazi story. Not surprisingly, Barack Obama has managed to fail spectacularly in all three.

The first aspect of this failure has to do with the run-up to September 11th. Given terrorist’s general penchant for anniversaries and the fact that September 11th is such a trophy date for them, the Obama administration should have had every American embassy and consulate on the highest security level possible, with terrorist friendly places like Libya, practically on lockdown. Add to that the chaos associated with the fledgling government and Libya should have been ground zero for extra security measures.

Sadly, it was not. The State Department, in the specific person of Hillary Clinton, denied repeated requests for increased security. Indeed the American mission at Benghazi "was like a cardboard building, there wasn't even bullet proof glass” and security personnel “were not even allowed to have bullets”.

The second aspect of failure at Benghazi was the response to the attacks themselves. The attack on the American compound began on September 11th at 9:40 PM local time, 3:40 Eastern time. In addition to dozens of people storming the front entrance to the compound the attack included small arms fire, mortars and RPG rounds. By 6:00 AM local time the attacks on the compound and the annex were essentially over and the survivors were being transported to the airport. During the 8 hour siege no support came from outside of Libya – although a six man security team from Tripoli (including 2 DOD employees) arrived at 1:30 AM to help evacuate personnel and retrieve bodies of those killed, including Ambassador Stevens. There was however never any military support sent. Of note is the fact that 3 hours after the attacks began, the Secretary of Defense ordered anti-terrorism security teams sent from Spain, but five hours later, by which time the attacks were over, they had not even gotten off of the ground. More consequentially however is the fact that prior to the attack on the annex a Special Forces unit in Tripoli was preparing to fly to Benghazi. They too never got off the ground because they were told to stand down, that they couldn’t go because they didn’t have authority. This is in stark contrast to the administration’s claim that no one was ever given a stand down order and that all available resources were used.

The third aspect of failure, and the most consequential for the American people as a whole, although certainly not for the families of the victims of the attacks, is the obfuscation and cover-up. Coming just 2 months before the presidential election, Barack Obama made the conscious decision to lie to the American people. Indeed, in an attempt to further his administration’s fiction that terrorism was on the wane and that America was once again loved around the world, Barack Obama tried to pretend as if nothing of consequence had happened as he jetted off to Vegas on a campaign stop. What’s worse, five days later, despite knowledge to the contrary, he trotted Susan Rice out in front of the nation to lie and blame the events in Benghazi on a YouTube video. Later, Hillary Clinton claimed that she had never denied any increased security requests from Libya. Today, eight months later we know that both were lies.

What is particularly disturbing about the events surrounding Benghazi is that they are sequential, i.e. they compound one another. After any one of the three they could have decided to make good, honest decisions. They didn’t and taken as a whole the Benghazi affair is a disaster. We all know that mistakes get made in life and in any organization, government or otherwise. As they say, nobody is perfect and we should not expect our politicians to be so. And we don’t. We do however expect them to be competent and honest. In this case Barack Obama and his administration showed themselves to be not only imperfect, but incompetent, dishonest, and most of all, self-servingly callous with the lives of four Americans who were in Benghazi serving as representatives of the American people.

It’s possible for Americans to believe that in the chaos of Libya in the summer of 2012, that somehow security measures were not quite what they should have been or that the security in place seemed adequate but turned out to fail in a perfect storm of events. After all, “No battle plan ever survives contact with the enemy”.

What’s not possible for Americans to believe however is that in the midst of a raging battle of unknown duration, the President of the United States would refuse to allow Special Forces to attempt to protect and rescue those Americans who were being attacked. From the very beginning the administration understood the gravity of the situation – both on the ground and for their campaign. Rather than jettison the fiction of a terrorism free middle east, the president choose to order reinforcements to stand down. Additionally, later pronouncements that military aid from outside Libya would not have arrived in time are simply absurd. As far as we know the terrorists do not punch clocks for an 8 hour shift of causing mayhem. By definition a terrorist attack timetable is not coordinated with the victims beforehand. In the middle of the battle there was no way of knowing if it would last 5 more hours or 5 more days. In that light the decision to refuse reinforcements shows Barack Obama to be at best an incompetent Commander in Chief and at worst a narcissistic politician for whom his power is the only issue of concern.

Finally there is the cover-up. Every American understands that safety and security are messy affairs and that tragedy occurs and people die, often brave people who have willingly borne the burden of defending us. While Americans might be able to accept as human the misjudgments in preparation in the run up to September 11th, and while they might reluctantly accept the fact that they have elected an incompetent Commander in Chief, they will not, or at least should not, accept a president who, when four Americans die on his watch, lies to the American people about the cause so that he can win reelection. At some point you have to ask, is there nothing that rises above politics? What is the body count that separates the president from the candidate? What if the number had been 8 victims? Would 16 victims have been enough bloodshed to cause him to delay his trip to Las Vegas? Had 20 Americans died would they still have dared to blame it on the video?

Barack Obama has shown himself to be an incompetent president, an ineffectual Commander in Chief and most of all a pernicious politician. One has to wonder where things will go from here. Say what you will about Richard Nixon, when the time came he at least knew when the game was up and had the grace not to drag the nation into a constitutional crisis. If we get to that point with Barack Obama one wonders if grace will emerge as one of the character traits that’s been hidden for the last five years… Don’t count on it.

Big Business + Government... Why Wall Street records don't mean happy days are here again...

On Friday, the stock market, driven by record profits and a better than expected jobs report, - not to be confused with a good one - closed at its all time record high. Closing at 1,614, the S&P 500 closed up 148% from the low it reached in 2009. Not bad given that the economy is up a paltry 5.5% over that same period. Already the markets are up over 10% since the beginning of the year. There are a number of reasons for this.

One is the fact that the 500 companies represented the index have been reporting strong revenue and earnings growth, particularly among technology companies like Apple, Google and Facebook. Another factor is that the Fed’s money pump. The Federal Reserve has been pumping $85 billion a month into the economy since the beginning of the year, doubling the $40 billion a month it had been pumping in since 2010. By the Fed driving bond rates to close to zero, the stock market is the natural beneficiary of the dearth of competitive returns. Where else are investors going to put their money?

Then there is the economy. Last week the government announced that the unemployment rate had dropped 7.5% in March, down from a high of 10% in October of 2009.  Those jobs numbers sound great, until you look a little closer. The primary reason the rate is down 25% in 4 years is not because of job growth, but rather because so many people have grown discouraged that they have stopped looking for a job all together. Basically, since Barack Obama became president, 9.5 million Americans have simply left the workforce and as such are simply no longer counted. Had those people still been looking for a job - U-5, the rate would be 8.9%, which might not be such good news for stocks.

The reality is that while the stock market may be going gangbusters, the country as a whole is a different story. The simple reason is the stock markets, by definition, reflect the fortunes of big businesses. Currently, for a company to be listed in the S&P 500 it must have a market capitalization of at least $4 billion. That leaves out 99.9 percent of all companies in the United States, including the jobs engine: Small businesses. Small businesses create 64% of all new jobs, employ tens of millions of people and are the places from which large successful businesses emerge.

Basically Wall Street is heading for the stars while Main Street limps along. This is no accident. Two pieces of legislation clearly demonstrate the problem. The first is Obamacare. In 2009 it was passed despite the fact that a majority of Americans never favored it. How? Collaboration between the Democrat party and big business advocacy. Companies as diverse as General Motors, Wal-Mart and Pfizer pushed for the passage of the sainted Obamacare because they understood that the legislation would create a significant benefits for them. In many cases big companies like Wal-Mart understood that they could unload some of their costs on the public, or more importantly, they could saddle small business competitors with healthcare costs they could not afford. As competition dried up, up would go their revenue and profits…

Just as expected, Obamacare has resulted in small businesses hiring fewer workers or hiring more employees on a part time basis to keep below Obamacare’s 50 employee threshold. The most recent jobs report shows this shift to part time workers. The April report showed that the average workweek per employee in the US dropped by .2 hours. That is the equivalent of firing over 700,000 people. That larger number of workers working fewer hours means that small businesses are saddled with greater accounting, training and management costs while simply seeking to maintain their current productivity levels.

The second piece of legislation that showcases the big business / government cabal is the Internet Sales Tax bill, euphemistically called “The Marketplace Fairness Act”. The legislation would force online retailers to collect sales taxes for every taxing authority in the country whether they have a presence there or not. Simply put, state and local governments cannot live within their means and seek to squeeze every dollar they can from largely defenseless small businesses. Big businesses meanwhile seek to kneecap potential competitors by foisting upon them regulatory compliance costs they simply can’t afford. A small business doing $1.5 million a year selling backpacks or tee shirts will typically not be able to keep up with the 9600 different taxing authorities that exist around the country. Although the legislation requires each state provide one clearinghouse for tax collection within its domain, it will still leave small businesses open to legal jeopardy from each of the 9600 local taxing authorities.

Here’s just one example. Have you ever looked at your grocery store receipt and noticed some items have a T beside them while others don’t? The ones with the T next to them are taxable and the others are exempt. Some jurisdictions tax staples like milk and eggs while others don’t – and each is constantly shifting the rules. Some communities exempt some forms of chocolate while exempting others. How is a small business selling gift cheese from Wisconsin supposed to understand if it’s fine cheeses count as untaxed staples or taxed luxuries in 9600 different jurisdictions with 9600 different sets of rules? If complying with that law sounds daunting, it is, and that is exactly why many big businesses, including Amazon.com are supporting it: Less competition = more profits.

At the end of the day this stock market bonanza should not be seen as a sign of a robust economic revival. Unfortunately it’s more like a pig wearing lipstick. It’s the result of governments who refuse to live within their means conspiring with big businesses who seek to eliminate competition. The hapless saps caught in the middle are the American worker, who has fewer employment opportunities, and the nascent entrepreneur who finds that maintaining or starting a business is simply becoming unsustainable or impossible. We expect that from government, but it’s a sad day in America when two shining beacons of free market success like Wal-Mart and Amazon embrace the antithesis of free markets – regulation – in order to undermine the opportunity for other entrepreneurs to enjoy that same success they achieved.