Clear Fog Blog

Political musings from Warren E. Peterson

Archive for December, 2012

Channeling Thomas Jefferson

Posted by Warren Peterson on December 30, 2012

A friend sent me several quotes attributed to our third President, Thomas Jefferson. Google “Thomas Jefferson quotes” and you’ll find many more sources. The quotes printed below were selected from: BrainyQuote.Com. Though written over 200 years ago, they hold true today. The last two speak particularly to our current government. The first presents the age old problem and the second, a road to resolution.

Quotes from Thomas Jefferson:

A Bill of Rights is what the people are entitled to against every government, and what no just government should refuse, or rest on inference.

My reading of history convinces me that most bad government results from too much government.

Experience hath shewn, that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny.

I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.

A wise and frugal Government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circlue of our felicities.

It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.

An association of men who will not quarrel with one another is a thing which has never yet existed, from the greatest confederacy of nations down to a town meeting or a vestry.

I never considered a difference of opinion in politics, in religion, in philosophy, as cause for withdrawing from a friend.


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The Fiscal Cliff, Not the Problem

Posted by Warren Peterson on December 17, 2012

All the proposed solutions to avoid the fiscal cliff – whether it is soak the rich, cut spending or a combination – reduce the annual budget deficits over ten years by, at best, $4.6 billion a year. With deficits forecasted at over $1 trillion a year for the next four years at least, we fall far short of solving the deficit problem much less the growing total debt. In fact, neither the fiscal cliff nor the deficit is the problem, the total debt is. Our current debt is over $16 trillion. Add another $4 trillion of continuing deficits plus the unfunded liabilities for Social Security, federal and state healthcare and pensions and our real total debt approaches $100 trillion. Yes, $100,000,000,000,000.

It is time to honestly face the reality of the debt before it crushes us. Here are three steps to solvency:

1. Accept as an over riding principle that we have a moral responsibility to the
next generations to resolve the debt we amassed largely over the last thirty years.

2. Stop adding to the debt. Stop making promises we cannot keep. We cannot
expect democratically elected officials to do this without providing them
political cover. Pass a balanced budget amendment to the Constitution.

3. Develop a plan to eliminate the debt over time (could be as long as 100
years). This plan would include:

a. Debt reduction as a line item in every budget.

b. Reform of the tax systems. For the income tax, a simplified progressive tax
where the rich pay the most but everyone pays something and deductions
are few. Consider a value added tax (VAT). In total, increase revenue but
dedicate the increase to debt reduction.

c. Reform entitlements. Social Security, healthcare and pensions by reducing
or eliminating automatic cost of living increases. Reset eligibility by age and
or income and convert pensions to 401K type retirement plans.

d. Reduce spending. Over and above entitlements, take on the sacred cows
like the military including veteran benefits and new weapons systems, farm
subsidies, and “pork barrel” projects.

e. Use a conservative forecast of inflation. Over time, inflation will be an ally in
the debt reduction fight.

Can we start to eliminate our debt? Some states are in trouble especially with unfunded liabilities but it is at the federal level where the bulk of the debt problem lies, we lack the political leadership to forge consensus on how to address the debt problem. Moreover, we need to educate a public that fails to grasp the serious nature of the issue. Words like unsustainable, trillions of dollars, unfunded liabilities, debt bomb and deficits may cause the average voter’s eyes to glaze over but they have alarming meaning and must be faced. Resolving the debt will require sacrifice on everyone’s part. God help us if we do not act soon.

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Costco, Tax the Rich, Fiscal Cliff

Posted by Warren Peterson on December 1, 2012

Whether Congress passes Obama’s tax the rich or we go over the fiscal cliff, taxes are going up in 2013. So if you are rich, especially if dividends constitute a significant portion of your income, you’d want to move as much income as you can back into 2012 to avoid whatever tax increases are coming next year. What is surprising is who is helping the rich do just that. It is none other than co-founder and former CEO of Costco and big time supporter of President Obama’s reelection, James Sinegal. His company is borrowing $3.5 billion to pay anticipated 2013 dividends now in 2012. Why would he help those filthy rich, of which he is one, dodge paying “their fair share” for another year? Weren’t we supposed to close tax loopholes? Since he supported Obama, will Mr. Sinegal press for a retroactive tax on dividends? Don’t hold you breath. One wonders if Mr. Sinegal will support any spending cuts as part of a deficit/debt compromise? Don’t exhale.

Read the Wall Street Journal’s November 30, 2012 article, “Costco’s Dividend Tax Epiphany” for more on tax hypocrisy.

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