E-Newsletter No. 4
April 2014
If not us, who? ____ If not now, when?

As we noted last month, President Obama, in his State of the Union speech, discussed the need to find a solution to the problem of “income inequality”. One of his proposals is to raise the minimum wage to $10.10 per hour. However, based on the Congressional Budget Office’s analysis of his proposal, it is a much better “sound bite” than an effective policy. Increasing the minimum wage would serve to decrease the country’s poverty rate by less than half a percent, and the $31 billion “extra tax” on businesses would not go to only low-income families, because many low-wage workers are not members of low-income families. Just 19% of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29% would accrue to families earning more than three times the poverty threshold. [The remaining 52% of the $31 billion would also go to families above the government’s poverty threshold]. Our Editorial Board believes that there are more effective ways to address poverty in America.

Some of our readers may be aware that a documentary was released last fall, which was entitled Inequality for All. It features the viewpoints of Robert Reich, who was Secretary of Labor during President Clinton’s first term. Our Editorial Board agrees with a number of Mr. Reich’s observations, but we also take exception to some of his conclusions. Early in the documentary, Mr. Reich acknowledges that within the US economy “some inequality is inevitable” – – it is the essence of capitalism. Capitalism fosters innovation, creativity and enterprise, and it rewards taking personal responsibility for your own economic well-being. We agree with Mr. Reich’s observation that the U.S. economy is not a purely capitalistic / purely “free market” system. We agree that one of the roles of government is to set the rules and regulations by which the market functions, and therefore (rightly or wrongly) the government’s rules help determine who benefits and who is hurt by those policies and programs.

We also agree with Mr. Reich’s observation (and the underlying data) that the inflation-adjusted income of the average US worker began to flatten out during the 1970s, primarily due to the effects of globalization and new technologies. Robotics, self-scanning check-out lines, and other changes in the workplace have eliminated certain jobs. Some people curse the effects of progress and change; our Editorial Board embraces creativity, innovation, progress and change. However, this raises an interesting question – Does this mean that workers today (more so than at any other point in time) need to continue learning after they finish their formal education? Absolutely.

Here are some of Mr. Reich’s other observations about income inequality – – The disparity in annual income/wealth between “the Top 1%” and the average/median for the country as a whole has steadily increased over the past 30-40 years, and peaked in 2007 – – we agree with the data. America’s overall economy has grown tremendously during the past 30-40 years. Therefore “income inequality” is primarily a mathematical result – – when the economy has grown tremendously, and the average/median income has grown only slightly, there is an increase in the mathematical disparity.

One of Mr. Reich’s hypotheses is that this concentration of wealth leads to “speculative investments” (ie, in housing) which contribute to the formation of various “asset bubbles” which inevitably burst, and which led to the great recession of 2008-2009. However, he does not acknowledge that the government’s own loosening of the rules relating to the requirements/qualifications to obtain a mortgage also significantly contributed to this asset bubble. In addition, as Mr. Reich correctly points out, many people did not diligently pay down their mortgage balance (to ensure that they would never lose their home) but instead used their home as an ATM. (Plus, the government allows mortgage interest to be a deductible expense for tax purposes). It is generally accepted that sub-prime mortgages were one of the major triggers that led to the great recession. As we noted above, we agree that the government does have an important role to play in establishing rules and regulations to protect the public (in this case, from ourselves).

We also agree with one of Mr. Reich’s main warnings about income inequality – – the increasing concentration of wealth does create a danger to democracy. With money, comes the possibility to control government. The Inequality for All documentary was fairly even-handed in that it identified several wealthy individuals who have made significant contributions to either liberal causes or conservative causes (according to each contributor’s tendency). Unfortunately, the Supreme Court has ruled that campaign contributions by corporations and wealthy individuals, in effect, cannot be limited, because this represents a restriction on the freedom of speech. There is a reason for the expression “Money talks”, and money does buy influence. As an alternative, our Foundation supports the concept of Term Limits. We need to find different ways (i.e., CHANGE THE RULES) to reduce the possibility that our elected officials become entrenched, and become beholden to special interests, rather than to the interests of the country as a whole. We believe that if our elected officials are elected for a set (limited) period of time, they will have a greater tendency to serve the public good, rather than focus on worrying about their next re-election.

So, who is the “Top 1%”? The income level for the Top 1% is an annual income over $380,000. The Top 1% includes some professional people (doctors, lawyers), some entrepreneurs/business owners/venture capitalists/risk takers, some corporate CEOs, certain elected officials at both the national and state levels, professional athletes, entertainers, etc.

One last set of data to be considered (this is IRS tax data for 2011) – – The Top 1% of US taxpayers paid a greater share of all federal income taxes in 2011 (35.1%) than the entire bottom 90% (31.7%). The 1,366,000 taxpayers in the Top 1% (who earned approximately 20% of the country’s total personal income) paid over 35% of the total income taxes paid to the federal government, so it’s not like the Top 1% isn’t already covering a relatively higher share of the total tax load. We agree that they should – – Please re-visit our website and see our Conversation Pieces on Tax Rationalization, Tax Reform, and Tax Simplification issues. Just to clarify… There were approximately 136.6 million personal income tax returns filed for 2011. This is substantially less than the US population of 317 million US citizens, primarily due to “Married Filing Jointly” tax returns (with or without dependent children), along with a number of citizens who do not file an income tax return.

Having said all that…. We also agree with the comments that were made by Warren Buffet and Nick Hanauer in the documentary – – The US tax code is screwed up – – they only paid an effective tax rate of 17.7% / 11% on their incomes, which were in excess of $10 million. As Mr. Reich points out, it is the US government that sets the rules. At the end of the day, this is what the political process is all about. This is why We The People need to Join the Conversation and get more involved in the process, to debate (and find better solutions to) the issues that are being discussed.

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Our Editorial Board also recently reviewed a commentary that was published a few months ago by one of our favorite columnists, Cal Thomas – – Income Inequality is Part of the Entitlement Philosophy. The primary points that Mr. Thomas makes in his commentary are that certain political leaders want us to accept a false premise: that if I earn more money than you, I “owe” you some of my money to make things “fair”….. “Income inequality” is a part of the greed-envy-entitlement philosophy promoted by liberals who want to addict more people to government….. There was a time when Americans would have been ashamed to take, much less ask for, anything from their fellow citizens…. Envy, greed and entitlements are not the things that built America….. The concern should not be how much others make, but how much you can make if you apply yourself and adopt the values embraced by successful people. Thank you, Cal – we couldn’t have said it any better.

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On March 4, President Obama submitted his budget for fiscal 2015. We will address the president’s proposed budget in next month’s newsletter. The unfortunate news is that, for each of the next ten years projected in the president’s budget, there is not a single year that shows anything other than a continuation of annual deficits. Evidently, our country’s game plan is to let the amount of debt per citizen continue to grow each year. Our Editorial Board believes that (contrary to the president’s plan) we CAN get this fixed.

OK, one more set of data – – Even if the US government were to “appropriate” (i.e., steal) the entire net worth (the accumulated wealth) of the country’s Top 100 billionaires (Bill Gates, Warren Buffet, George Soros, Oprah Winfrey, Mark Zuckerberg, etc.) the government would be able to pay-off only a fraction (less than 7.5%) of the $17.5 trillion “on book” US debt (which excludes the future negative cash flows for Social Security and Medicare benefits that have also been promised). Even the very richest people in the country cannot begin to pay off our country’s cumulative debt, so who is going to pay it off? This intergenerational debt obligation (which is being pushed onto our children and grandchildren by our federal government) is immoral. We MUST get this fixed.

US Debt Clock (the “on book” US debt) –
March 1st – $54,729 per citizen / April 1st – $55,228

E-Newsletter No. 3
March 2014
If not us, who?_____If not now, when?

Last month, we talked about President Obama’s State of the Union speech and the lack of any plan to address the country’s growing debt problem. We also reported on the legislation that was passed by the US House of Representatives and US Senate to suspend any limitation on the amount of US debt until March 2015.

In this month’s newsletter, we would like to address the president’s proposal to increase the federal minimum wage from $7.25 per hour to $10.10 per hour. As discussed elsewhere on our website, our Foundation promotes the concept of personal responsibility, rather than another government program. In addition, our Editorial Board hold(s) the following truths to be self-evident –
– Poverty sucks – – it is estimated that approximately 46 million citizens (roughly 15% of the population) live in poverty
– The current poverty level for an individual (as published by the US Government) is $11,490
– The current poverty level published by the US government for a family of four is $23,550
– For 2,080 hours of work (no overtime or vacation time) $7.25 per hour is $15,080
– For 2,080 hours of work (no overtime or vacation time) $10.10 per hour is $21,008
– From a purely monetary perspective, a “minimal wage” job (however defined) sucks
– From any perspective, wanting to have a job, but not having a job, really sucks
– In a [primarily] free-market, capitalistic economy, prices are affected by supply and demand
– In a free-market economy, economic decisions are made after consideration of costs and benefits
– The US participates in the global economy, and the level of globalization is increasing each year

Our Editorial Board believes that an individual’s personal economic well-being is a personal responsibility. But for every belief, there can be an alternative contrarian belief. As we noted on our website, Mitt Romney once made the following observation – There are… people who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That’s an entitlement. The government should give it to them.

However, as we noted in that Conversation Piece, our Editorial Board does not believe that the number of people who feel they are a victim totals 47%. But the proponents of the two opposing viewpoints (Personal Responsibility versus a Government Program) have (and hold on to) their own personal beliefs. Our Editorial Board believes that a proposal to increase the minimum wage issue is a very effective “sound bite”- – it speaks to each of us as a caring person and our tendency to want to “do something”. However, as we have noted elsewhere, we believe that there are way too many examples of government programs that “sounded good”, but then we subsequently find out that all of the implications were not thought through very well, and we find ourselves in a situation where we have “unintended consequences”, and the president’s proposal is one more example.

Our Editorial Board believes that increasing the minimum wage is counter-productive in solving poverty problems. There are two basic, fundamental (and generally accepted) economic realities (supply and demand, along with “cost versus benefit” decision making) that virtually guarantee that increasing the minimum wage will serve to eliminate a certain number of jobs. It should be noted that different studies project different numbers of jobs lost, but none of the studies show that increasing the minimum wage will serve to increase the number of jobs.

This is how decision making happens in the (real) business world – – Faced with a new higher mandated cost, businesses will analyze the economics and the alternatives, and if appropriate, may choose to shift these extra costs into equipment in lieu of minimum wage job(s). The demand for workers will decrease due to higher mandated wage costs, but the supply of available potential employees will remain the same (or probably increase). New higher mandated costs will either be passed on to the market place (which increases inflation) or (if the business is not able to pass on these higher costs in the marketplace) the higher wage costs will negatively impact the business’ profitability, and therefore the business’ ability to continue to stay in business (and provide jobs).

Minimum wage jobs are merely the first rung on a person’s economic ladder. These types of jobs were never intended to be the kind of job that a person should strive for, in order to support a family of four. These jobs are typically filled by high school kids, or by people who are trying to get into the workforce for the first time to establish their skills credentials, or by senior citizens who want to continue to work for personal reasons and who would prefer to get some level of pay rather than perform volunteer work, etc., etc. A minimum wage job has minimal skill requirements – – the primary ones being the ability and the consistency to show up for work each day, take direction from management, be pleasant to work with, and to competently fulfill that job’s duties and responsibilities. Unfortunately, developing and maintaining these minimal skills can be a challenge for some individuals, and this is where the public education system and/or social services agencies (and Not for Profit Organizations) need the public’s support, so that these organizations can become more effective in fulfilling their role(s) to help eliminate poverty. This support can include joining your local PTA, running for the local school board, or providing monetary support to these organizations, etc. In order to achieve a higher level of pay, higher paying jobs require higher levels of skills (i.e., higher level math and language skills and/or specialized skills). Our Foundation believes that it is the individual’s personal responsibility to acquire those skills, so that they can find the type of job (or career) that they would like to have, to fulfill their own personal dreams and aspirations. It should be noted that sometimes those dreams and aspirations evolve into a desire to own your own business that would employ your fellow citizens.

The “political sound bite” regarding the minimum wage needs to be re-focused away from the purely “emotional argument” (poverty sucks, so “we the public” are obligated to try and do something) and the conversation needs to be re-directed towards the role of personal responsibility, along with society working on finding effective solutions to the issue of poverty in America.

In closing, our Editorial Board would like to mention that we also hold the following truth to be self-evident – – in a free-market, capitalistic economy “income inequality” is merely a fact of life. History has shown that even Communism was unsuccessful in eliminating income inequality (or poverty). Next month we will talk about the president’s proposal for the government to solve this “problem”.

US Debt Clock – – February 1st – $54,544 per citizen / March 1st – $54,729
We can get this fixed…..

3/10/14 Addendum – Please be sure to read the Comment from a California Member

E-Newsletter No. 2
February 2014

If not us, who?
If not now, when?

As many of you are aware, President Obama delivered his State of the Union speech on Tuesday night, January 28th. Our Editorial Board was extremely pleased when, six minutes into his speech, the president acknowledged that what unites the people of this nation, regardless of race, or region, or party, young or old, rich or poor, is the simple, profound belief in opportunity for all; the notion that if you work hard, and take responsibility, you can get ahead in America. As we all know, this is the basic premise of our Foundation to Promote Personal Responsibility.

However, we were extremely disappointed that the president did not put forward any plan to fix the country’s growing debt problem. Instead, the “sound bite” that he included in his speech was – Our deficits – cut by more than half. However, as we know, that statement simply means that the US government’s debt is not being repaid, but instead continues to grow (more on that later).

Our Editorial Board recognizes that it will take a long time (many years) for our country to repay its debt, and we acknowledge that cutting the deficit is preferable to having the amount of the annual deficit grow each year. However, the US government is not accomplishing what it needs to do – – cut spending and generate the necessary surpluses to begin repaying the debt. Much of the remainder of the president’s speech was devoted to discussing additional programs that the federal government should initiate (without any mention of how those programs would be funded).

In our monthly newsletter, we intend to keep you informed about the amount of the incurred “on-book” debt per US citizen (i.e., the amount of “on-book” debt, which does not even include the present value of the future payments that have been promised for Social Security and Medicare). According to the US Debt clock, this amount of debt per citizen increased from $54,426 as of January 1st to $54,544 as of February 1st.

As many of you are aware, once the federal government was “re-opened” last October, the next key date became February 7th, when the country’s debt ceiling needed to be addressed. We are extremely disappointed to report that during the week of February 10th, the US House of Representatives and the US Senate passed legislation to suspend any limitations on the US debt until March 2015. This legislation was signed into law by President Obama on Saturday, February 15th. In effect, our elected officials have written themselves a blank check on your (and, if applicable, your children’s) bank account for the next thirteen months.

We would also like to mention that on February 4th the nonpartisan Congressional Budget Office released its annual budget and economic outlook. We are providing the following link to an in-depth analysis prepared by the Committee for a Responsible Federal Budget –

http://crfb.org/sites/default/files/report_analysis_of_cbos_2014_budget_and_economic_outlook.pdf

The main messages are –
– Although the country’s deficit levels will decrease this year and next, the annual deficit will begin growing again within two years.
– Almost nothing has been done to finance or slow the growth of “entitlement programs”, which are the main drivers of our long-term debt.
– Unless changes are made, both spending and taxes will remain above historical average for the next decade, and will continue to grow over time, and annual deficits in excess of one trillion dollars will return early next decade.
– Interest payments on the country’s debt will quadruple in nominal terms between 2013 and 2024.
– By 2020, interest payments on the cumulative US debt will exceed the level of all non-defense discretionary spending.

The Congressional Budget Office’s projections are further evidence that the country’s annual deficit and cumulative debt problems are far from resolved. The Campaign to Fix the Debt, the Congressional Budget Office, the Committee for a Responsible Federal Budget, and our Foundation all join together, to encourage our elected leaders to work toward reducing the amount of federal expenditures, and ultimately reduce the amount of our country’s debt. Please refer to our Conversation Piece entitled What the US Government Should (and Should Not) Do, and our recommendations for spending reductions, to restructure the size of the US government.

In closing, we want to highlight (and applaud) the final comments President Obama made in his State of the Union speech – Our freedom, our democracy, has never been easy…. But for more than two hundred years, we have… expand(ed) the possibility of individual achievement….so that the words set to paper by our Founders are made real for every citizen. The America we want for our kids – a rising America where honest work is plentiful and communities are strong, where prosperity is widely shared and opportunity for all lets us go as far as our dreams and toil will take us – none of it is easy. But…I know it’s within our reach. Believe it.

We share the president’s sentiments. Keep the faith. We can get this fixed…..

E-Newsletter No. 1
January 2014

Welcome to our inaugural e-newsletter.
We hope you had a happy holiday season.

Our Editorial Board is pleased to report the successful launch of our website last month, along with the sign up of our initial Members. We believe that we have a very solid Foundation with our initial Members, who share our concerns about the growth of the US government, and our country’s annual deficit and cumulative debt. Our Foundation’s Members are committed to Joining the Conversation, forwarding our website’s link (F2PPR.org) to their families, friends and neighbors, and offering up new thoughts and recommendations on how We The People can affect the political process, to help solve some of our country’s most vexing problems.

As you are probably aware, last month the US House of Representatives and US Senate passed legislation regarding the federal budget for the fiscal year that began last October 1st. You may have read the following encouraging “sound bites” for this accomplishment –

For the first time in what seems like ages, Congress has passed a government spending plan without resorting to last-minute brinkmanship such as midnight negotiations to prevent an imminent government shutdown.

The legislation increases the spending cap to $1.012 trillion for fiscal 2014, and reduces the deficit by about $23 billion over 10 years.

The important fact that is missing from the above snippets is that last month’s legislation only dealt with the discretionary portion of federal spending. It should also be noted that the amounts in the legislation exceed the spending caps for fiscal 2014 that had previously been approved by Congress.

Total federal spending for fiscal 2014 in the President’s proposed budget (which includes both mandatory and discretionary amounts) is $3.778 trillion. The projected deficit in the President’s budget for fiscal 2014 is $744 billion. While this amount is down somewhat from the latest estimate of the deficit for 2013, a $744 billion deficit for 2014 represents an additional $2,300 increase in the amount of debt per citizen – for every man, woman and child in the country.

On our website, we have included a link to the US Debt Clock. On January 1, 2014, the federal government’s “on book” debt (i.e., excluding the net present value of future payments for Social Security, Medicare and other promised benefits) was $17.27 trillion, which equates to $54,426 for each US citizen. The main stream media has an obligation to report this cumulative amount per citizen, along with the additional increase that is now incorporated into the federal government’s budget for fiscal 2014. Lastly, to put the above “accomplishment” into perspective, $23 billion over 10 years represents an average of $2.3 billion per year, which equates to $7.25 per citizen per year.

Our elected representatives’ next big hurdle will be the decisions that need to be made in regards to the country’s debt ceiling. The October deal that re-opened the federal government after a 16-day shut down suspended the country’s debt limit until February 7th. We will give you an update on this issue in next month’s e-newsletter.

In the meantime, our Editorial Board would like to share with you the following link to a concise overview of our country’s annual deficit and debt problems. It is a 13 minute video prepared by David M. Walker, the former Comptroller General of the US Government. If nothing else, please be sure to watch the last two minutes of this video. (The good news is – – at least we’re better than Greece)….

We would like to close our inaugural newsletter with our Foundation’s motto:
If not us, who?
If not now, when?

Keep the faith. We can get this fixed…..