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Contributed by Mike Walker, Colonel USMC (retired)

All,

In Toronto this weekend, the United States stood alone in arguing for expanding national debt in order to continue governmental stimulus spending.  The other seven world economic powers politely declined to continue down that dangerous road.   One thing we need to credit our G-8 friends for is that they had the character and honesty to warn us that our national debt is a serious problem.  It is the next global economic bubble waiting to burst.

Some see this is chance to humble the United States and knock it off its pedestal for when the bubble bursts, the United States will be in real economic trouble.  Some say the other world powers are positioning themselves by minimizing their debt so as to exploit the situation when the US debt bubble bursts.  In either case, the United States needs to get its debt house in order now, before it is too late.

One odd voice in G-20 did support the increasing of US debt to expand government influence in the economy:  Argentina.  We should certainly look to Argentina in trying to understand the balance between the government and the private sector in creating economic prosperity but we should most certainly not be listening to the current Argentine government under President Cristina Kirchner.

In 1910 Argentina was one of the ten richest countries in the world.  The question then was, who would be most prosperous country in the Americas, Argentina or the United States?

One century later, the answer is in, the United States now has a nominal per capita GDP of $46,381 and is ranked 6th in the world.  Argentina now has a nominal per capita GDP of $7,732 and has fallen to 62^nd in the world.

Why?  In a nutshell, while Argentina embraced a state-centered economy where the government was made the engine for growth and prosperity, the United States adopted a private-sector economic model where free enterprise became the engine for growth and prosperity.  All that is threatened by our national debt.

Either we master our governmental debt or forces beyond anyone's control will have their way.  We must not go the way of Argentina.  The future is now.

Regards,

Mike

What kind of military leader, I'm referring to our "commander-in-chief", would give away the game by setting a concrete date to withdraw our troops? A pandering and short sighted one for sure. If you think that he has problems with the military now, wait until we get closer to the end of 2010 and the first half of 2011...

The obvious adult thing would be to untie the military commander's hands and let them prosecute the war to its conclusion.... does anyone remember Vietnam? Or how Iraq would have gone without the "surge", which Obama panned. Our leaders must be resolute, sure of themselves, their team and their mission.

Update: Looks like General Petraeus has begun changing the rules for engagement...

Now a word from Mike Reagan...

Gen. Stanley McChrystal, who until today was the leader of U.S, and NATO forces in Afghanistan, has resigned in the wake of derogatory comments made by the general and his staff during an interview with Rolling Stone magazine.

One can only guess at this point why the general chose to publicly disclose his feelings on an array of topics in an on-the-record capacity to a journalist associated with this particular magazine, not one generally associated with thought-provoking foreign policy pieces. The president chose wisely in quickly replacing Gen. McChrystal with someone with impeccable credentials and a record of accomplishing military objectives that at first glance may seem to be unobtainable.

You may remember this man as Gen. David Petraeus, the former commander of forces in Iraq who crafted, implemented and led the famous surge that ultimately saved countless American and Iraqi lives. Interestingly, this is the same David Petraeus who faced the wrath of the uber-progressive MoveOn.org during that same timeframe. MoveOn launched a controversial ad entitled "Petraeus Betray Us," which drew the wrath of a majority of Americans who felt it wholly inappropriate to attack a United States general who was in the field leading American personnel into battle. At the time, 72 sitting United States senators agreed.

On September 20, 2007, Senator John Cornyn of Texas (R) offered Senate Amendment 2934, which set out to: "express the sense of the Senate that General David H. Petraeus, Commanding General, Multi-National Force-Iraq, deserves the full support of the Senate and strongly condemn personal attacks on the honor and integrity of General Petraeus and all members of the United States Armed Forces." The measure passed overwhelmingly with 72 "yeas" to 25 "nays" and 3 not voting.

It will not surprise many of you to see the likes of Hillary Clinton, Chuck Schumer or Harry Reid voting against a measure that supported the leader of our armed forces engaged in battle in favor of a progressive grassroots organization. But what should concern many of us is that then-Sen. Obama decided to seek political refuge by not casting a vote. Then-Sen. Joe Biden did the same.

Gen. McChrystal, despite his proud military record, exercised extremely poor judgment in allowing such dismissing comments about the Obama administration to be aired in a public forum. The president's choice to replace him is an understandable decision.

Less understandable is how President Obama can demand a respect he has been inconsistent in offering to others. In 2007, he was unwilling to stand up to the liberal elements of his party in defense of Gen. Petraeus. As he now calls on that same general to rescue him from the political firestorm flowing today and continue the surge in Afghanistan, I express only the greatest admiration for the honor and integrity of David Petraeus.

The war in Afghanistan stands at a crucial point as more American forces pour into the region. While I have nothing but confidence in Gen. Petraeus, the resignation of Gen. McChrystal is an unfortunate loss, and one symptomatic of the tension between the civilian and military dimensions of this effort. As President Obama and Gen. Petraeus move foward in this conflict, I hope the president will begin to take proactive steps to reconcile this divide, listen to the counsel of generals in the field, and increase coordination between all aspects of the fight in Afghanistan. That country, and ours, can afford no less.

---

Mike Reagan, the elder son of the late President Ronald Reagan, is spokesperson for The Reagan PAC (www.thereaganpac.com) and chairman and president of The Reagan Legacy Foundation (www.reaganlegacyfoundation.org). Look for Mike's books and other information at www.Reagan.com. E-mail comments to Reagan@caglecartoons.com.

Read this and pass along. California used to be the wealthiest state. Now California has become a beggar. States like Texas, though they are having to be careful with their budget, fair much better than we in California do and Texas have no state income tax. If they don't have the money, they don't spend it! 

From Mike Walker.

All,

There is talk in Washington about sending even more billions of dollars to California to bail out its government and its employees, ideally teachers, police, and fire fighters.

So why be against that?  Those groups are as quintessentially American as mom, apple pie, and the American flag.  But we all need to be against it because it is the right thing to do as things now stand in Sacramento.  Here is why:

California’s elected officials have done very little to put their financial house in order over the last decade and what they have done is not working.  In the last four months, the elected representatives in Sacramento have done nothing, absolutely nothing, to fix their budget hole.  They substituted responsible governance with inaction based on a wish.  They did little more than hope that there would be a taxation windfall to make the $19 billion deficit problem go away.  That fantasy dissolved into thin air in May.

They were faced with a crisis and they sat on their hands.  Thanks to their failure to act we are now in as bad a hole as we have ever been.  Their new solution?  Lobbying Washington for more American taxpayer dollars.   The federal deficit is growing dangerously large yet the “pols” in Sacramento are spending their time asking for handouts and rearranging their deck chairs on the Titanic.

Do not do it.  No more federal bailouts for California’s government.  Make California take ownership of its problems.  Do not reward this type of malfeasance by pouring ever more American taxpayer dollars down the California government sinkhole.

Is California’s government really a giant financial sinkhole?  You bet. 

Let us look at the facts.  The huge federal stimulus program, the American Recovery and Reinvestment Act (ARRA) has already committed $55 billion to California, some $13.2 billion of that in direct aid to the California government.  Clearly, the US taxpayer has made a major effort to financially buy time for California’s elected representatives to “fix” state government.  Sacramento has wasted that American sacrifice.

How big is the sinkhole and how useless was ARRA in getting California’s governmental house in order?  Here are the deficit projections for California’s government by the non-partisan California Legislative Analyst’s Office (LAO) after the federal stimulus monies were sent:

Fiscal year

2009-10           -$26 Billion (covered by cuts, deferrals, borrowing, and ARRA bailout)

2010-11           -$19 Billion deficit

2011-12           -$21 Billion deficit

2012-13           -$23 Billion deficit

2013-14           -$20 Billion deficit

2014-15           -$18 Billion deficit

Why did the ARRA stimulus fail to get the economy going in California and why should the American taxpayer refuse to throw billions of good dollars after bad into the California government sinkhole?  Because ARRA was designed to address a national crisis and California’s government, the chief winner in ARRA funding here, was fiscally dysfunction before, during, and it now appears, will remain fiscally dysfunctional long after the recession in the rest of the country is over.

To get a taste of how futile it is to feed the California government “beast” with US taxpayer dollars, here is trip down memory lane:

Fiscal year

2001-02           California wipes out a $7 Billion reserve and goes $3.4 Billion into the red

2002-03           -$14 Billion deficit is faced; California ends up -$4.5 Billion in the red

2003-04           Sate borrows $10.7 Billion to cover deficits, asks for US taxpayer help.

In November 2006, the LAO was predicting the following government spending deficits for California:

Fiscal year

2006-07           -$4.6 Billion deficit

2007-08           -$2.8 Billion deficit

Remember, all that happened before the Wall Street financial meltdown in late 2007.  This is nothing new for the California government.  It was broken then.  It is broke now.  It will remain broken in the future.  It was economic nonsense to think that funding California’s dysfunctional government would help California’s private sector pull the State out of the recession.  Sadly, we have the double-digit unemployment rate to prove that foolishness.

If Washington really wants to help California, skip the Sacramento sinkhole and give the money to small businesses (up to 2,000 employees or so).  They will put people to work and they will then pay more in taxes year after year which in turn helps teachers, police, and firemen on an ongoing basis.  That is the win-win solution.  That is what will really help California and our Nation.

Mike

Too Big or too Small

John Hinderacker, Powerline

A lot of people are having fun with the idea of Barack Obama's postmodern presidency. Mark Steyn suggests that Obama may be the first president for whom the office just isn't good enough:

Many Americans are beginning to pick up the strange vibe that for Barack Obama, governing America is "an interesting sociological experiment", too. He would doubtless agree that the United States is "the place on Earth that, if I needed one, I would call home." But he doesn't, not really: It is hard to imagine Obama wandering along to watch a Memorial Day or Fourth of July parade until the job required him to. That's not to say he's un-American or anti-American, but merely that he's beyond all that. Way beyond. He's the first president to give off the pronounced whiff that he's condescending to the job - that it's really too small for him, and he's just killing time until something more commensurate with his stature comes along.

And so the Gulf spill was an irritation, but he dutifully went through the motions of flying in to be photographed looking presidentially concerned. As he wearily explained to Matt Lauer, "I was meeting with fishermen down there, standing in the rain, talking..." Good grief, what more do you people want? Alas, he's not a good enough actor to fake it.

I almost choked on my coffee while reading this. It is a fact, we all know it intuitively, Barry knows that he is destined for so much more, maybe Commissar of the Northern Hemisphere. The Germans have an old saying used to describe a person who once was riding high and then is reduced to a meager situation, the person is then "baking small loaves." How will Barry  respond in the near future when he has lost  his political capital and is further marginalized? Bobzhuman...

Read this, print this, distribute... from Mike Walker

All,

No more Taxpayer Bailouts? Not true based on the half-finished job we are looking at.

Follow the taxpayer's money through the bailout labyrinth and you will become worried. We are facing tens, potentially hundreds, of billions of dollars more in bailouts. These are not hypothetical bailouts linked to some unknown future financial crisis but bailouts stemming from the 2007 crisis that will be “begged for” in the coming weeks and months. Why?

Look at the new list of the top 10 “borrowers” of taxpayer money in the mortgage/financial industry based on an earlier e-mail sent back in January.

Entity Borrowed Paid Back +Profit for US Taxpayers New Tax

Fannie Mae $75.2 Billion $0 $2.5 Billion Exempt

AIG $69.9 Billion $0 $0 Exempt

Freddie Mac $50.7 Billion $0 $4.3 Billion Exempt

Ctitgroup $45 Billion $20 Billion $2.5 Billion 15% Rate

B of A $45 Billion $45 Billion $4.6 Billion 15% Rate

Wells Fargo $25 Billion $25 Billion $1.4 Billion 15% Rate

JPMorganC $25 Billion $25 Billion $1.7 Billion 15% Rate

Goldman-S $10 Billion $10 Billion $1.4 Billion 15% Rate

Morgan-S $10 Billion $10 Billion $1.3 Billion 15% Rate

PNC Fin $7.6 Billion $7.6 Billion $0.7 Billion 15% Rate

First, Fannie Mae is now number one in sucking up taxpayer dollars. They jumped past AIG, the “system failing” institution. This occurred while the original debt owed to the taxpayers stayed the same for all but “still sinking” Fannie Mae.

Second, the top “borrowers” from the private-sector financial institutions have paid back 85% of the money owed plus an average 8% “return” for the taxpayer. Good news, but no relaxing on our part until either all our money is paid back or the debtor institution closes its doors.

Third, the two Government-Sponsored Enterprises (GSE’s) have still not paid back one cent on the billions owed. They have also only generated a 5.4% average “return” on the debt to date. And Fannie Mae may keep visiting the bailout trough. Its $75,200,000,000.00 debt may grow. The Fannie Mae bailouts are NOT going to end due to the new financial reform bill being passed in Washington DC, not now, not ever. They are exempt from its provisions.

That, in a nut shell, is why the private sector works and big government does not. Put another way, one lesson learned from the Great Recession (as evident in the table above) is that free enterprise works and works within an albeit flawed “accountability/ consequences” system while government enterprise does not work because politics inevitably intrudes and gradually destroys the marketplace system of checks and balances.

We painfully learned that a loss of checks and balances within a government enterprise can cause major damage to the private sector as well. We relearned that the private-sector marketplace is the indispensable engine in creating future wealth for the benefit of our society as a whole as well as our government.

Why the big bailouts in the first place? Back in 2007 we almost had the entire mortgage/financial sector go under and take us all with it. Action had to be taken to prevent that and it cost a lot of money. We taxpayers wound up on the hook for hundreds of billions of dollars in the form of a massive bailout.

The bailout kept us afloat and for that the folks in Washington DC deserve a lot of credit. But in the end, the bailout is only a (very expensive) bandage so what is being done to address the root problems of the 2007 collapse?

The politicians in Washington DC are now telling us that they are fixing the root problems through regulation of the mortgage/financial markets. They are telling us that the hole is being plugged while the bailout keeps us afloat.

But that is wrong because there are two holes in the mortgage/financial ship that need to be plugged to keep it (and us) from sinking in the future. There would not have been a “Great Recession” if both the “Banks” and the GSE’s had acted rationally. We have to fix both root problems.

Do not get me wrong, plugging one hole is great news. The folks in Washington DC deserve an “A+” for mandating the creation of an exchange for credit default swaps and other derivatives. The old system blessed by the International Swaps and Derivatives Association failed us all. Had the transparency of an exchange been in place in 2006 much of the subsequent mayhem may have been avoided.

Most Americans support the reform of the mortgage/financial sector. Many support the new 15% tax on banks, etc being imposed as well. And by all means go after Goldman Sachs. If the SEC has a reasonable belief that they broke the law then prosecute them and let justice take its course. By the way, at least someone in Washington DC was smart enough to first get back all the taxpayer’s money plus a nice return (14%) from Goldman Sachs before bringing forth the lawsuit.

We can now say we have plugged or are very close to plugging one of the holes, however imperfectly. But the ship will still sink if the other hole is not plugged and, as far as the taxpayers are concerned, it is the much larger of the two. The taxpayers want the giant eaters of taxpayer dollars, Fannie Mae and Freddie Mac, to get the same treatment as the banks.

When are we going to see the “Fannie Mae/Freddie Mac” hole plugged?

Back in 2006 the effort to regulate Fannie Mae and Freddie Mac died during a filibuster when the needed sixty votes could not be found. Just as in the case of the missing swaps and derivatives exchange, if Fannie and Freddie had been reined in at that time then much of the pain we are now suffering might have been avoided.

I personally favor the "Bear Stearns’ Solution” for Fannie and Freddie. They rolled the dice (in part in the pursuit of big profits/big dividends/big bonuses) and failed in a big way. I say do away with them just like all the old traditional investment banks were done away with in 2008. The "To Big to Fail" argument is a bunch of bunk in this case. This isn't 1910; bankruptcy no longer means automatically closing the doors and selling off every last paper clip. The home mortgage industry will not disappear if Fannie and Freddie rightfully enter the dustbin of history.

If Washington isn’t going to shut Fannie and Freddie down then we want a major regulation bill to fix them but most of all we want our taxes back. We want our money back from Freddie and Fannie!

If the nabobs in Washington think they can get away with doing nothing about Fannie and Freddie because they think we are too simpleminded to follow what they are doing with our tax money then that is another reason why trust in the government is at an all time low.

We know there are two holes in the financial/mortgage ship and we know the bailouts will go on and on and on if nothing is done to plug the “Fannie and Freddie” hole.

Too many in Washington just don't seem to trust us with the whole truth but spewing a half-truth in its stead is clearly not working. That just makes us more suspicious. Is this malaise so prevalent because we have too many good reasons to not trust government? Certainly the 125.9 billion “good reasons” in the case of Fannie Mae and Freddie Mac are more than anyone ever needed or wanted.

Even more worrisome is the fear that $125.9 billion is not the end of it. Will someone in Washington DC step up to the plate and tell the American people what the true cost of the taxpayer bailout really is for Fannie and Freddie?

Mike

What Matters... a note from Mike Walker, USMC Colonel (retired). I am always impressed with Mike's message but this piece speaks to purpose and strength in an individuals life and how that person chooses to share that in his/her community.

Marines,

We veterans got it right about the far-leftist liberal elites a long time ago. Long serving Democratic Senator John Glenn of Ohio said it best more than thirty years ago.

A rich and removed Howard Metzenbaum, a man whose ignorance was always in competition with his arrogance, never grasped what made a real American.

But Howard got a glimpse when he ran into the real deal in the form of a grass roots all-American hero, John Glenn, US Marine and Astronaut. Here is what transpired way back in 1974:

Howard Metzenbaum: “How can you run for the senate when you never held a job?”

John Glenn: “I served twenty three years in the United States Marine Corps. I went through two wars. This was not a nine-to-five job. I flew one hundred and forty nine missions. My plane was hit by anti-aircraft fire on twelve different occasions.

I was in the space program. It wasn’t my checkbook; it was my life that was on the line. This was not a nine-to-five job where I took time off to take my daily cash receipts to the bank.

I ask you to go with me, as I went the other day, to a veterans’ hospital and look those men, with their mangled bodies, in the eye and tell them they didn’t hold a job. You go with me to any Gold Star mother and you look her in the eye and tell her that her son did not hold a job.

You go with me to the space program and you go as I have gone to the widows and orphans of Ed White and Gus Grissom and Roger Chaffee and you look those kids in the eye and tell them that their father didn’t hold a job.

I tell you, Howard Metzenbaum, you should be on your knees every day of your life thanking God that were some men – some men – who held a job. And they required a dedication to purpose and a love of country and dedication duty that was more important than life itself. And their self-sacrifice is what made this country possible.

I have held a job, Howard.”

What today’s pampered, blessedly isolated, and simple far-left liberal souls, like Howard before them, will never realize is how their disdain for best and brightest in America will become an eternal rallying cry. To understand please see the video from Afghanistan:

http://www.mca-marines.org:80/leatherneck/2d-marine-division-combat-camera.asp

How does that Marine, in the midst of war, recall that dialogue word for word with such passion?

Because it matters.

Semper Fi,

Mike

Slapping Friends

By Charles Krauthammer

WASHINGTON -- What is it like to be a foreign ally of Barack Obama's America?

If you're a Brit, your head is spinning. It's not just the personal slights to Prime Minister Gordon Brown -- the ridiculous 25-DVD gift, the five refusals before Brown was granted a one-on-one with The One.

Nor is it just the symbolism of Obama returning the Churchill bust that was in the Oval Office. Query: If it absolutely had to be out of Obama's sight, could it not have been housed somewhere else on U.S. soil rather than ostentatiously repatriated?

Perhaps it was the State Department official who last year denied there even was a special relationship between the U.S. and Britain, a relationship cultivated by every U.S. president since Franklin Roosevelt.

And then there was Hillary Clinton's astonishing, nearly unreported (in the U.S.) performance in Argentina last month. She called for Britain to negotiate with Argentina over the Falklands.

For those who know no history -- or who believe that it began on Jan. 20, 2009 -- and therefore don't know why this was an out-of-the-blue slap at Britain, here's the back story:

In 1982, Argentina's military junta invaded the (British) Falkland Islands. The generals thought the British, having long lost their taste for foreign lands, would let it pass. Besides, the Falklands have uncountably more sheep than people. They underestimated Margaret Thatcher (the Argentines, that is, not the sheep). She was not about to permit the conquest of a people whose political allegiance and ethnic ties are to Britain. She dispatched the navy. Britannia took it back.

Afterward, neither Thatcher nor her successors have countenanced negotiations. Britain doesn't covet foreign dominion and has no shortage of sheep. But it does believe in self-determination, and will negotiate nothing until and unless the Falkland Islanders indicate their desire to be ruled by a chronically unstable, endemically corrupt polity with a rich history of dictatorship, economic mismanagement and the occasional political lunacy (see: the Evita cult).

Not surprisingly, the Falkland Islanders have given no such indication. Yet inexplicably, Clinton sought to reopen a question that had been settled for almost 30 years, not just pointlessly stirring the embers but even taking the Argentine side (re: negotiations) against Britain -- a nation that has fought and bled with us for the last decade, and that today has about 10,000 troops, far more than any other ally, fighting alongside America in Afghanistan.

Of course, given how the administration has treated other allies, perhaps we shouldn't be so surprised.

-- Obama visits China and soon Indonesia, skipping India, our natural and rising ally in the region -- common language, common heritage, common democracy, common jihadist enemy. Indeed, in his enthusiasm for China, Obama suggests a Chinese interest in peace and stability in South Asia, a gratuitous denigration of Indian power and legitimacy in favor of a regional rival with hegemonic ambitions.

-- Poland and the Czech Republic have their legs cut out from under them when Obama unilaterally revokes a missile defense agreement, acquiescing to pressure from Russia with its dreams of regional hegemony over Eastern Europe.

-- The Hondurans still can't figure out why the United States supported a Hugo Chavez ally seeking illegal extension of his presidency against the pillars of civil society -- its Congress, Supreme Court, church and army -- that had deposed him consistent with Article 239 of their own constitution.

But the Brits, our most venerable, most reliable ally, are the most disoriented. "We British not only speak the same language. We tend to think in the same way. We are more likely than anyone else to provide tea, sympathy and troops," writes Bruce Anderson in London's Independent, summarizing with admirable concision the fundamental basis of the U.S.-British special relationship.

Well, said David Manning, a former British ambassador to the U.S., to a House of Commons committee reporting on that very relationship: "He (Obama) is an American who grew up in Hawaii, whose foreign experience was of Indonesia and who had a Kenyan father. The sentimental reflexes, if you like, are not there."

I'm not personally inclined to neuropsychiatric diagnoses, but Manning's guess is as good as anyone's. How can you explain a policy toward Britain that makes no strategic or moral sense? And even if you can, how do you explain the gratuitous slaps to the Czechs, Poles, Indians and others? Perhaps when an Obama Doctrine is finally worked out, we shall learn whether it was pique, principle or mere carelessness.

letters@charleskrauthammer.com