Published - Idaho State Journal 03/26/13

The financial crisis in the Euro Zone continues to haunt financial markets globally. This week’s iteration of the crisis surfaced in tiny Cyprus, and the EU attempted to force government confiscation of private customer bank deposits before another bailout would be authorized. Can governments really steal from private citizen’s bank accounts, and could it happen here? The answer to both is a qualified, yet disturbing “Yes.”

Due to massive public and private debt and a deep financial connection with fiscally troubled Greece, Cyprus is the sixth of the EU’s seventeen countries to receive massive monetary infusions to maintain solvency. In an unprecedented move, the EU voted to have Cyprus raid Cypriot bank deposits for up to 38% before another bailout would be authorized.

Americans should take note, not only of what’s happening in the Eurozone with Cyprus right now, but especially at how our domestic fiscal policy mirrors what’s been happening in Europe, and at how the U.S. is creating a similar future crisis.

To recapitulate the issue in simple terms, global economic growth, especially in the Eurozone, has slowed dramatically, since the financial crisis of 2008. This has revealed the problematic fiscal policies of many countries, which have continued to spend exorbitantly in spite of reduced tax revenue. When economic growth declines, so do tax receipts. That gap between spending and receipts creates significant budgetary deficits, which is unsustainable, and jeopardizes the liquidity and viability of the banking systems of the respective countries, since they hold much of their debt.

The Cypriot parliament voted late Friday on a plan to come up with the requisite 5.8 billion Euros needed for unlocking the 10 billion Euro bailout. Customer accounts with greater than 100,000 Euros are at risk of being raided by their own government. A defalcation of customer deposits would be a new low for any government that now has to pay the price for their own imprudent fiscal management.

It’s unlikely, given current laws and regulation, that U.S. bank customers would face a similar governmental theft of their deposits. But that can easily change, and some experts fear such a scenario is possible in light of some developments, especially for retirement accounts.

In November, Atlantic Monthly ran a story, "The 401(k) Is a $240 Billion Waste."  Time Magazine ran a similar story. Both referenced a Danish study, that concludes that government should abolish the tax-advantaged status and deductibility of retirement accounts, for they amount to “subsidies” granted to “the rich.” As soon as government recognizes a benefit as a subsidy, they believe they own it.

Also in November, Investor’s Business Daily reported that The American Society of Pension Professionals and Actuaries had launched a campaign to alert retirement planners to possible changes to individual retirement accounts.

On January 18th, Richard Cordray, the acting head of the newly formed Consumer Financial Protection Bureau (CFPB), was interviewed by Bloomberg. They reported, “The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in helping Americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agency’s first foray into consumer investments.” The CFPB was created by the Dodd-Frank legislation with wide-ranging powers. The agency works within the Federal Reserve, a corporation privately owned by member banks, and is insulated from congressional oversight, and its budget is not subject to legislative control.

The National Seniors Council (NSC) issued this warning two years ago. “A recent hearing sponsored by the Treasury and Labor Departments marked the beginning of the Obama Administration’s effort to nationalize the nation’s pension system and to eliminate private retirement accounts including IRA’s and 401k plans.”

"This hearing was set up to explore why Americans are not saving as much for their retirement as they could," explains National Seniors Council National Director Robert Crone, "However, it is clear that this is the first step towards a government takeover. It feels just like the beginning of the debate over health care and we all know how that ended up."

Deputy Treasury Secretary J. Mark Iwry presided over the hearing. He is a long-time critic of 401k plans because he believes they “benefit the rich.” He also appears to be the Administration’s point man driving this effort.

"This whole issue is moving forward very quickly," warns Crone. "Already there is a bill requiring all businesses to automatically enroll their employees in IRA plans in which part of every employee’s paycheck would be automatically deducted and deposited into this [government] account. If this passes, the government will be just one step away from being able to confiscate all these retirement accounts."

There are many who question the NSC’s take on this, and others who outright deny it. But when those at the highest levels of government harbor an ideology distinctly more European than American, anything is possible. Once sacrosanct principles of private property ownership and individual liberty are at risk of subjugation to the prevailing ideology. Cyprus may be just the beginning, and not just for EU states.

AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho, and is a graduate of Idaho State University with degrees in Political Science and History and former member of the Idaho State Journal Editorial Board.  He can be reached at rlarsenen@cableone.net.

Published – Idaho State Journal, 03/17/13

As the stock market has been advancing into all-time high territory this week, many Americans are wondering how the economy can be so great while they’re struggling so hard to make ends meet. Let’s correct that perception immediately: the stock market is not the economy, and should not be conflated with it. The stock market is only one of many indicators that measure the financial health of the country. Wall Street, our metonym for the financial markets, rarely resembles Main Street, U.S.A., and this market run provides a perfect illustration of that fact.

The Dow Jones Industrial Average (DJIA), a composite of stock prices of 30 of the top companies in the country, has been in record territory for the past week. The Standard & Poor 500, an index comprised of a broader selection of 500 of the largest companies representing all sectors of the economy, closed Friday within five points of its closing record high. This is encouraging to investors, until we consider that factoring in inflation, the Dow is still about 1,500 points shy of its previous record in 2007. So while the markets are high, the significance is not.

There are primarily three reasons the markets have ascended to these lofty levels. The first is that after the market correction of 2008, earnings projections were dramatically lowered in the wake of the reduced economic growth prospects. The bar of expectations was lowered so far that they had no place to go but up, and for the next eight quarters of earnings reports, over 90% of publicly traded companies exceeded their reduced earnings forecasts. Positive earnings represent profits, which is the fuel for appreciating equity (stock) values.

The second reason is based on the cozy crony-capitalistic relationship between Washington and Wall Street. With tax-advantaged treatment, bailouts, grants, and interest-free loans, Washington has, for self-aggrandizing purposes, infused massive amounts of capital into select industries, sectors, and companies, that has significantly augmented their financial condition.

The third, but arguably most significant reason, is Fed monetary policy. Historically, the Federal Reserve, through their Federal Open Market Committee (FOMC) has had two conventional tools at their disposal to stimulate the economy, the Fed Funds Rate and the Discount Rate. The target Fed Funds Rate is the rate at which banks and other depository institutions actively trade balances held at the Federal Reserve, on an uncollateralized basis. And the Discount Rate, or window, is the rate the Federal Reserve charges member banks when borrowing money from the Feds for themselves, and not for lending to other banks.

The lower these rates are, the cheaper money is to the banking establishment, which at least theoretically, increases their lending capacity, and lowers the prime rate to borrowers. The Prime Rate, which is usually about 300 basis points (3%) above the discount rate, is the best rate for banks’ best customers, and is what most other retail interest rates are tied to.

The Fed Funds Target Rate has been at 0-.25% for the past four years, as the FOMC has attempted to “jump-start” the economy after lapsing into a deep recession in the fourth quarter of 2008. The affect has been negligible. The leading indicators of economic activity continue to show weakness.

Since near zero Fed Funds and Discount Rates have been ineffectual, and governmental policy has been counterproductive in stimulating the economy, including the much-hyped $800 billion “stimulus” spending, the Fed has had to resort to an unconventional means of economic growth. Ben Bernanke borrowed a book from the Japanese central bank to launch a process of Quantitative Easing; this is a means of infusing money into the economy by the central bank buying financial assets from commercial banks and other private institutions. Like the rates that the Fed controls, this process is designed to increase liquidity with lending institutions for new loans, using market forces to move long-term rates lower on the yield curve.

Ben Bernanke’s Fed is now in their third iteration of Quantitative Easing, referred to as QE3. The central bank is buying $45 billion in Treasury securities (bonds and notes) as well as $40 billion in mortgage-backed securities (MBS) every month, with newly minted cash from the Treasury. By so doing, over $2 trillion in new cash has been injected into M1, which accounts for all of the money in circulation, including coins, currency and demand deposits, like checking and savings accounts.

Even this unconventional economic stimulus is inefficacious to Main Street, the broader economy, but Wall Street loves it, as it has been the primary mover of equity prices for the past four years. As the DJIA has been steadily recovering since 2009, actual economic growth has virtually stalled. Recently revised fourth quarter gross domestic product (GDP) figures show the economy barely grew at an annualized rate of .01% last year. This is not a healthy or expanding economy, especially when compared with China’s 7.5% GDP growth rate.

“It really feels like this is what $8 trillion gets you, between deficit spending and money printing,” said RC Peck, chief investment strategist and CEO of Fearless Wealth. “It’s been about $8 trillion over the last four years and I really don’t think we’d be at these prices [if it weren’t for that].”

Bond manager Jeffrey Gundlach, CEO of DoubleLine Capital concurs. Gundlach says, “The slow-growth U.S. economy is living on cheap money as is the bull market, which is in its last stages.” He explains that the central bank is committed to “easy money,” referring to the accommodative low rate policy and quantitative easing. He calls these policies “circular financing schemes.” He believes that the equity bull market is in its seventh inning and when the game ends it will be “unpleasant.”

Those with 401(k)s are beneficiaries of the market run, as are other private investors with stock holdings. But aside from that, ascending stock prices have little impact on most Americans.

The economy has not improved in any tangible way for the millions of Americans struggling with unemployment and underemployment. A healthy jobs market is crucial to strengthening the middle class, which currently exhibits a troubling lack of long-term stability. More people have dropped out of the work force than at any other time, and median household income continues to decline.

Lawrence Katz, an economics professor at Harvard said recently, “You’re really struck by the unevenness of the recovery. The top end took a whack in the recession, but they’ve gotten back on their feet. Everyone else is still down for the count.”

The latest income figures from the Census Bureau confirm this. “Median household income after inflation fell to $50,054, a level that was 8 percent lower than in 2007, the year before the recession took hold.”

Just this week, the Federal Reserve announced a historic shift in its primary focus. Previously, the central bank held to the conviction that controlling inflation was their primary function, in order to stabilize and grow the economy. They now believe that improving the labor market and reducing unemployment is the key to economic recovery, growth, and stability, and their tone in doing so has been with increasing urgency. Those of us who work in the financial industry wonder why it took so long for them to realize it.

The real unemployment rate, according to the Bureau of Labor Statistics U-6, report, is 14.3%. And until that rate improves, which will have to come in the form of fiscal and regulatory reform by Washington, not just by Fed easy money policies, the middle class will continue to struggle, which translates to reduced consumer spending and fewer durable goods orders, and more small businesses strapped for cash as they compete for reduced spending dollars. As it is currently, Wall Street is ascending, while Main Street declines. When this bifurcation ends, it will be cause for celebration when the markets reach new highs.

AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board.  He can be reached at rlarsenen@cableone.net.

Published – Idaho State Journal, 03/10/13

 “One man with courage makes a majority,” penned Thomas Jefferson. When that courage is armed with principle and backed by constitutional precepts, it’s formidable. Such was the case this week when Kentucky’s Junior Senator, Rand Paul, took to the floor of the senate in a one-man filibuster, reminiscent of the 1939 “Mr. Smith Goes to Washington.”

Unlike his counterpart in the classic Frank Capra film, however, Paul’s filibuster was over constitutional principles, and citizen rights.. The issue for him was whether the President of the United States was presumed to have power to supercede the 4^th, 5^th, and 6^th Amendments to the Constitution by killing American citizens, on American soil, with unmanned aerial devices (UAV), or drones.

The setting was the confirmation of John Brennan as the new director of the Central Intelligence Agency. Brennan refused to answer Paul's question during the Senate sub-committee confirmation hearing regarding the use of drones to attack American citizens domestically.  Senator Paul was appalled at the idea that the administration would even consider using drones domestically without a citizen ever having been charged with a crime in a court of law.

An American Civil Liberty Union (ACLU) lawyer, Nate Wessler, validated Paul’s premise in an interview this week, when he referred to the administration as, "Judge, jury, and executioner,” if they used drones domestically.

Drones have been used to kill Americans on foreign soil. In 2011 a drone strike targeted, and killed, Anwar al-Awlaki, a radical Islamic cleric born and educated in the United States.

Since Brennan refused to answer the question, Paul sought clarification from Attorney General Eric Holder. In a March 4 letter to Paul, Holder superciliously said the Obama administration believes it could "hypothetically" carry out drone strikes against Americans on U.S. soil, but "has no intention of doing so." Such a response was hardly comforting.

Holder declared, “The question you have posed is therefore entirely hypothetical, unlikely to occur, and one we hope no president will ever have to confront. It is possible, I suppose, to imagine an extraordinary circumstance in which it would be necessary and appropriate under the Constitution and applicable laws of the United States for the President to authorize the military to use lethal force within the territory of the United States.”

That Holder would declare the issue to be “entirely hypothetical,” leads one to believe he’s not at all familiar with how the technology has been, and is being used by the administration. And that he would merely “suppose” that “it is possible,” clearly indicates not much thought had been applied to the issue, a sobering admission from the government’s top attorney.

Senator Paul said, beginning his thirteen hour filibuster, “I will speak as long as it takes, until the alarm is sounded from coast to coast that our Constitution is important, that your rights to trial by jury are precious, that no American should be killed by a drone on American soil without first being charged with a crime, without first being found to be guilty by a court. That Americans could be killed in a cafe in San Francisco or in a restaurant in Houston or at their home in Bowling Green, Kentucky, is an abomination. It is something that should not and cannot be tolerated in our country.”

That such could be possible, and not merely hypothetical, should be self-evident. Drones are increasingly utilized domestically for research purposes, as well as for regulatory compliance enforcement by the government.

We extend citizen’s rights to expatriates, regardless of where they are globally. Yet after the administration’s 2011 targeting of al-Awlaki with a drone attack, the next logical question is whether it matters where such a target happens to be. This all seems duplicitous on the part of the administration, when our own citizens are not afforded the rights guaranteed by the Constitution, while simultaneously extending citizen’s rights to non-American enemy combatants.

Just this week, Sulaiman Abu Ghaith, the al-Qaida spokesman, fundraiser and son-in-law to Osama bin Laden, who is not an American citizen, was afforded citizen’s rights denied to al-Awlaki, as he made an appearance in court just blocks from ground zero in New York City.

Holder finally sent Paul the answer he was looking for. “No,” was Holder’s ultimate response, which finally brought the Senator’s filibuster to a close. This was not just a victory for Paul, to finally get the definitive answer he sought, but also a victory for all of us. Especially since it was a mere six weeks ago that Holder’s boss took an oath to protect and defend our Constitution, that inconvenient founding document that this administration seems to have such a difficult time upholding.

Senator Paul’s one-man crusade for the rights of American citizens, regardless of station, status, creed, color, or party affiliation, was a victory of principle over political expediency, and essentially validated Thomas Jefferson’s aphorism. One man with courage may not a majority make, but armed with truth and principle, can have the same effect.

AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board.  He can be reached at rlarsenen@cableone.net.

Published – Idaho State Journal, 03/03/13

Listening to our top politician in Washington this week was reminiscent of Chicken Little’s apocalyptic warning, “The sky is falling.” In daily appearances the loss of 2.5% of the federal budget has been lamented, implying catastrophic consequences. “It’s not apocalyptic,” he said, but the implication clearly made that it’s close to it. “It's just dumb. And it's going to hurt. It's going to hurt individual people and it's going to hurt the economy over all,” he said.

The president elaborated, “Emergency responders like the ones who are here today — their ability to help communities respond to and recover from disasters will be degraded. Border Patrol agents will see their hours reduced. FBI agents will be furloughed. Federal prosecutors will have to close cases and let criminals go. Air traffic controllers and airport security will see cutbacks, which means more delays at airports across the country. Thousands of teachers and educators will be laid off. Hundreds of thousands of Americans will lose access to primary care and preventive care like flu vaccinations and cancer screenings.”

As if to not be outdone, California Representative Maxine Waters cried, “We don’t need to be having something like sequestration that’s going to cause these jobs losses, over 170 million jobs that could be lost.” Apparently she’s unaware that our entire civilian labor force is only 144 million jobs in America! But the hyperbole seems to work, at least for the president, as he continues to blame congress for a plan that the White House concocted.

The hyperbole is, however, a far cry from reality. The sequester, which is now in effect, is actually the budget authority figure, not a budget outlay. There’s an important difference. A budget authority provides through an appropriations bill, the authority to spend a certain number of dollars. A budget outlay is an actual payment made for government obligations. The Congressional Budget Office in their January update scored the $85 billion in sequestration “cuts” as an actual $44 billion outlay. Rather than representing a “cut” of 2.2% of the federal budget, it’s a reduction of about 1.25% of a $3.6 trillion budget. And to make matters worse, it’s not really a cut, as a reduction in spending, but just a cut in the rate of growth of federal spending. The remaining $41 billion is in future budget outlays, unless congress or the president tinker with the reduction further.

We have to remember, Washington doesn’t use zero-based budgeting, they use baseline budgeting. The baseline is an inclined trend-line of spending increases each year. Washington uses the current spending levels as the "baseline" for establishing future funding requirements. They then assume that future budgets will equal the current budget times the inflation rate times the population growth rate. So rather than “cutting” spending by $44 billion, the rate of growth for future spending is reduced by $44 billion the first year. And given Washington’s creative accounting techniques, the rate of spending will likely accelerate after the first year of sequestration cuts, in spite of the agreement hammered out with the Budget Control Act of 2011 where the White House created the sequestration idea.

And all of those threats that the president made earlier about who wouldn’t get paid, and what services would not be provided, are just that: empty threats. That is unless he decides that those are the areas to be cut, rather than Moroccan  pottery classes, an empty airport at Lake Murray State Park in Oklahoma, a robot squirrel funded through the National Science Foundation, or the Alabama Watermelon Queen Tour. Yes, those are actual federally funded projects. It’s clear what his priorities are, to punish those programs and people most deserving of funding in order to portray the “draconian” 1.2% cut in the growth of spending as nigh unto apocalyptic. After all, money is power, and the more the threat of deprived spending can be spun to hurt the deserving and needy, the more power one has.

The sequester will be evenly divided between military and discretionary spending. The military will be adversely affected by reduction or elimination of defense programs.

Financial markets and the financial gurus on Wall Street obviously were not unnerved by the prospect of a 1.2% cut in the growth of spending, as financial markets closed higher for the week. Weighing more heavily on the minds of market analysts is the looming threats to economic growth of such massive government debt.

The rest of the outlay reduction of $1.2 trillion triggered by the sequestration will be applied over the next ten years. But even with that reduction, the federal debt is projected by the Congressional Budget Office to be a staggering $26 trillion. Erskine Bowles, co-chair of the Simpson-Bowles Deficit Reduction Commission has calculated that service on the interest for that debt alone, if rates stay near record lows, will be $1 trillion by 2020!

The sequester is actually beneficial since it will slightly slow the growth of the deficit and our national debt. But even the modified baseline must drop sharply to avoid a collapse of the economy under the weight of our national debt.

Published – Idaho State Journal, 02/24/13

It may not be surprising to some that groups and organizations across the country that are so openly opposed to “bullying” are so adept at it. Politically correct groups advancing the same-sex agenda are pervasive in their denunciation of bullying against those who are “different” yet seem to have mastered the practice against those who don’t share their beliefs. The recently announced review of the Boy Scouts of America policies, which reject avowed homosexuals from membership, provides a case study in collective bullying and intimidation of a quality organization dedicated to instilling character in its members.

Bullying, broadly defined, is the “use of force or coercion to abuse or intimidate others. It can include verbal harassment or threat, physical assault or coercion and may be directed repeatedly towards particular victims on grounds of race, religion, gender, sexuality, or ability. If done by a group, it’s referred to as mobbing.”

Bullying has occurred, and does still occur for various reasons, and should be proscribed as socially unacceptable behavior universally, at all levels. If universally applied, denunciation of the groups engaged in bullying of pro-family organizations should be as vociferous as against individuals who engage in bullying against those who are “different.” But in the hypocritical and duplicitous world of political correctness, bullying is not only condoned, but encouraged against groups that advance traditional values. 

To some, bullying is clearly acceptable, as long as it’s politically correct. Significant corporate and non-profit sponsors and supporters of Scouting have withdrawn their support, including financial, in order to bully the BSA into complying with the radical pro-gay agenda. AT&T, Ernst and Young, Intel, Merck & Company, United Way, and others have curtailed or discontinued their support to the tune of millions of dollars. The financial component takes bullying to a whole new level.

It seems an interesting dichotomy that an organization that itself is so committed to anti-bullying within its ranks, would become the target of bullying by those who profess to support the same commitment. All the more inscrutable when we realize that less than 3% of the total U.S. population is homosexual. “Tyranny of the minority” is no longer theoretical. It is a political and social reality as verified by the bullying actions against the Boy Scouts.

A decision on the organization’s ban on gay members was delayed by the 75 member executive board. The delay until May will allow the 1,400-member National Council to decide whether to continue the ban or give in to the bullying tactics, allowing local units to decide for themselves. Chief Scout Executive Wayne Brock said, “the proposal to end the ban came about as outside forces put pressure on the Scouts to address its policy on gays.” Even the possibility of reversal of national policy diminishes the perception of the safety and well-being of Scouts as a top priority to the organization.

In 2000, the Supreme Court upheld the BSA, that the constitutional right of association allows a group to exclude a person from membership when "the presence of that person affects in a significant way the group's ability to advocate public or private viewpoints." Clearly the agenda of the politically correct crowd is antithetical to Scouting’s core values.

Just last July, the executive board of the BSA had announced their determination to keep the ban in place by saying it was “absolutely the best policy.” But two members of the executive board, James Turley, CEO of Ernst & Young, and Randall Stephenson, CEO of AT&T, have been engaging in their own bullying of other board members to weaken the resolve to maintain the ban.

What’s at stake is the emotional and physical welfare of over 2.7 million young men in the Scouting program. Currently, even with some infractions of leader/Scout contact policy, over 98% of Scouts feel “safe” within the Scouting organization, according to a Harris poll a few years ago. Statistically, that’s probably much higher than how many young people feel safe in their own homes.

Rescission of the ban clearly places those young men at risk. In a peer-reviewed research piece printed in the Archives of Sexual Behavior, researchers Marie E. Tomeo, Donald I. Templer, Susan Anderson, and Debra Kotler, made some striking conclusions. The abstract to their research, Comparative Data of Childhood and Adolescence Molestation in Heterosexual and Homosexual Persons, states, “In research with 942 nonclinical adult participants, gay men and lesbian women reported a significantly higher rate of childhood molestation than did heterosexual men and women. Forty-six percent of the homosexual men in contrast to 7% of the heterosexual men reported homosexual molestation.” The likelihood of significantly increased pederasty involving those 2.7 million young men is virtually assured if the BSA yields to the corporate and politically correct bullying that threatens their core values.

For 103 years, the Boy Scouts have perpetuated a tradition of building moral character and inculcating values that contribute to a conscientious, responsible and moral society. That rich and venerable history is now threatened by the bullying techniques so decried and denounced by the very groups now bullying the Scouts.

Rather than create their own programs based on their own “values,” morally relativistic organizations seek to destroy that which is good; based on solid, everlasting principles. Their success in forcing their conformist political correctness is unraveling the social mores of our cultural fabric, strand by strand.

The need for public support of Scouting has never been greater. The Friends of Scouting drives conducted locally generate 39% of their operating budget.  This money stays here locally to support and benefit the local program.  When the public cuts back on their FOS donation it has no affect on the National Council it only hurts our local Scouts.  The National Council gets its money from corporate donors, and from membership and rechartering fees. Scouting needs our continued moral and financial support to counter the bullying that is attempting to morph it into something it was never intended to be.

AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board.  He can be reached at rlarsenen@cableone.net.

Published – Idaho State Journal, 02/17/13

It is regrettable that we no longer have a true “State of the Union” speech. Rather than hearing a recapitulation of the condition of the nation and where it’s headed, we get what appears to be little more than another campaign speech replete with a veritable Christmas-list of populist proposals and recommendations. Predictably, there were errors, omissions, and outright prevarications, and very little mention of the problems that have been exacerbated over the past four years.

“As long as I'm commander in chief, we will do whatever we must to protect those who serve their country abroad, and we will maintain the best military in the world," said the President. Our consulate in Benghazi was denied additional security multiple times, and the former Navy SEALs that rushed to embassy personnel’s rescue last September 11, were told to “stand down.” This can hardly be classified as doing “whatever we must to protect” our citizens serving abroad.  

As for the “maintain the best military in the world,” comment, he must truly think all American citizens, not just his star-struck adherents, are cretins. His administration has already recommended reducing military spending from 5% to 3.4% of real GDP, and the sequester, which was the administration’s idea and which he has disingenuously promised “will not happen,” is set to kick in next month. Unless congress kicks the can down the road further, that will trigger another $1 trillion in defense cuts. Plus, the President is intent on reducing our primary deterrent, our nuclear arsenal, by another 40%. Only in a convoluted, twisted illogical world do those factors add up to maintaining the “best military in the world.”

"Today, the organization that attacked us on 9/11 is a shadow of its former self," he further told us. Yes, Al Qa’ida is less formidable than before, but what about all of the other Islamic extremist groups that maintain similar heinous objectives of eradicating infidels and wiping Israel off of the map? Groups like the Muslim Brotherhood, which is now running Egypt, to whom the administration is selling 200 M1A1 Abrams battle tanks and a squadron of F-16 Falcon fighters. It is truly inscrutable how he can boast about the decimation of Al Qa’ida while selling our best implements of war to their ideological brethren.

Another whopper was the, "Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion," statement. There has been no reduction in the deficit, and our average for the past four years has been $1.44 trillion. In other words, we’re borrowing 43 cents for every dollar that we spend. What he classifies as a “reduction” is accounting smoke and mirrors that are not real. The only thing that has been “cut” has been the rate of projected budgetary spending growth.

“We have doubled the distance our cars will go on a gallon of gas,” the President boasted. Well, not hardly. The CAFE (Corporate Average Fuel Efficiency) standards goal is to double miles-per-gallon efficiency by 2025. Such a forward looking goal is strikingly at odds with the past-tense reference that it has already been accomplished. I’ve heard some pundits attribute that to his “god-complex,” that because he has uttered it, it is so. And the 2025 standard is a goal, kind of like “not adding a dime to the deficit,” although reality has this nasty habit of contradicting the hypothetical.

Then the litany of populist Christmas wish-list items followed, from “green energy” to education. And the administration’s answer to all of their pet projects is to throw more money at them. But he did say, "Nothing I'm proposing tonight should increase our deficit by a single dime." I guess that’s supposed to assuage our concerns. But if the phrase sounds familiar, there’s a good reason. In 2009, he used the phrase liberally starting with, "I will not sign a bill that adds a dime to our deficits -- either now or in the future." "Health care reform will not add one dime to our deficit." "I will not sign health insurance reform ... if that reform adds even one dime to our deficit over the next decade -- and I mean what I say."

In 2010 he said, "That's also why we're restoring pay-as-you-go: a simple rule that says Congress can't spend a dime without cutting a dime elsewhere." Also from 2010, "This [jobs] legislation is fully paid for and will not add one single dime to our deficit." And again, "We will not add one dime to our deficit."

The idiom continued into 2011. "I will not sign a plan that adds one dime to our deficit." And again, "I want to lower the corporate rate and eliminate these loopholes to pay for it, so that it doesn't add a dime to our deficit." It would appear that the caveat to the statement is “A” dime, for all the while he was making such fine sounding promises, he added nearly 60 trillion dimes to the deficit! Perhaps it’s time to invoke a simple math test for qualification to be President.

The President, in reference to energy costs, said, “That's why my administration will keep cutting red tape and speeding up new oil and gas permits." Oil and gas production have increased over the past four years by 14%, but all of the increase has come on state and private lands, as federal lease production has dropped by 11%. I’m just curious how he can claim to "keep" doing something that he has yet to do.

The Washington Examiner reported last fall, “In 2008 under President Bush, there were a total of 55,085 oil and gas leases in effect on federal land. In 2011 under Obama, there were just 49,174, a decrease of 11 percent.?In 2008 under Bush, there were 47.2 million acres of federal land under lease. In 2011 under Obama, there were just 38.5 million, a decrease of 19 percent.?In 2008 under Bush, the federal government approved 6,617 oil and gas permits. In 2011 under Obama, the federal government approved just 4,244 permits, a decrease of 36 percent.”

And Reuters recently reported “energy companies will likely see more regulation in Obama’s second term, with less access to federal lands and water even as the administration promotes energy independence. Even tighter rules are expected for oil and gas drilling.” Clearly everything the administration is doing in the energy sector is increasing costs by attempting to limit exploration, drilling, and production.

And on ObamaCare, the President declared, "Already, the Affordable Care Act is helping to slow the growth of health care costs." The cost of implementing ObamaCare has actually increased with each new projection. A recent study released in Health Affairs, said, “actuaries from the Centers for Medicare and Medicaid Services (CMS) expect an annual increase in health care spending from 2010-2019 of 2 percent over estimates made before passage of the PPACA. They also predict spending will reach $4.6 trillion in 2019, for an average annual growth rate of 6.3 percent during that time.” The passage of ObamaCare has accelerated the already high price of health care. Just the opposite of what the President claims.

The real state of the union is disconcerting. Poverty is higher than any time since FDR was President. There are eight million fewer employed Americans than four years ago, which has dropped our participation rate to the lowest level in the nation’s history, at just over 60%. And for those still looking for work, the average duration of joblessness has doubled to over 40 weeks. Long-term unemployment, averaged over the past four years, is at the highest level since the Great Depression.

Millions of Americans will be losing their company-sponsored health insurance due to the strident regulatory demands of Obamacare, which strikingly contrasts with what he promised, “if you like your health insurance, you can keep it.”

We emerged from the latest recession in the 2^nd quarter of 2009, but our “recovery” has been the most tepid in U.S. economic history. Many economists point at the anti-business and anti-private sector policies and regulations of the administration as the most significant contributing factor. According to the Wall Street Journal, the administration added “11,327 regulations to the Federal Register in the first three years of the Obama administration (and that was before the big drivers -- Obamacare and Dodd/Frank really got going). As The Economist magazine noted, America "is being suffocated by excessive and badly written regulation," including "flaws in the confused, bloated law (Dodd/Frank) passed in the aftermath of America's financial crisis."

As columnist Mona Charen recently penned, “This is the Obama economy -- a shrinking private sector drowning in regulations, a voracious public sector always in search of new ways to waste money (wind cars! solar stethoscopes!) and the inexorable ticking, louder every passing day, of the debt bomb.”

Tuesday’s big speech was more of a declaration of the state of the President’s ideologically tinged perception of what he thinks reality should be, rather than a recap of the actual condition of the union. And as with all politicians, but especially this one, we must pay closer attention to what he does, not what he says. They’re usually in diametrical opposition. Precious little of what the administration has accomplished has actually ameliorated the state of the union based on the data. The President’s grandiloquence may mask that reality for some, but not for those of us who rely on empirical data.

AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board.  He can be reached at rlarsenen@cableone.net.

Published – Idaho State Journal, 01/27/13

Historically, Presidential Inaugural Addresses have sought to inspire and unite the nation, and provide directional leadership for the next presidential term. Perhaps to some, Monday’s speech did that. But to adherents of American exceptionalism, it was disconcerting. The president’s speech was laced with references to our founding principles, but their meaning twisted, misrepresented, and stripped of their historical and definitional significance.

God was mentioned seven times in the address, which may exceed the number of times the Almighty has been invoked by him over the past four years, which made their invocation seem superficial. The Constitution was mentioned once, at the very beginning, citing his second term as evidence of its “enduring strength,” in spite of the fact that he has stretched and distorted that document’s limitations on the executive branch beyond recognition of the founding fathers so dramatically during his first term.

Even the Declaration of Independence was cited, and those eternal classical-liberal ideals of life, liberty, and the pursuit of happiness that led to the severance of our relationship with Great Britain, and the perceived tyranny of King George. It was no surprise that he was reticent regarding the breadth and scope of our current federal government, which arguably wields immensely more tyranny over the American people than the British crown held over colonial America.

Even free market economics were mentioned, although it was in the context that the omnipotent and omniscient federal government must constrain and control it.

Clearly, through artistry and manipulation, precept-by-precept, the principles upon which the American republic was established were being redefined. Those tenets, which are distinctly and singularly American, which once were the pillars that the nation stood upon, were going through a historical revision right before our eyes. They were being reframed, redefined, and reshaped to fit a new progressive lexicon of American patriotic buzzwords that vitiate their original meanings.

The Constitution seems to have relevance since it returned him to power for another four years. But in terms of governance, it seems that to him it has lost its applicability to 21^st century American politics since he can issue Executive and Administrative Orders that circumvent the very document he moments earlier swore he would uphold and defend.

God has no relevance in the godless, morally relativistic, and warped values of the ideology that seeks to make omnipotent government the central component in every American life, replacing an omnipotent deity. As the president’s campaign website so proudly portrays with its “Life of Julia,” the government is to be there at every turn and juncture in the life of the average American; governing, regulating, “helping,” and “supporting.”

And perhaps most invidious of all, a perverted sense of “liberty.” No spurious redefinition of liberty could be more antithetical to the founder’s intent than, “being true to our founding documents … does not mean we all define liberty in exactly the same way.”

In any language and any culture, liberty is synonymous with freedom. Not just a freedom “to,” as in “to do something,” but also a freedom “from,” as in freedom from control, repression, and tyranny. Each time liberty or freedom were mentioned, the words rang increasingly hollow and meaningless. For freedom to, and freedom from, have an inverse relationship to government growth, government power, and government control, which have dramatically increased over the past four years.

With each incremental Executive Order or legislative Act that broadens and expands central governmental authority, and with every dollar taken out of the pockets of Americans to fund the insatiable spending appetite of government, individual liberty and freedom are disproportionately diminished. As government grows, individual liberty decreases. No wonder, then, that he would frame the concept of individual freedom in the context of “collective action.” The progressive statist agenda is always based on collectivism, not individuality.

It’s difficult to separate the causation, or at least correlation, of the massive expansion of governmental power, and alarming growth of government debt of the past four years, from the perceived elusiveness of the American Dream. Four years ago, over 52% of Americans still believed the “American Dream” was attainable. That has now dropped to less than 40%, according to pollsters at Zogby.

And regrettably the perception seems accurate. Between legislative Act, presidential declarations, and bureaucratic regulatory expansion, Investor’s Business Daily now calculates that the government has direct or indirect control of more than 60% of the entire U.S. economy. Energy production, oil production and distribution, banking and finance, manufacturing, logging, mining, health care, insurance, automobile manufacturing and more, are all now controlled by the central government. A strict political classification of such an economy is clearly fascistic, where government controls, not necessarily owns, the means of production. Individual and collective freedoms are sacrificed when government wields so much power over the entire economy.

Clearly typifying the moral relativism of our dysfunctional culture, the phrase “We cannot mistake absolutism for principle,” perverts the very meaning of principle. After all, a principle is  “a fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.” As such a principle is definitionally absolute. When they are no longer absolute, they are no longer principles, they’re simply good ideas. Such facile application of relativism to fundamental tenets like individual freedom and liberty diminishes the principled foundation of our republic.

The implications for the next four years are indeed ominous if this Inaugural Address represents the ideologically tortured state of our founding principles. With fundamental precepts marginalized through redefinition, token relevance accorded the Constitution, and free markets only viable with governmental control of the means of production, we are well on our way to the president’s desired “fundamental transformation of America.”

AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board.  He can be reached at rlarsenen@cableone.net.

Published - Idaho State Journal, 1/20/2013

To Americans who can still think, this week’s sensationalized gun-control presentation at the White House was all show, with little substance. The intended effect was to have us believe that the president was doing something about gun violence, but nearly all of his 23 recommendations are aimed at law-abiding citizens, rather than criminals.

You’d think that President Obama was from California, as masterfully as he stages events, complete with props, isolated talking-points, and emotional image manipulation. Perhaps it’s simply a “Chicago Way” skill acquired from “never letting a crisis go to waste.” The net result was an emotionalized response to a legitimate concern, which should’ve been approached with common sense, rather than emotionalism. This administration is perhaps the most adept ever at using fear and emotion to further its ideological agenda.

The props used in the presentation were four children who wrote to the president about gun control, and families affected by the tragedy at Sandy Hook Elementary last month. Such blatant emotionalized exploitation of children for a political objective should be an affront to any sentient person. I couldn’t help but think of a picture I saw the next day of two adorable girls holding a sign that said, “Mr. President, we wrote to you about passing all of your debt to us. When do we get to be on TV?”  Sorry, girls. That’s not an issue the president cares about; otherwise you could be similarly exploited, emotively, as child-props.

The props, staging, and presentation created the false image that if we care about those children, we must stand with the president in challenging constitutional rights and our own ability to defend ourselves. It’s a false dichotomy, for the basis of his Executive Orders is emotional, and the recommendations of no perceivable empirical value in protecting those children.

Proving that the 23 executive orders were all show and little substance, or mostly emotion and little common sense, consider the fact that had all of the president’s Executive Orders and Administrative Orders been in effect before last month, Adam Lanza would still have been able to perpetrate his crime in Newtown, Connecticut. As it is, he reportedly broke 20 laws that day. It is ludicrous to presume that a few more laws, regulations, or penalties aimed primarily at law-abiding citizens, would have prevented him from perpetrating his heinous act. What those orders will do is impede non-threatening citizens from procuring their own means of protection. The criminals will continue to break laws and regulations to get and do what they want.

At least Obama didn’t issue an Executive Order to ban certain types of weapons, or to enact what is undoubtedly his ultimate goal, the elimination of the Second Amendment altogether, and implement a complete gun ban. Had he done so, the consequences could well have turned sour for him with impeachment proceedings initiated in the House, and for the nation, as law-abiding gun owners across the country prepared to defend their rights against the tyranny of an administration that holds the Constitution, and certain of our inalienable rights, in contempt.

When we approach the issue logically versus emotionally, empirical data must be relied upon, rather than the highly emotional tugs at our heartstrings. The Center for Disease Control (CDC), in 2003 thoroughly analyzed fifty-one in-depth studies dealing with gun control. Those studies included everything from the effectiveness of gun bans to laws requiring gunlocks. From their objective analysis, they “found no discernible effect on public safety by any of the measures we commonly think of as ‘gun control.’”

If we want to be serious about gun violence, first, abolish gun free zones, which blatantly advertise themselves to be uncontested areas to perpetrate mass violence. They allow loonies like Lanza to be foxes in a hen house. Armed citizens, like the one in an Oregon mall last month, are the best defense against the Lanzas of the world.

Second, address the gang violence issue in America. According to the Center for Disease Control, 70% of all gun violence occurs in the 50 largest cities, some of which have outright gun bans in place, and 73% of those crimes are committed by teenagers in gangs. Address the societal breakdown in the inner cities that fosters the gang culture, and armed violence drops significantly.

Third, focus much more effort on background checks including the abolition of the barrier that prevents mental health professionals from sharing patient information with law enforcement on individuals who pose a risk to society.

Fourth, rather than focusing on guns as an ideological agenda, start looking at all violent crimes. According to the FBI, there are 50% more non-firearm homicides each year than firearm homicides, 16,799 to 11,493. And the number one weapon used in all violent crimes is the baseball bat. Neither the bat nor the gun is the problem. The problems are cultural and societal.

And the media must quit playing into the quest for celebrity status by people like Lanza, and start praising people like Nick Meli who stopped the Oregon mall shooting rampage last month.

To solve the complex problems vexing the nation, we need much less emotionalized staging in reaction to crises, and much more common sense. Children used as props to advance an ideological agenda may provide a “feel good” moment for politicians, and even some citizens, but they solve no problems.

AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board.  He can be reached at rlarsenen@cableone.net.

Published – Idaho State Journal, 01/13/13

Charged by President Obama with forming a task force to examine possible solutions to senseless shootings as we saw at Sandy Hook Elementary in Connecticut last month, Vice President Joe Biden mentioned one tool available to the president is the Executive Order (EO). It is a viable tool for a president to specify how established constitutional precedent or statute are being enforced, but it cannot be used to create law. If the president uses the EO to limit the 2^nd Amendment, or to raise the debt limit, as has also been suggested, he would clearly be acting unlawfully.

There is only the most tenuous support for the use of the EO in the Constitution. Article II, Section, Clause 5 of the U.S. Constitution instructs that the president, as head of the Executive Branch of America’s tripartite government (executive, legislative, and judicial) “take Care that the Laws be faithfully executed.”

And for the most part, that is how the over 13,000 Executive Orders have been used over the past 240 years. Presidents have issued them to clarify or facilitate executive branch employees and agencies in implementing or enforcing laws in the Federal Register, passed by Congress. In our constitutional republic, laws are made by the legislative branch, and either signed into law by the president, or the president’s veto overridden by the legislative branch. But laws are made by the legislative, not the executive branch. The executive branch’s responsibility is to ensure that the laws created by legislative act are enforced, or executed, if you will.

These constitutional restraints on executive power are all that prevent our republic from turning into a despotic, totalitarian state. The executive branch has grown so much in power over the past 100 years especially, that it would not take much effort on the part of an unprincipled power-monger to literally usurp power reserved to the legislative and judicial branches by the Constitution, and act in totalitarian fashion by declaring laws and edicts from the Oval Office.

That’s why many across the nation took note last year when Obama brazenly declared, “If congress doesn’t act, I will.” What that signaled to the nation is that Obama considered his power to not be limited by constitutional constraints, and that he could simply change or enact law by declaration, Executive Order, or fiat.

The use of the EO is only legal and binding if it is based on existing statute or an Act of Congress which gives the president the powers to do as he intends. This was established judicially by the landmark 1952 Supreme Court ruling of Youngstown Sheet & Tube Co. v. Sawyer, 343 US 579. By executive order 10340, President Harry Truman declared that all steel mills in the country were to be placed under federal government control. The Supreme Court ruled, however, that the EO was invalid since Truman was essentially creating, or making law, as opposed to clarifying the executive branch enforcement of a law established by congress or the Constitution.

John Yoo, a law professor at Berkeley, said in a research piece last year, “It’s the duty of the president. He must always uphold the law.” He further indicated that the only exceptions in doing so are if laws are unconstitutional or if prosecuting them can be reasonably deemed not viable.

Yoo’s comments were made following Obama’s Executive Directive to the Department of Homeland Security, that essentially granted amnesty to certain illegal aliens. Yoo, and co-author Robert Delahunty of the University of St. Thomas, argued that Obama created new law, by declaring that his DHS was not going to enforce laws enacted by Congress.

Obama displayed the same contempt for constitutional constraints on his power when he declared he would not enforce the Defense of Marriage Act.

This is precisely why many are concerned with yet another Obama term, where constitutional and legislative limitations on his power will likely be ignored even more blatantly. When the president of a country arbitrarily chooses which laws to enforce and which not to, and assumes or usurps powers of the states or other branches of government to which he has no lawful for legal claim, he is no longer functioning as a president for the people, but as a dictator of his own will.

On January 21, for the second time in four years, Obama will place his left hand on the Bible, raise his right arm to the square, and promise before the nation and the world that he will, to the best of his ability, “preserve, protect and defend the Constitution of the United States."

If, after making that promise, the president willfully and intentionally breaks his oath to support the Constitution, by either imposing new restrictions on the 2^nd Amendment, or to increase the debt limit, his actions will be tantamount to newlyweds immediately breaking their vows through infidelity. A citizen that acts outside of the law is, by definition, a criminal, and it's no different for a president. The question each of us must ask is, how many times will he be allowed to trample the Constitution he has promsied to uphold?

AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board.  He can be reached at rlarsenen@cableone.net.

By Richard Larsen

Published – Idaho State Journal, 01/06/13

The major news services this week universally proclaimed that the “fiscal cliff” had been averted by a last minute deal between congress and the White House. There were many components to the fiscal cliff, some of which have been addressed by the last-minute deal, and many that were not. The revenue components have been resolved, while the more significant spending related issues were simply postponed.

The best news is the Bush era tax cuts are now permanent, vindicating the former president whose tax cuts bore his name. The 10, 15, 25, 28, and 33 percent tax brackets are now permanent, while individuals earning $400,000 or couples at $450,000 will now pay the 35% up to those amounts, and 39.6% on anything over those levels.

The marriage tax penalty is now permanently fixed. The tax code, before the 2001 EGTRA (Economic Growth and Tax Relief Reconciliation Act), required a husband and wife to pay more in taxes when they filed jointly than they would as single taxpayers. According to calculations from the tax publisher CCH, the marriage tax penalty translates to a nearly 17% increase in taxes for those married couples who file jointly, regardless of bracket.

Everyone who is working will now see more taken out of their paychecks for Social Security. The payroll tax is now reverting from the temporarily reduced 4.2% rate for employees’ portion back to the pre-EGTRA levels of 6.2%. That will mean about $1,000 tax increase for employees earning $50,000 per year.

The Jobs and Growth Tax Relief Reconciliation Act of 2003, or JGTRRA, temporarily reduced the capital gains tax rate. Most capital gains have been taxed at 15 percent for the past nine years, and investors in the 10 percent and 15 percent tax brackets have not paid any taxes on profits from appreciated asset sales. Qualified dividends have been taxed similarly. These rates are now permanent for all but the higher income taxpayers who will pay 20% on dividends and capital gains.

The Child Tax Credit was extended for another five years which allows each head of household to deduct $1,000 for each qualifying child, as opposed to the pre-JGTRRA deduction of $500. Also, the current levels of the Earned Income Tax Credit were extended until 2017.

The estate tax exclusion amount is retained at $5 million indexed for inflation, but the top rate has increased from 35% to 40%. The estate tax “portability” election was made permanent, which allows the surviving spouse’s exemption amount to be increased by the deceased spouse’s unused exemption amount.

Childcare expense deductions of up to $3,000 for one child and $6,000 for two or more dependents are now permanent.

The so-called AMT Patch is now permanent, and is indexed to inflation. The Alternative Minimum Tax was implemented in 1969 to ensure that wealthy taxpayers were not using tax loopholes or taking excessive tax breaks to reduce their tax liability disproportionately. It was never indexed to inflation, so the fairly high income levels of the AMT 43 years ago are low by today’s standards. For 2012, the exemption amounts are $78,750 for married taxpayers filing jointly and $50,600 for single filers. Relief from AMT for nonrefundable credits is retained.

There were more than 70 so-called tax extenders scheduled to expire at the end of 2012. Some of those were made permanent, and some were allowed to expire. A few of hose made permanent included: expanded adoption credit and adoption-assistance program amounts; the exclusion for employer-provided educational assistance; the enhanced rules for student loan deductions introduced by EGTRRA and special treatment of tax-exempt bonds for education facilities.

Some of those “temporary” tax extenders were renewed for another year. They included, among other things: deduction for certain expenses of elementary and secondary school teachers; mortgage insurance premiums treated as qualified residence interest; deduction of state and local sales taxes; deduction for qualified tuition and related expenses; and tax-free distributions from individual retirement plans for charitable purposes.

For those who itemize deductions, there are new higher limits to phasing out of deductions and exemptions. The thresholds are $250,000 for single taxpayers, $275,000 for heads of household, and $300,000 for married taxpayers filing jointly.

The tax increases are projected to raise $600 billion over ten years, or roughly $60 billion per year, enough to fund government operations for about six days. And, as usual, the measure included $70 billion in special tax breaks and credits, a perpetuation of crony capitalism.

Unresolved by the last-minute measure are issues related to Social Security and Medicare funding and solvency, reduction of our massive deficit, and the $16.4 trillion debt limit which we will hit in February. Also postponed is the automatic implementation of $1.2 trillion in spending cuts over 10 years, known as the "sequester."

Washington still must find the discipline to cut spending in order to avert a more devastating fiscal cliff created by our $1 trillion-plus deficit and $16 trillion national debt.

AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board.  He can be reached at rlarsenen@cableone.net.

Published – Idaho State Journal, 12/30/12

Nero may not have actually “fiddled” while Rome burned in 64 A.D., but the aphorism applied to him has special pertinence to today’s environment in Washington, D.C. Many of our elected officials are fiddling while economic and fiscal calamity await the nation. And while Nero may not have actually created the Roman fire, the precarious perch our economy teeters on is the creation of our fiddlers.

The House has already passed two measures that would completely avert the so-called “fiscal cliff” that the media and economists are lamenting we’ll go over on January first without some compromising. Since the House measures include more spending cuts, no permanent lifting of the debt limit, and don’t raise taxes on “the rich,” the bills are non-starters with the Senate and the White House.

Meanwhile, Senate Majority Leader, Harry Reid, is calling on the House to pass the Senate’s bill. The Senate version allows rates on high income earners to increase from 35% to 39.6%, and doesn’t include the spending cuts the House version implements. Since the Senate version includes a tax increase, it qualifies as a revenue bill, which makes it unconstitutional, since all revenue bills must originate in the House. So Reid is banking on our ignorance, his stupidity, or both, to have us believe that their legislation is even viable.

And where’s the President on all this? Unsurprisingly he backs the Senate’s illegal bill, with less in spending cuts, and allowing tax rates to go up for the top income bracket. Again, unsurprisingly, he wants more spending, for another $80 billion “stimulus,” including extension of unemployment benefits. And even more unsurprisingly, he’s demanding that our rapidly-approaching spending limit be lifted and abolished altogether. Now isn’t that a brilliant idea to give a spendthrift an unlimited credit card after already racking up $6 trillion of our $16 trillion national debt in just four years?

For anyone who has a modicum of common sense and financial awareness, the President has more than proven his incompetency in fiscal matters. The fact that the media still paints him as the principled party to whom all others in Washington must show abeyance to, and must compromise to, is a testimonial to the gross incompetence of the mainstream media and their complete sellout of the country in favor of the President’s economy-crippling agenda.

Just to make this point clear. For six days of revenue (the $65 billion that would be raised by making top income-earners’ taxes go up), an unlimited credit card, and another $80 billion in impotent, wasteful “stimulus,” including extension of unemployment benefits (which have been proven to increase unemployment), our illustrious president is willing to sacrifice the economy, our national solvency, financial security, and the credit rating, of the United States. If anyone truly believes our Commander in Chief is looking out for the best interest of Americans and our country, I’ve got a bridge to sell you in Brooklyn. His demands are illogical, fiscally irresponsible, and could be financially devastating to the entire nation!

After witnessing this lunacy emanating from the White House, one can’t help but wonder at Obama’s desire to “fundamentally transform America,” and if the way he intends to accomplish that transformation is by completely collapsing the American economy under the massive federal debt and declining dollar, and then rebuild it according to his statist and fascistic ideology. After all, this White House believes that they shouldn’t “let a good crisis go to waste,” and how better to transform the nation than by creating a crisis that would facilitate his objective.

Based on Obama’s own words, while excoriating Bush for a $4 trillion debt increase over eight years, Obama is both irresponsible and unpatriotic. And nothing could be more irresponsible and unpatriotic than how he’s dictating the terms of economic destruction. He is willfully allowing the nation’s economy to wither and flounder to meet his asinine ultimatums.

And, lest we forget, it was his party in Congress that created the “taxmageddan” component to the fiscal cliff. The Democrats have demonized the “Bush tax cuts” for the past ten years, and forced the sunset clause to make them temporary. They then signed on to the temporary cuts two years ago which created the “cliff” on 1/1/13.

There have always been ideologues in Washington, but never have I seen such fiscally irresponsible, financially illogical, anti-American sycophants comprise an entire party in Washington as we see now in the Senate and in the White House. An entire party that is irresponsible, lacks genuine leadership in doing what’s right for the nation, and has no apparent concern for our financial and economic future.

The House majority will be blamed for the financial wreck that Obama and Reid are foisting upon the nation, as their willing accomplices in the mainstream media will affix the blame to the only ones who are attempting to be responsible. And Obama will continue to “fiddle.”

AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board.  He can be reached at rlarsenen@cableone.net. 

Published - Idaho State Journal, 12/23/12

The atrocity committed in Connecticut last week is still to me incomprehensible and ineffable. I can find no adequate words to express my grief for all of those affected by such an inhumane act. As the joys of anticipation of Christmas for those families were dashed and replaced with the profoundest grief at losing a loved one, especially the children, the weight of their sorrow has hung over all of us.

As a sentient people, we should be repulsed, angered, saddened, and outraged at such a heinous act. The challenge is to channel the emotions and the feelings that have distressed us, into actionable ways to address such violence. Our feelings and emotions instinctively call for reduction or elimination of the tool of choice for the perpetrator. Yet we must, when reaching for solutions, transcend our feelings, and reason through logically what is viable, what will work, and what won’t.

The immediate call for more gun control is instinctive, yet must be approached logically rather than emotionally, based on empirical data. And there is a lot of it available.

The city of Chicago currently has the most restrictive gun control laws on the books, has been declared a “gun free zone” where handguns are banned, yet it is the most bloody city in the world in terms of gun related deaths. The city averages 40 deaths per month from guns, and is nearing 500 for the year. Chicago’s murder rate is 19.4 per 100,000, which is by far the highest rate in the nation, at nearly 3 times New York which is at 6, and nearly 2 ½ times Los Angeles’ 7.5. In fact, Chicago ranks as the number one deadliest Alpha city (significant urban center in the global economic system) on the planet. Since it is no longer possible to legally own guns within city limits, the only ones who still have them are criminals. It doesn’t appear gun control works for Chicago. In fact, the city illustrates how correct the aphorism is that if guns are outlawed, only the outlaws have guns. The law-abiding citizens do not.

The Center for Disease Control (CDC), in 2003 thoroughly analyzed fifty-one in-depth studies dealing with gun control. Those studies included everything from the effectiveness of gun bans to laws requiring gun locks. From their objective analysis, they “found no discernible effect on public safety by any of the measures we commonly think of as ‘gun control.’”

In 2005, the American Journal of Preventive Medicine conducted a similar analysis of extant gun laws across the country. They arrived at a similar conclusion, as the abstract for their research concludes, “that evidence for the effectiveness of a given firearms law on an outcome is insufficient.” After reviewing over fifty different gun control laws, and coming to the conclusion that their effectiveness on an outcome is “insufficient” is euphemism for “they had no discernible effect.”

Some have argued for a so-called “assault weapons ban,” which would restrict firearms clip size for ammunition, among other things. We had such a federal law on the books from 1994 through 2004. A 2004 University of Pennsylvania study, commissioned by the National Institute of Justice to ascertain the effects of the ban, revealed, “We cannot clearly credit the ban with any of the nation’s recent drop in gun violence. And, indeed, there has been no discernible reduction in the lethality and injuriousness of gun violence.”

So-called “gun free zones” obviously don’t work either, as Chicago clearly demonstrates, and the very concept is ludicrous. Every shooting in a school is done illegally per federal law (1995 Gun Free School Zones Act). For those intent on inflicting harm, nothing’s quite so appealing as a gun free zone, for they know all the law-abiding citizens are going to be compliant, giving the perpetrator a veritable shooting gallery to work with, unfettered and undeterred from his mayhem by a legally armed citizen. In short, criminals aren’t the least deterred by gun free zones, and if anything, they’re likely to consider any signage indicating a gun free zone as a welcome sign.

Since gun control doesn’t work, let’s look at increasing the ability of citizens to protect and defend themselves. Simi Valley, California is consistently listed among the safest of American cities. They have all of California’s gun control laws in force, but locals know it as the home to a lot of police officers from neighboring communities. Nothing like trained and armed homeowners to keep a community virtually crime free.

In 1982, Kennesaw, Georgia, witnessing an increase in local crime, did something counterintuitive to the likes of Chicago and New York; they passed an ordinance requiring heads of households, with some exceptions, to own a handgun. Crime dropped precipitously, and has stayed down. So much so, that Family Circle selected the town as one of the 10 best in the nation to raise a family in.

Our problems with violence and mass shootings have much more to do with cultural and societal issues, mental illness, and a lack of ability on the part of law-abiding citizens to defend themselves. Guns are not the root of the problem. Our nation was brought to its knees eleven years ago, by 19 fanatics armed with box-cutters. The tool of destruction is not the perpetrator; the person using or misusing it is.

Gun control has proven impotent in curbing the problem, and “gun free zones” are absurd, since they practically advertise themselves to be potential venues of mayhem and violence. More gun control is not a solution, but only serves as a Band-Aid to our emotions so we feel like we’re doing something. The problems are much deeper in our society than Band-Aids can cure.

AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board.  He can be reached at rlarsenen@cableone.net.

Published – Idaho State Journal, 12/16/12

United Nations treaties, much like U.S. legislation, belie their intent when all one looks at is the title or even the stated objective. To really grasp their full intent, it’s incumbent to read the entire treaty in order to not be among the gullible who swallow the superficial explanation. Such is the case with the UN Convention on the Rights of Persons with Disabilities (CRPD) treaty, which failed ratification in the U.S. Senate this week.

The CRPD seems to be one of those “feel good” measures, based on its summary. Its stated intent is to “promote, protect and ensure the full and equal enjoyment of all human rights and fundamental freedoms by all persons with disabilities, and to promote respect for their inherent dignity” If that’s all the measure did, it would’ve been unanimously approved. However, the objective, along with the title, is as deceptive as the Affordable Care Act, which, as we increasingly learn, is neither affordable, nor will it provide quality care. It’s legislative deception at its finest. And as with the ACA, the “devil’s in the details” with the CRPD.

The CRPD has fifty Articles, and nearly 200 requirements. Many of the requirements are controversial and have little if anything to do with advancing “rights” of the disabled, but address issues like abortion, forced contraception, limiting freedom of speech, restricting freedom of press, altering Social Security benefits, and circumventing parental rights. Walter Olson of the Cato Institute indicates, from a thorough study of the treaty, that “Families, parents, states, Congress, and students all stand to lose some independence” if the CRPD was ratified.

These issues are difficult enough to deal with in the context of our highly polarized political environment and congress, yet inexplicably, there were 61 U.S. Senators willing to abdicate domestic control over such issues, turning them over to an unelected bureaucracy of the UN.

And that’s precisely what would have occurred had the treaty been ratified. Article VI of the U.S. Constitution states, “and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land.” So the bedeviled details of the CRPD would trump federal statute. And true to form, for the colluders in the UN, they even included a clause that would debilitate our 10^th Amendment of state’s rights. Article 4, Section 5 of the CRPD declares, “The provisions of the present Convention shall extend to all parts of federal states without any limitations or exceptions.”

Succinctly, the U.S. would have surrendered our sovereignty on all issues addressed in the treaty had the senate foolishly ratified it. Sen. James Risch (R-ID) clearly understood what was at stake, when he explained after the vote, “I have been outspoken and critical of the ballooning reach of the United Nations into every aspect of our lives. At the end of the day, this is a matter of national sovereignty for the United States and every other country in the world.”

If we, as a nation, ever wanted to make changes to our own Americans with Disabilities Act or any other related federal laws, of which there are half a dozen, we would be unable to do so, had the treaty been ratified. All changes to our own code on these subjects would’ve been impossible for the treaty would have transferred jurisdiction on such matters to an unelected, bureaucratic body in the United Nations. Our sovereignty on all related maters would have been forfeited, and ceded to the UN.

And this is by design, for we see it in all such treaties crafted by the United Nations. The UN Arms Trade Treaty, ostensibly drawn up to curtail terrorist acquisition of small arms, is an only slightly masqueraded attempt at identification, control, and regulation of small arms and munitions in every member state. A month long effort in July to frame the treaty to the liking of all UN members failed. But within hours of Obama’s reelection last month, the administration changed its tone and promised unequivocal support for the measure.

The UN’s Law of the Sea Treaty, which was, in its most recent incarnation, ratified by the UN in 1994, has never had enough votes in the U.S. Senate to make our country beholden to it. That treaty essentially transfers legal ownership and sovereignty over the world’s oceans and seas to the UN, which then has all rights to royalties and ownership of offshore drilling operations, among other provisions. It also has backdoor provisions for enforcing carbon emissions.

The UN Internet Regulation Treaty, currently being drafted at a conference in Dubai, is nothing short of a power and censorship grab by the United Nations, as was revealed just this week. According to Terry Kramer, the U.S. ambassador to the World Conference on International Telecommunications, the treaty has morphed into an attempt to extend internet governance to the UN, grant the UN taxing authority over transnational internet ventures, and control content. Gratefully, it appears the U.S. will not sign onto this latest UN power grab.

The United Nations has no reservation in purloining the rights of sovereign states and their citizens. As with any legislation, at any level, we mustn’t be lulled into complacency based on the titles or stated objectives from anything emanating from the UN. The devil is indeed in the details, and there was a lot of the devil in the CRPD.

AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board.  He can be reached at rlarsenen@cableone.net.

I was astounded recently to hear someone say they believe the talk of a “fiscal cliff” is artificial and not a legitimate threat. There is an artificial component to it in that government created it, but the threat is legitimate, and not only will it impact everyone of us in one way or another, even if an agreement is reached in Washington, but the cumulative economic impact could be significant.

There are several components to the so-called “fiscal cliff,” some of which are less widely known than others. Most people are aware that the present six income brackets taxed at rates of 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent will expire, and revert to the pre-Bush era five income brackets taxed at rates of 15 percent, 28 percent, 31 percent, 36 percent and 39.6 percent. Without some reconciliation in Congress, everyone, even those at poverty level, will see their taxes increase.

The marriage tax penalty will return. The tax code, before the 2001 EGTRA (Economic Growth and Tax Relief Reconciliation Act), required a husband and wife to pay more in taxes when they filed jointly than they would as single taxpayers. This will expire the end of the year as well. According to calculations from the tax publisher CCH, the marriage tax penalty translates to a nearly 17% increase in taxes for those married couples who file jointly, regardless of bracket.

There are also more than 70 so-called tax extenders scheduled to expire on December 31. These are tax breaks for businesses and individuals that are technically temporary but usually end up being extended. They include the itemized deduction for state and local sales taxes, tuition and fees, and educators' out-of-pocket classroom expenses.

The Jobs and Growth Tax Relief Reconciliation Act of 2003, or JGTRRA, temporarily reduced the capital gains tax rate. Most capital gains have been taxed at 15 percent for the past nine years, and investors in the 10 percent and 15 percent tax brackets have not had to pay any taxes on profits from appreciated asset sales. Qualified dividends have also been taxed similarly. We now will revert to the pre-JGTRRA capital gains rate of 20 percent. The zero capital gains rate for low-income filers will return to 10 percent, and stock dividends will be taxed as ordinary income, meaning the top rate could be as high as 39.6 percent.

The Child Tax Credit will expire, which means each head of household will only be allowed a $500 deduction for each qualifying child as opposed to the current $1,000 deduction.

Currently, all taxpayers, regardless of income, are allowed to claim full annual exemption amounts for themselves and dependents. This exemption will be reduced or eliminated for higher income households.

For those who itemize deductions with their tax returns, the old limits will return. The aggregate of itemized deductions for higher income taxpayers will be reduced by three percent if the deductions exceed an annual threshold of a taxpayer's adjusted gross income.

Currently, childcare expenses of up to $3,000 for one child and $6,000 for two or more dependents are allowed. This will change back to $2,400 for one child, and a maximum of $4,800 for two or more children.

Also, the Estate Tax will revert to previous levels. Currently, an estate of greater than $5.1 million will be taxed at 35%, but after the first of the year, any estate over $1 million will be taxed at 55%.

For the past three years, the maximum number of weeks of unemployment insurance available in states with very high unemployment rates (8.5 percent or higher) was 99 weeks. That included 26 weeks of regular unemployment insurance, 53 of Emergency Unemployment Compensation, and 20 of Extended Benefits. At the end of the year, the emergency and extended benefits expire, reverting to a maximum of 26 weeks, or six months of unemployment benefits.

The so-called AMT Patch also expires. The Alternative Minimum Tax was implemented in 1969 to ensure that wealthy taxpayers were not using tax loopholes or taking excessive tax breaks to reduce their tax liability disproportionately. It was never indexed to inflation, so the fairly high income levels of the AMT 43 years ago are low by today’s standards. With the patch expiring this month, the AMT exemption drops from $48,450 to $33,750 for single filers, and from $74,450 to $45,000 for married couples. Many more middle-income taxpayers will fall under AMT tax parameters.

The convergence of all of these expiring tax policies, combined with the sequestration, or forced reduction in spending of $1.2 trillion over nine years, and the rapid approach to the federal debt limit of $16.5 trillion, and we have a veritable fiscal cliff, or, as some refer to it, a fiscal abyss.

The Congressional Budget Office has warned the economy would contract by nearly 1% if the tax issues are not resolved by the end of the year. However, the impact would likely be much more than that. Christina Romer, the former chairman of the Council of Economic Advisors, has calculated that tax increases of one percent of GDP lowers real GDP by roughly three percent. The combined tax increases listed above amount to nearly 2% of GDP, which will plunge the U.S. into another recession.

A deal will undoubtedly be reached before the end of the year to extend, adjust, or modify some or all of these components to the fiscal abyss.  However the fact remains that all of this financial havoc is threatened because the president insists on raising the top income tax rate from 35% to 39.5%, which will raise approximately $65 billion per year; enough to fund the government for about six days. It is both illogical and imprudent to threaten the nation with such fiscal havoc over six days of government funding. But with the media firmly behind him, he is inexplicably portrayed as the principled and prudent player in the negotiations. If all current tax rates are allowed to expire, the impact for 2013 alone will be $388 billion in new revenue, but would, according to Romer and most economists, thwart our fragile recovery and induce a new, deep recession.

The president’s own Simpson-Bowles deficit reduction commission responsibly recommended $3 in cuts for every $1 in revenue increase. Only a serious attempt at reducing spending will narrow the yearly deficit gap, which has averaged $1.44 trillion for each of the past four years.

The House majority favors a plan, much like Mitt Romney suggested, of limiting deductions at a proposed $50,000. The Tax Policy Center estimates that approach would raise nearly $800 billion over a decade, nearly $300 billion more than allowing the top two tax bracket rates to revert to pre-Bush levels, and have a much less pejorative effect on the economy.

If serious spending cuts are not made, even with higher taxes levied against the top income brackets, and long-term fixes are not made to Social Security or Medicare, the nation will continue the race toward the fiscal abyss, and the consequences will be much more devastating, and irreversible.

AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board.  He can be reached at rlarsenen@cableone.net.

Published – Idaho State Journal, 12/02/12

Note: This column was written in response to a tasteless personal attack column written by former Idaho 2nd District Congressman Richard Stallings which appeared in the Idaho State Journal two weeks before the general election. His ad hominem attack can be read at http://www.pocatelloshops.com/new_blogs/politics/?p=9703.

Just before the election, a column was printed in the Journal authored by former Congressman Richard Stallings. While ostensibly written to call into question the political philosophy of erstwhile presidential candidate Mitt Romney, the column was little more than a contemptible assault on the character of the Republican nominee. It was replete with subjective judgments against the man, mischaracterizations and misrepresentations of his policies and comments, and displayed shocking ignorance of Christian theology.

The column impugned the integrity of the candidate, and his campaign by accusing “dishonesty” in representing certain positions. The examples cited were claims that President Obama raised taxes and had attempted to remove the work requirement for welfare recipients. The author claimed both of those were “lies” that Romney told the American people.

Certainly the congressman is aware that there are 21 new taxes in Obamacare, and that the Supreme Court ruled the Act constitutional by virtue of it being a tax increase. That makes the Romney statement accurate. Representing it as a lie is disingenuous at best.

Robert Rector who helped write the 1996 Federal Welfare Reform Act that included the work requirement for welfare recipients says Obama did in fact “gut” the reform by substituting work requirements. A Health and Human Services directive last year granted states the authority to issue “waivers” which allowed recipients to not work, but pursue “career pathways” which don’t require work. Since many of the self-appointed “fact checkers” have taken issue with the Romney claim, which seems at direct odds with those who actually drafted the legislation, it can hardly be called a “lie,” but more accurately, a difference of opinion based on the same set of facts.

Based primarily on these arguments, Romney was accused of being a dishonest man. The columnist capped this alleged moral deficiency by stating, “As a general rule, Mormons are interviewed annually by the Bishops and one of the questions is about honesty. They look you in the eye and ask if you are honest in all your dealings. The Church expects honest answers. From what I have seen from the Romney campaign his answer should be no.”

What the columnist did was engage in a logical ad hominem fallacy, which is literally an “argument against the person.” This tactic is employed frequently by those who, in order to discredit their adversaries, attempt to marginalize them personally by making unsubstantiated accusations or allegations against them. In effect this redirects attention to the individual, in this case Romney, rather than their policies. It is a linguistic misdirection to make the opponent the center of the argument, rather than the issues or policies at hand; something akin to a magicians’ trick.By employing the ad hominem logical fallacy, Stalling’s attack was rendered logically impotent.

It’s not a new tactic, but seems to be used with increasing frequency, not just by politicians today, but by the media.

That last statement by the columnist also is ambiguous as it relates to an “annual interview.” The only “annual interview” that members of the LDS faith have with their ecclesiastical leader is at tithing settlement where the member makes an accounting of his donations to the church. The interview Stallings seems to be referencing is a Temple Recommend Interview which occurs bi-annually. Allegations of dishonesty are of dubious veracity when simultaneously misrepresenting their contextual relevance. Such a misrepresentation might be construed as being dishonest.

And if I’m not mistaken, the congressman appropriated to himself the mantle of prosecutor, judge, jury, and executioner in declaring Romney “dishonest.” He is not in an ecclesiastical position to determine worthiness for Romney. I believe Jesus proscribed such unrighteous judgment, when he said, “Judge not, that ye be not judged. For with what judgment ye judge, ye shall be judged, and with what measure ye mete, it shall be measured to you again.”

And finally, on the issue of Christian theology, the congressman apparently subscribes to the notion that citizens forced by the government to pay taxes, which in turn redistributes it to the needy, is a Christian act of charity. There are no salvific acts for government, and forced “giving” is not charity. We are, as he says, to be our “brothers’ keeper,” but not through forced tax payment and government largesse. Such a concept is utterly antithetical to Christ’s teachings. Jesus taught us individually to give, he didn’t go to the Sanhedrin to convince them to levy exorbitant taxes so the government could do what we are expected to do individually.

There’s a fine line between criticism of policy and casting aspersions at the character of those who seek elective office. Clearly the line was crossed in this case. A need must’ve been felt to try to knock Romney down a few notches with his vindictive personal attack, but the congressman only succeeded in diminishing his own stature.

AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board.  He can be reached at rlarsenen@cableone.net.