The yoke of two Americas

It became clearer after President Obama’s re-election that we're two Americas.  Has our country been this divided since the Vietnam War, or perhaps the Civil War?  Mr. Obama captured just fifty-one percent of the popular vote.  

Last November, I anticipated more reaction from voters in the Center, due in part to the now infamous, “You didn’t build that” quip.  I believed it validated deep concerns held by many Americans that President Obama remains anti-business and anti-free market.  I also believed there was no way to take such a gaffe out of context (as claimed by the President and his defenders) and that the ripple effect would devastate the President's campaign.  I was obviously wrong about the fallout as far fewer swing voters in the Center cared about the issue than I'd imagined.  Setting aside the unpredictable American Center, the two Americas of Blue and Red remain far apart in their belief systems.

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Much of Blue America believes that since car tires rolled on public pavement while building businesses, or since career success came after attending public universities --- government funding enabled positive economic outcomes.   

Red America concedes that of course, some large scale public works projects and excellent public universities influenced America's growth and as our population grew, a corresponding increase in the size of federal government was necessary.  

However, Red America doesn't believe our nation flourished exclusively, or even principally, for these reasons.  Red America believes, it was limited government, free markets and personal freedom that enabled growth and prosperity in the first place coupled with initiative, smart risk-taking and hard work. Red America points to history that suggests the inevitable outcome of unchecked deficit-spending and taxation courts disaster and that we're already witnessing our decline.

Red America remains convinced that one of the most perilous problems faced by our nation today is federal spending and that added taxation, by any other name or game, is more of an enabler to the fiscal problem, than a cure.  For this view, Red America is often labeled by Blue as extremists.

Leaders of Blue America welcome new tax increases like the 2% payroll hike on all taxable wages up to $113,700 (which Blue dismisses as end of a tax "holiday") and the new Medicare adder of 0.9%.  

Class warfare and the politics of envy are often used to justify tax increases.  This historically has been Blue America's mantra to increase taxes.  Paying one's "fair share" is whatever they want it to mean.

And on the spending side, a reduction in the rate of increase to any budget item, is still decried as a spending cut by Blue America.  By contrast, Red America welcomes the prospect of a nominal $85 billion spending reduction from a government that spent over $3.5 trillion last year. 

Sadly, the yoke of two Americas remains firmly in place.

White House Fiscal Adviser?
Wikimedia Commons

The Romney tax policy

Conceptually, it's not more regressive than what we have but it's being labeled as such by Obama supporters who conflate marginal tax rates with effective tax rates.

Lower marginal rates on a broader base of income is a step toward real tax reform.  Reduce the mountain of deductions, credits and incentives -- apply lower marginal rates to a greater aggregate of taxable income and in the process remain revenue neutral while simplifying the tax code.  What's wrong with that?

Perhaps the problem for Mr. Obama's supporters is that remaining revenue neutral might help curb run away government spending.

(This is a CEO, not a Community Organizer)

Don't sulk, resist.

In his piece from the current issue of Fortune magazine, Geoff Colvin says the current environment is a "...nasty, insidious force that's undermining the native optimism that buoys up business people everywhere" and then he admonishes readers with one word -- "Resist!"  

I appreciated another article in this issue by Ms. Mina Kimes who wrote about a manager for the MFS International Value Fund -- Mr. Barnaby Wiener.  Like a lot of people; I largely stick to index funds, but Mr. Wiener's actively-managed fund according to Fortune, is one of the best in its class having outperformed 99% of its peers since 2002. 

Mr. Wiener says "It's much more important to avoid losing money than it is to make money" and he adds, "If you avoid the big losses, you make money almost by default."  Those statements seem consistent with Warren Buffet's well-known view, "The first rule of investing is don't lose money; the second rule is don't forget Rule No. 1."  OK, but what's the third rule?  Anyway, on to the election...

1. The presidential election is only 50 days away.

2.  It's the most important election of my conscious lifetime (in other words, since I was 24).

3.  We need a CEO more than a Community Organizer with velvety speeches.

4.  Please encourage anyone still on the fence to get out and vote for Mitt & Paul.

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My take on GOP presdential candidates

Ron Paul, Wikipedia

Ron Paul -- I remain conflicted about Ron Paul.  The reasons are simple and shared by a number of GOP voters.  Let's first look at the plus side.  I love the man on fiscal policy.  As he once described his zeal to cut federal spending, “I am absolutely convinced it is the only road to prosperity.”  On monetary policy -- Ron Paul is the gold standard (pun intended).

If not for the Tea Party, I'd have bolted from the Republican Party a few years ago because I wasn't seeing enough Republicans walk the fiscal talk that Rep. Paul walks every day.  Then I discovered Ron Paul.  When Ron Paul says he'd cut a trillion dollars in federal spending year one, he even tells you how he'd do it.  When he talks about The Fed's destructive, easy money policies -- he means it.  I admire his courage and consistency.  Unfortunately, Rep. Paul's foreign policy is often, "Blame America First."  It's unfair to brand virtually all American foreign intervention as "nation building".  He's more worried about domestic TSA agents, than foreign enemies of this country.  He's obsessed with "rights" of enemy combatants (non Americans) in Guantanamo and dismisses the record of domestic security our existing policies (maintained by leaders in both parties) have engendered.  I also question his views on Israel.

I recall an attempt Mr. Paul made to appeal to Pro-Defense Republicans when he highlighted the fact he had voted to use force after 9/11.  My fear is that a President Paul would wait for another 9/11 before acting.  Ignoring one's enemies has nothing to do with Liberty. 

Traditional Republicans have significantly more in common with hardcore Paul supporters than either group has in common with Democrats -- and probably always will.  I respect the ideological purity of most Libertarians -- their loyalty and unswerving respect for the Constitution.  My differences with some of them are: a) an all hands-off position about containing evil and preserving national security, b) a failure to embrace political reality by running hopeless candidates who siphon GOP votes and c) too many of them still spout the nonsense that there is no difference between Republicans and Democrats.

Newt Gingrich, Wikipedia

Newt Gingrich -- Mr. Gingrich will not be the nominee of his party, but if you ever have the opportunity to see Newt Gingrich speak in public, you must make the time.  He's a rare breed of public speaker -- poised and colorful with an enviable command of American history and domestic politics.  I've never seen him use notes at the stump.  Speaker Gingrich also says ineffective things at the worst possible moments like his recent attacks on Romney's private equity group.  .            

Rick Santorum --

Rick Santorum, Wikipedia

A lot of Americans are getting their first taste of Rick Santorum.  He's been a part of the Washington landscape for a long time while managing to keep his nose clean and win respect from people who agree with him and scorn from those who don't.  Mr. Santorum will not be the nominee of his party either.  His character, social values and deeply-held convictions are the stuff that lands one a spot on Mount Rushmore, but we need a CEO in the Oval Office more than a role model for at-risk youths.  I'm also troubled by his explanation for a vote against the Commonwealth of Pennsylvania when it tried to become a Right To Work (RTW) state.  Mr. Santorum now says he'd sign an executive order allowing all states to become RTW states. By the way, check out this site to learn more about RTW site.

Mitt Romney --
That brings us to Mr. Romney.  Words that come to mind are: urbane, wealthy, smart and energetic.  Of course, that's not enough to win.  I hope Governor Romney's commitment to balanced budgets will remain as pure as Governor Scott Walker's performance here in Wisconsin. 

By the way, I'm now awarding an annual Maddente.com MVP Award for public adherence to fiscal responsibility under adverse conditions.  Mr. Walker earns the inaugural award -- hands down -- for his 2011 performance.  Taking a $3.6 billion dollar deficit to a $300 million dollar surplus, without raising taxes, against a Tsunami of cheap legislative stunts and vicious public union attacks, has re-defined courage and leadership in this state.

But back to Mitt.  There's much more to learn and discuss about Mitt Romney, of course, but for now I'll close with this thought: Mr. Romney will be the GOP nominee facing Barack Obama in November and if elected, he'll become an infinitely better President than his predecessor.