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.

Icon by Flat-icons-com at freepik

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 historical cycle that rings true today

A friend* trying to console me after Mr. Obama's re-election, shared a timeless quote:

"Again and again after freedom has brought opportunity and some degree of plenty, the competent become selfish, luxury-loving and complacent, the incompetent and the unfortunate grow envious and covetous, and all three groups turn aside from the hard road of freedom to worship the Golden Calf of economic security.  The historical cycle seems to be: from bondage to spiritual faith; from spiritual faith to courage; from courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to apathy; from apathy to dependency; and from dependency back to bondage once more."

Icon by Arfianta at freepik

Those prophetic words came from the leader of a Pennsylvania company during a speech on March 18, 1943.  The speech was delivered by Mr. Henning Prentis and his words ring true today. 
 *Thanks, Kevin.

Defending Paul Ryan in the NY Times

Excerpts from my letter to the editors at the New York Times Magazine concerning a cover story on Paul Ryan in the October 21 issue published online November 1.  


Illustration by Jaime Hernandez

The excerpts also appear in today's print edition of the New York Times Magazine.  My apologies for the blurry, tiny font.

 



Ben Stein speaks about hypocrisy

I saw Mr. Stein speak in San Diego last June.  An interesting figure: part lawyer, part economist, part actor -- and he's also quite funny at the stump.  Some of his latest wisdom on health care and immigration policy follows...


Ben Stein - SodaHead image

"Fathom the hypocrisy of a government
that requires every citizen to prove they
are insured. . . but not everyone must
prove they are a citizen."
   
Now add this, "Many of those who refuse,
or are unable, to prove they are citizens
will receive free insurance paid for by
those who are forced to buy insurance
because they are citizens."

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.

Image by storyset on Freepik



Maddente.com raison d'être

Raison d'être -- is French for "reason for existence" -- which is a heady concept.  I'll define this blog's raison d'être for my five six readers, with this post.  Many of my posts center on fiscal responsibility. 

Fotosearch Image

So when I see a column I agree with as I did today in WSJ by Steven Malanga ("State Politicians and the Public Pension Cookie Jar") -- I share it and talk about it.  I hope in a small way, I'll add attention to the generational burden-shifting and recklessness taking place (and it feels good to get gripes out of my system and into a post).

Mr. Malanga focuses on one part of a multi-faceted national spending problem -- defined benefit programs for public employees -- better known as public pensions.  I didn't understand how costly they are until some six years ago, when a retired pediatric dentist of all people, began to educate me.

I also have misgivings about pension plans in the private sector, but shareholders of those pension-granting organizations choose where to invest their money.  Put differently, if a majority of company shareholders wish to tolerate expensive employee retirement and health care plans -- that's their business.  Investors can and do vote with their feet.  But taxpayers can't sell their shares, or wage a proxy fight. So, public pension reform is my topic du jour (OK, that's it for the French phrases -- I promise). 

Fortunately, voters are beginning to wake up and support leaders like Governor Scott Walker and the fiscal reforms they sponsor to curb these budget busters in the public domain.

Someone asked me why I haven't been posting much lately.  The answer is I've been busy working and like most working Americans -- trying to add to my defined contribution plan.
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Governor Scott Walker / Wikipedia Image

Finally, I'll share another column also found in today's WSJ  by Peggy Noonan about Governor Scott Walker's resounding win this week, called "What's Changed After Wisconsin". 

Mr. Walker, whom I hope you'll remember -- not recall -- is the first recipient of the Maddente MVP Award for public adherence to fiscal responsibility.