Fairytale Logic & Weapons Of Mass Deflation

My father, the wisest man I have ever known, has always told me that “two wrongs don’t make a right”. These insightful words instilled in me, at an early age, a sense of personal responsibility and a general antipathy toward blaming others for the consequences of actions that I control. These are attributes that have served me well throughout my life, as individual accountability is imperative to the building of human character, a prerequisite of, and a steppingstone to, the fulfillment of the American Dream.

That China has made a practice of tying its currency to that of the American dollar is no secret to the world. That the Obama Administration blames this deflation of the Chinese Yuan for America’s economic weakness is slightly more surprising. That the President’s reaction to what he perceives as a snub is to weaken his nation’s dollar is remarkable in its lack of judgment and speaks volumes of the man who initiated it. This “eye for an eye” approach toward global economic diplomacy indicates a lack of principled leadership and an ignorance of the laws of capitalism.

The practice known as “quantitative easing”, in which the Federal Reserve has begun to inject $600 billion of newly printed money into the American economy, is justified by fairytale logic, i.e., that stealing demand from the rest of the world can mask the effects of domestic policy failures. The inevitable result of this type of loose fiscal planning, however, is a lessening of American buying power which, in turn, will necessitate a rise in commodity prices, an increase in unemployment and negative economic growth.

At the recent G-20 meeting in Seoul, South Korea, President Obama, by answering a wrong with a wrong, brought about the most complete and thorough rebuff of a sitting American President at a global economic summit to date. Mr. Obama and Treasury Secretary Timothy Geithner insisted throughout this summit that they were not to blame for America’s domestic woes, painting the United States as a victim of international bullying, mercilessly perpetrated by economic browbeaters such as China, Germany and Brazil, all of whom are using highhanded export and exchange rate policies as weapons of mass deflation. In an attempt to explain his lack of success concerning his primary goals of cutting trade-surpluses and pressuring China into increasing the value of its Yuan, President Obama stated the following: “Part of the reason the United States is attracting dissent is we’re initiating the ideas.” This predilection for blaming its failings on the passions and the prejudices of others has become a trademark reaction of the Obama Administration when faced with scrutiny or dissent. America’s traditional allies, however, appear to be losing patience with the President’s “blame-game” approach. To wit, French President Nicolas Sarkozy - “Clearly the approach of throwing blame at each other doesn’t work.” and German Finance Minister Wolfgang Schäuble - “It doesn’t add up when the Americans accuse the Chinese of currency manipulation and then, with the help of their central bank’s printing presses, artificially lower the value of the dollar.” In other words, two wrongs don’t make a right.

In order for America to effectively maintain its traditional role as leader of the world’s economy, President Obama must rise to the task at hand. Shirking responsibility and blaming others, as the President is predisposed to do, is not the mark of a leader; passing the buck is a luxury reserved solely for those who follow. In lieu of stooping to the level of China, now is the time for America to rise above and strengthen the value of its currency. This can be accomplished through responsible spending and growth, reforming what is broken in our current system, and fostering the innate ingenuity and individual drive that, traditionally, are the hallmarks of America. These are the actions of a veritable leader, confident in his moral standing and proud of the nation he represents. Clearly, the American people have come to expect this brand of leadership from their presidents. Alas, just as my father has taught me that two wrongs cannot make a right, as the midterm elections have recently shown, nor can they make a left.

Governor Huckabee & The Second Kick Of A Mule

At the November 5th meeting of the RJC (Republican Jewish Coalition), in New York City, I had the privilege of speaking with former presidential candidate and television talk-show host, Governor Mike Huckabee. Although a supporter of the Governor prior to this event, my respect and admiration for the man increased exponentially as I sat at a table and conversed with him. What I immediately realized as our discussion progressed was that Governor Huckabee possesses a quality that has become exceedingly rare amongst America’s national leadership - that of character. Character is the most elusive and the least expendable attribute of an effective American leader. Character symbolizes all that is great in our nation and represents the defining aspect of the politicians we most revere, e.g., George Washington, Abraham Lincoln, Franklin Delano Roosevelt and Ronald Reagan. It was an impalpable sense of character emanating from these leaders that gave the American people a veritable sense of hope and security amid perilous and trying times, believing as they did, that their national leadership understood their hardships and sufferings and was dedicated to their safety and happiness, irrespective of party factions. It is this high sense of character that is presently missing from America’s national leadership.

While I do not adhere to the theory that the Obama Administration has purposefully weakened America’s global standing and hindered its economic growth, this supposition represents a growing fear among the American electorate. This pervasive distrust of the President is not the result of Tea Party ignorance or endemic simplicity as many on the far-left have claimed; rather it is the natural byproduct of a growing impression that the leader of our nation has reneged on a sacred oath, that his steadfast idealism at times supersedes his erratic dedication to the Constitution, and that he is willing to sacrifice the public-good if its interests run contrary to his agenda.

Perhaps Governor Huckabee summed it up best when he explained to the RJC what he believed to be the essential dilemma concerning our present leadership – a fundamental disconnect between the American people and the leaders they have elected to govern them. President Obama has chosen a path of detachment, cloaking himself in the theories of academia, evading the harsh realities of everyday Americans struggling to pay their bills, forfeiting their earnings to the government and surrendering their independence to the state. This would explain why the grand majority of the President’s inner-circle hails from the public sector, never having managed so much as a lemonade stand, let alone a business or enterprise. A cold aloofness to the public fray allows the Administration to shelter itself from the extraordinary times that we live in and the ordinary people they affect.

Governor Huckabee viewed the results of the midterm elections as a sign of American resilience. A multitude of people with roots in the private sector will soon be entering office. These are people who have proven their character and their ability to lead prior to their lives in politics. Their election represents a shift in the electorate, indicative of a newfound respect for individual drive and a reverence for the American dream.

The isolated world of academia, while providing a service to society, has not and cannot produce the leadership necessary to perpetuate American exceptionalism. By nature, theoretical utopianism and societal idealism do not represent reality. Shrouding oneself in political romanticism and denying oneself the truth is not the mark of a leader. While these theories may find a home in classroom debates, they do not belong in, and in fact prove caustic to, the workings of practical government.

I believe, as does Mr. Huckabee, that President Obama means no harm to America, that his heart is in the right place. It is merely his character, or lack thereof, that precludes the nation’s advancement. For the sake of the country, it is my fervent hope that the Obama Administration takes heed of the message that was recently sent by an increasingly frustrated electorate and musters the fortitude to reinvent itself, face reality and connect with the American people. This course of action would prove beneficial to the interests of the President, as well. Alas, there is an old southern saying that still finds voice in Mike Huckabee’s home state of Arkansas: There is no education in the second kick of a mule.

People, Providence & Congress

With remarkable consistency, the Obama Administration has stayed true to its economic agenda, producing federal deficits in excess of $1 trillion for the second consecutive year. The $1.29 trillion shortfall of fiscal year 2010 fell just shy of the record-breaking $1.42 trillion budget gap of 2009. Over 30% of this year’s deficit - $414 billion - is attributable to interest paid on foreign and domestic debt, while increased government losses on Social Security, Medicaid and Medicare account for the bulk of the remainder. The massive national deficits of fiscal years 2009 and 2010 have merely served to exacerbate the sheer enormity and unsustainable drift of America’s national debt – presently approaching $14 trillion.

There are times in the history of a nation when the accumulation of debt can be justified. The United State’s Constitution charges the federal government with protecting the nation’s borders and with defending the Union from foreign invasion, from domestic insurrection, and from threats to its national honor, thereby holding Congress responsible for providing for the general welfare of its citizenry through an active military and a stable national infrastructure of communication, transportation and defense. Irrespective of budgetary prudence, if world events or domestic neglect create a situation in which these institutions become imperiled, Congress should and must provide the funding necessary to effectively reverse that threat. However, even in instances where the creation of debt is necessary and justifiable, it should not be blithely accumulated and it should always be accompanied with a comprehensive plan for its expedient elimination.

The $2.71 trillion in deficit spending that has defined the Obama Presidency, however, cannot be justified as supporting the general welfare of the nation, nor can it be rationalized as money spent in defense of America’s sovereignty, its borders or its honor. While the percentage of defense spending, as a share of the budget, has remained consistent with America’s historical average at 20%, entitlement spending, by the same measure, has increased exponentially. Safety net programs – unemployment benefits, food stamps, low-income housing assistance – have understandably increased, given the state of the economy. So too, has government spending swelled under a plethora of less justifiable and considerably more dubious government funded initiatives such as “cash for clunkers”, two misbegotten “stimulus” bills, and a litany of corporate bailouts. In addition to these wasteful measures, the Obama Administration has seemingly offered a blank and open checkbook to many of the federal government’s most crooked and moribund agencies, e.g., the Pension Benefit Guarantee Corporation, Fannie Mae, Freddie Mac and the Federal Deposit Insurance Corporation. The professed goals of the Administration in initiating these programs and subsidies – green job creation, correcting the laws of capitalism, raising aggregate demand – can, at best, be justified as issues pertaining to the specific welfare of the people, therefore falling under the proper jurisdiction of state and local government. While creating and funding government programs is not extra-constitutional, per say, it is questionable behavior given the fact that this superfluous agenda has led to such onerous federal deficits and has proven detrimental to the nation.

Social Security, long praised by Democrats as eternally self-sustainable, has joined the ranks of deficit producing programs in fiscal year 2010. Because of the interrelationship between Social Security, Medicaid and Medicare, all of these institutions will be running permanent deficits by fiscal year 2017. The shortfalls that these programs produce will naturally be subsidized by America’s general fund which, in turn, will require additional taxpayer revenue. Social Security, Medicaid and Medicare are all worthy programs that must be sustained, but unless restructured, both in form and in function, their continued existence is uncertain. The American people, by nature, are disinclined to benefit themselves at the cost of their children and their grandchildren. These three programs currently represent a standing-structural-deficit that, if left unchecked, will snowball out of control by the end of the present decade.

Although pragmatic reforms and spending cuts are urgent steps that must be taken in order to achieve a semblance of economic stability, their effect will prove negligible unless coupled with lasting pro-growth initiatives. Perhaps the most damaging aspect of the Obama Administration, thus far, is its blatant anti-business philosophy. At a time when U.S corporations are in desperate need of a boost to compete in the world market, they are facing the prospect of the largest tax increase in American history on domestic business and industry, due to take effect in January. As the dollar continues to devaluate due to the size of the national debt and the Federal Reserve’s ceaseless insistence on printing and reprinting new currency, a devastating 35% tax on all new corporate investments is further discouraging venture capitalism. With regard to China – a nation infamous for human rights violations and its recent attempts at military and navigational hegemony in the South China Sea - the United States Treasury Department is presently instigating a questionable trade-war concerning the value of the nation’s Yuan. If the Chinese were to increase the value of its currency, as the Obama Administration desires, it would result in Chinese products being sold in America at considerably increased prices, thus placing an enormous burden on American buyers and sellers respectively. All the while, President Obama appears omnipresent, with near daily attacks and virulent exhortations on the job and wealth creators of the nation, e.g., the United States Chamber of Commerce and Wall Street. Without economic growth – a function of the private sector – the American economy will be doomed, at best, to a fate of perpetual mediocrity. Across the board tax-cuts, trade agreements with allied nations such as Panama, Colombia and South Korea, and an easing of regulatory measures are required steps for a nation to achieve substantial economic growth – an indispensable prerequisite of recovery.

Given the Obama Administration’s track record concerning the three most vital components of a lasting economic recovery, the Congress of 2011 will face the daunting task of rehabilitating America’s unstable market while simultaneously battling an organized resistance from the executive branch of government. There are good men and women in both political parties who want what is best for the nation. These are the people who must now stand up, unite and endeavor to push back against the President’s failed agenda. Substantial cuts in spending, pragmatic reform of broken government programs and pro-growth initiatives represent the only path to redemption. It is imperative that Congress acts swiftly and stoically in order to achieve these goals; the bleak alternative is that our children and grandchildren will come of age in an America devoid of exceptionalism – a far different nation than we and our ancestors had the incredible privilege to experience.

Although the day of reckoning is fast approaching, it is not too late for America; its best days may still be ahead. Our nation’s fate now lies with the unlikely trio of the People, Providence and Congress.

Jeremy Pitcoff

American Spirit & Soul

Competition is the soul of America. It is the source of the nation’s exceptionalism and the impetus of its power and wealth. The Declaration of Independence does not guarantee a universal right to happiness. Rather, it confirms mankind’s right to pursue such happiness through individual drive and enterprise. The promise of America is the promise of humanity – to wit, that each human being, irrespective of religion, race or gender, has a god-given right to fairly compete for a better station in life.

American history is replete with examples of valiant individual struggles and remarkable national movements, all of which are aimed at realizing a dream of equal protection under the law, e.g., abolitionism, women’s suffrage and civil rights. The heroic leaders of these respective movements, Frederick Douglas, Abraham Lincoln, Susan B. Anthony, Alice Stone Blackwell, Martin Luther King Jr. and Robert Kennedy, each shared a common goal – that of securing a merit based system in American society, whereby each individual could fairly compete, and succeed or fail, based solely upon his or her respective skills, ambition, prudence and luck.

Having fought so hard, and having sacrificed so much to establish a government that trusts the people to trust themselves, Americans now feel betrayed. Over the course of the past four years, the United States’ Congress has systematically reversed what took centuries for Americans to establish. In a depressed domestic market with minimal economic growth, American businesses are currently being taxed at 35% on all new corporate investments. Prospective American job-creators – small business owners, high income earners and investors – presently forfeit over half of their earned income to state and federal taxes. Worse yet, these excessive burdens, and a litany of others, are due to increase in January. The American people are being excluded from competing in the global market and their government is the source of their problems. This week’s election was not only a referendum on President Obama and the Democrats in control of Congress; it was a broad condemnation of the theories that encompass big-government. Hopefully, President Obama will take heed of the warnings of America’s frustrated electorate and dedicate the remainder of his term in office to downsizing the government he has spawned. However, if he chooses to ignore the will of the people and refuses to budge on taxes, regulation and trade, he will have sealed his political fate.

It is the logic of the progressive-left that many Americans, I among them, find difficult to comprehend. For instance: How can a group of people who believe that Americans are incapable of governing themselves, declare themselves capable of governing? How can these people manipulate the edicts of capitalism in a more efficient manner than the laws of supply-and-demand? How can the President and the liberal-elite dare to compete with the innate ingenuity and natural industry that is the spirit and soul of America? Of course, these questions cannot be logically answered. The American People are aware of this, and have cast their votes accordingly.