I would like to suggest another use of the phrase. The pot, knowing it is totally caked in soot, is an expert on what black is and is better able to recognize similar blackness in others. So when the pot accuses the kettle of being black, it is essentially saying, “I see we have a lot in common. I’m black as night and I see that you are too. You have obviously spent your life in service over the open fire as I have.”

With this in mind, two different voices spoke out publicly this week, saying “Having personal and deep knowledge of Marxism, it is obvious that the US is speeding down the road to Marxism.” While this is my own paraphrasing, both individuals made this accusation unambiguously.

First: Committed Marxist and aspiring communist dictator, President Hugo Chavez of Venezuela has nationalized (government confiscation of private businesses) most of Venezuela’s key economic sectors. Recognizing a kindred spirit in Obama, Chavez paused during one of his infamous paternalistic lectures on his favorite subject (the scourge of capitalism and the glories of socialism) to opine: “Hey, Obama has just nationalized nothing more and nothing less than General Motors. Comrade Obama!”

He continued with a warning to fellow Marxist and Cuban dictator Fidel Castro: “Fidel, careful or we are going to end up to his (Obama’s) right.” Imagine!  Communist dictators expressing concern that an American president might be more socialist than they are. Clearly, the pot is seeing something in common with the kettle!

Second: The official newspaper of the Soviet communist party was Pravda. With the dissolution of the Soviet Union, the same publication was resurrected as an independent news organization, which employed most of the same journalists as Pravda. This week Pravda Online published an
editorial written by a man quite experienced with life under Soviet rule. This gentleman’s insights and reasoning are worthy of our attention. His thesis: “It must be said, that like the breaking of a great dam, the American descent into Marxism is happening with breathtaking speed, against the backdrop of a passive, hapless sheeple, excuse me dear reader, I meant people.”

1. The author then lists four critical events that led to American’s blind acceptance of the collapse into corruption and socialism.
   “First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather than the classics. Americans know more about their favorite TV dramas than the [political] drama in [Washington D.C.] that directly affects their lives. They care more for their ‘right’ to choke down a McDonalds burger or a Burger King burger than for their constitutional rights.”
2. “Then their faith in God was destroyed, until their churches, all tens of thousands of different ‘branches and denominations’ were for the most part little more than Sunday circuses and their televangelists and top protestant mega preachers were more than happy to sell out their souls and flocks to be on the “winning” side of one pseudo Marxist politician or another.”
3. “The final collapse has come with the election of Barack Obama. His speed in the past three months has been truly impressive. His spending and money printing has been a record setting, not just in America’s short history but in the world. If this keeps up for more than another year … America at best will resemble the Weimar Republic and at worst Zimbabwe [both noted for their hyperinflation and economic collapse].”
4. “These past two weeks have been the most breathtaking of all. First came the announcement of a planned redesign of the American Byzantine tax system, by the very thieves who used it to bankroll their thefts, losses and swindles of hundreds of billions of dollars. These make our Russian oligarchs look like little more than ordinary street thugs, in comparison. Yes, the Americans have beat our own thieves in the sheer volumes.”

Most poignantly, though, the author recounts how Russians did not embrace Marxism, but were violently forced to submit to it. “The initial testing ground [of Marxism and communism] was conducted upon our Holy Russia and a bloody test it was. But we Russians would not just roll over and give up our freedoms and our souls, no matter how much money Wall Street poured into the fists of the Marxists.”

While I and most conservatives share the sentiments expressed by both Hugo Chavez and the Pravda editorialist, so many of our fellow citizens are either 1) incapable of understanding what is happening to our country, 2) willfully and dangerously ignorant, 3) traitorously indifferent, or 4) complicit in the imposition of socialism and Marxism upon the populace. My question is whether Americans will roll over and give up the freedoms dearly won in the blood of our martyrs, thereby abandoning the vision of our founding fathers. Or, will we stand up like the Russians, the Koreans, the Chinese, and the Vietnamese and say “Enough is enough! We will allow no one to destroy the divine miracle of America!”

Such is not the case. Take out a polishing cloth and give that blinding sheen reflecting off of team Obama a little rub and the ugly truth is quickly exposed. Obama is not particularly special nor is he well-regarded by Americans. Placing his popularity in historical context reveals that Obama is, at best, middle of the pack. Pew Research compared the approval ratings for the last seven presidents at their first term 100-day mark. They found that Obama trails the disgraced and despised Richard Nixon, the horribly incompetent Jimmy Carter, and the solidly conservative Ronald Reagan.

Slicing the data a different way, Obama is not notably more popular among the president’s own party. Republican approval of Reagan and Bush the 2nd is quite comparable to Obama’s popularity among Democrats. This analysis is hardly surprising. At 100 days into a new president’s term, one would expect that his own party (the winners of the recent election) is still happy to have their guy in office. Obama is, however, ahead of Carter and significantly ahead of Clinton among Democrats. The Clinton anomaly is probably what stands out most. By no means, however, is Obama wildly more popular even within his own party.

Closer examination of the data, however, does show a growing partisan trend. When looking at the approval ratings from the opposing party (the party not associated with the president) we see growing dissatisfaction with the opposite party president. This is a consistent trend since Richard Nixon, who enjoyed a 55% approval rating among Democrats at his 100-day mark. Every president since then has had less opposing party support, with the exception of Bush the 1st, who temporarily reversed the trend. Only temporarily though; Clinton, Bush the 2nd, and Obama were each increasingly unpopular with their opposing parties.

Given the Democratic Party’s hard drift to the left, partisanship has grown markedly in this same period. Therefor, the increasing partisan gap in presidential approval ratings is hardly surprising. It does, however, expose the emptiness of Obama’s promise of a new political environment where both parties work collaboratively for the good of the nation. Certainly, his performance in the first 100 days has been more partisan than any of the presidents discussed above and the opposing party approval ratings are consistent with that observation. While the promise of unity is empty, it is a great tool for publicly manipulating the opposing party: “Do things my way and go along with my programs and you will be seen as contributing to the unity the American people are screaming for, or oppose me and expose yourselves as obstructionists who will do everything to prevent political progress.”

Congressional Republicans have allowed themselves to be cowed by Obama’s manipulation and the assumed popularity of the new president when they should have stood solidly for conservatism. Where they failed the most though was when they did take a stand against Obama, where they did appear as obstructionists. In doing so, they betrayed conservatism which has excellent, time-tested alternatives to each of Obama’s socialist solutions. If congressional Republicans are to be seen as a viable alternative to Obama, they must not only oppose, they must successfully articulate strong and viable solutions to the concerns that Americans are focused on.

In May of 2008,
Gallup conducted a poll that measured the level of giving by political ideology. Gallup found that the more conservative a person is, the more she or he contributes to charity and that the more liberal a person is, the less she or he contributes to charity. The chart below shows just how marked the disparity is.

Also on the chart, you will notice the level of charitable giving reported by Misters
Obama and Biden for the four years prior to Obama’s appearance on the federal payroll. You will notice that their donations are very consistent with Gallup’s findings. Not shown on the chart, as the numbers are less readily available, are the charitable contributions of Bush and Cheney. I was able to find specific information for a couple of years, where it was reported that their donations ranged from 9% to 26% to 35% to 77% of their adjusted gross income.

While Gallup did not investigate why the differences exist, it is easily explainable by principles of the political ideologies surveyed. Conservatives believe in small government, confined narrowly to the functions authorized by the founding fathers in the Constitution and other documents. Conservatives recognize that government is generally incompetent, corrupt, and inefficient. With this in mind, it makes more sense for caring people to donate their hard-earned funds to organizations that are best equipped to provide the help and relief intended. Almost always, these are private organizations.

Additionally, conservative principles call for a solid work ethic and self-reliance. Yet nearly everyone has required help at one time or another to bridge a gap. By donating to private charities, conservatives are more confident that the recipients who actually need the help will indeed receive temporary gap-bridging assistance and not a permanent subsidy.

Liberals, on the other hand, tend to view the government as the source of solutions and remedies – the government has the responsibility, insight, ability, and resources to fix society’s problems. Additionally, the government has the ability to force or coerce people into giving. By delving a bit deeper into liberal thinking, we find that liberals are also motivated by controlling help and assistance to achieve their political aims. If a liberally inclined government can set up a social program to meet real or imagined needs, the liberals are able to better control the social agenda and reap the political benefits of creating a dependent class of people. This all leads liberals to prefer imposing taxation on everyone, forcing all to support their agenda, rather than willingly giving of their own personal funds.

Once again, though, Obama and the press are out of step with the American people, while conservative sentiments continue to align with the citizenry. Recently, a
Rasmussen survey found that 75% of America (a super majority) is distrustful of government, while only 7% support the “political class.” Specifically, the study found that most of the country:

• Trusts the judgment of the American people more than they do the judgment of America’s political leaders.
• Believes that the federal government has itself become a special interest group that looks out primarily for its own interest(s).
• Believes government and big business work together in ways that hurt consumers and investors.

Underscoring these sentiments is another Rasmussen survey that found only 14% of Americans believe that the federal government will do a better job running the big three automakers than private industry. A full 67% believe the automakers will be worse off with the federal government in charge.

It should be noted that in each of these studies, a majority of Republicans AND a majority of Democrats side with the majority of Americans – these sentiments cut across party lines. This supports my assertion that most Americans do not understand conservatism and that most Americans hold views consistent with conservative principles.

In apparent contrast to this opinion, yet another Rasmussen survey found that barely half of all Americans believe that capitalism is better than socialism.

Looking deeper at capitalism/socialism preferences, the study found that people with investments, Republicans, and Americans with more life experience (older than 30 years) are decidedly in favor of capitalism. Even a small majority of democrats and people without investments prefer capitalism. The one demographic group that overwhelmingly prefers socialism is adults under 30 years.

Given that only 53% of Americans recognize the benefits of capitalism, how is it that 75% are distrustful of the government’s management of the economy? One possible explanation is that many/most people do not understand what the two terms mean or how they differ. The survey simply asked which system people preferred, capitalism or socialism; it did not attempt to define the two terms. Perhaps simple ignorance explains the apparent disparity between this survey and the others cited.

On this disparity, Rasmussen opines: “The fact that a ‘free-market economy’ attracts substantially more support than ‘capitalism’ may suggest some skepticism about whether capitalism in the United States today relies on free markets.” They support this position with added evidence that only 15% of Americans prefer a government-managed economy (a popular definition of socialism).

Which brings me back to my assertion that most Americans don’t understand conservatism and that most Americans hold views consistent with conservative principles. This is a lesson we conservatives can take to heart. When speaking with non-conservatives it is best to assume a certain level of political naiveté and find common ground, which usually exists since most people hold conservative values in their heart of hearts, and then build agreement on the underlying conservative principle(s).

Then, most important of all, resist the urge to accuse them of being a closet conservative!

Consider…

September 2008. American International Group (AIG), a huge insurer, was on the verge of bankruptcy and had been shopping for government assistance. The federal government had just allowed financial powerhouse Lehman Brothers to collapse in bankruptcy. Claiming AIG was “too big to fail,” the feds drove a hard bargain, lending AIG $85 billion in exchange for an 80% equity stake in the company.

October 2008. AIG fails to respond to the federal rescue as had been hoped and the government decided to dispense another $48 billion. In a telling statement, a government representative indicated that the feds felt this additional infusion was relatively low risk. Then again it is always easy to see any bet as low risk when you are not betting with your own money.

November 2008. The federal government’s second attempt to rescue ailing AIG also failed to stabilize the company. Convinced they were “too smart to fail,” members of Congress and the
Executive Branch increased the rescue package to $150 billion and eased the terms of the bailout.

March 2009. Realizing that the feds still had not committed enough money to their rescue, AIG successfully petitioned the current administration to raise the country’s stake to $173 billion.

As the government reset their investment in AIG four times over four months, a series of mini-scandals hit the press as AIG executives enjoyed a 5-star get away on the taxpayer dime and sent their bailout money to foreign banks and other companies. By the fourth time around, staffers for the House of Representatives figured they ought to do a little more to protect the federal investment. One of those protections included a limitation on executive and key employee bonuses.

Funny thing happened on the way to the forum, though. It seems key government officials thought it wasn’t such a good idea after all and had the language removed from the fourth bailout bill. Never finding it too important to read, understand, or debate trivial things like bills that expend billions of dollars, the House passed the fourth bill without exercising any due diligence.

And surprise, surprise, AIG paid out $165 million in executive and key employee bonuses. No big deal, at least until the press starting raising a stink and we the people got in a huff about a failing company paying out mega-bonuses that were funded with tax-payer dollars.

Feigning disgust and abhorrence, the House raised up in righteous indignation, slapping AIG bonus recipients with a punitive and retroactive 90% tax on those bonuses. Fake indignation, however, was not enough to wash these stains off of Congressional hands. To fully cleanse themselves, Congress and administration officials had to ensure that allowing the bonuses in the first place was someone else’s fault.

First it was the Senate’s fault; they must have taken out the ban on bonuses. Then more particularly, it was Senator Dodd’s (chairman of the Senate banking committee) doing. At first, Dodd denied any involvement, but then admitted some culpability by claiming that the White House had demanded the bonus ban be removed and he was compelled to join them. Then, apparently, it was Geithner who had pressured the White House to make the change. For observers, this became a blame game fiasco with initial denials, partial confessions, and circular finger pointing.

Even in its indignation, the House of Representatives never fails to disappoint its detractors. With a growing reputation for not caring overmuch about the truth, accurate analysis, deliberation, or unintended consequences, the House’s punitive 90% tax on AIG bonus recipients appears to fail even the most basic of standards: constitutionality.

The bill passed by the House of Representatives would likely face constitutional challenges in four areas: 1) a bill of attainder (legislation directed at punishing particular individuals) is forbidden by the constitution; 2) ex-post facto laws (laws which make an activity illegal after-the-fact) are not allowed; 3) substantive due process (protection against the state preventing the fulfillment of lawful contracts) is protected by the courts; and 4) the takings clause argues against the taking of private property without appropriate compensation.

So let’s recap the government’s failings:

• In a mad rush, Congress and the President threw together a rescue package to save a company they deemed was too big to fail. Too big to fail, but not so big they had to do it right.
• The lack of analysis and deliberation forced the government to throw more money at the AIG problem three more times, each with minimal or no deliberation.
• Given an evolving track record of AIG misusing rescue funds, House staffers crafted language to prevent the misuse.  Senatorial and administration colleagues gutted the language.
• The House did not read the final language of the bill, but rushed the legislation through, not realizing that their objectives had not been met.
• When the press and the public cried foul about the AIG bonuses, the House looked incompetent or corrupt, and went into damage control mode. They pretended indignation, beat their chest, and got tough, hoping that they would be absolved of all charges before the next election.
• The House passed a law to punish AIG for giving bonuses they were contractually obligated to award – a law that many consider completely unconstitutional.

After all the bravado and decisive action from the House, the Senate and the White House quickly distanced themselves from the punitive bill. By the time the Sunday talk shows exposed the House’s lunacy, the House itself quickly backed down from their position and let the bill die a very quiet death.

At times like these, we should pause to reflect (in gratitude) on the wisdom of the founding fathers. They foresaw that the House of Representatives would be populist in nature, blowing in the wind of public opinion (paddling as fast as they can whenever they are startled) and established the Senate to be a more deliberative body that would resist reactionary populism in favor of reason and deliberation. Doesn’t always work but it certainly did this time.

Since nature did not equip the red eared sliders with reason, just a flight instinct, and since Congress seems to be similarly equipped, it is left to us to shape their environment so they react to us (the people) in a way that benefits the nation. Since they won’t/can’t do the right thing, we must. And we do this by getting involved in the public debate. When we do, our congressional red eared sliders will begin paddling when we want them to and will paddle in the direction that we want. We need to guide them with our collective voices.

Epilogue:
With all of the hullabaloo the AIG bonuses, I’ll bet you haven’t heard a single word that failed Fannie Mae and Freddie Mac (also newly nationalized entities) have been approved to dispense more than $200 million in bonuses. Not a peep from Congress or the press. Makes one wonder about the depths of hypocrisy?

• Has a socialist economy ever succeeded in consistently raising the standard of living for its people?
• Does socialism inspire innovation and foster efficiencies?
• Does socialism preserve individual liberties?
• Has government ownership of business improved profits, products, choice, availability, or fostered healthy competition?

To date, the world has yet to witness affirmative answers to any of these questions.
 
As for replacing the U.S. dollar with another currency as the currency of trade and national reserves I am rather agnostic. There are pros and cons either way. Personally, I’m inclined to focus on the health of the dollar rather than the national ego of printing the international currency of choice. Of much more importance, however, is that nations around the globe are expressing strong concern about the U.S. government’s handling of the economic crisis and the likely outcome. Add to those voices the 60% of Americans who doubt the efficacy of Obama’s plans and a rational person must ask why Obama et al are running at full steam without pausing to listen to reasoned and experienced voices of caution?
 
Well, maybe it is the audacity of arrogance or the audacity of ignorance. Most likely, though, it is the audacity or power-mongering and the audacity of Marxist ideology.
 
Let us each bolster our hope for America’s welfare with the resolve to play a role in changing the direction our nation is currently headed.

What Taxes We Pay
Of the 31% of our income that we pay in taxes, the lion’s share is taken in the form of individual income taxes by the federal government. The next biggest chunk is taken for social insurance programs, Social Security and Medicare. The depressing thing about these taxes is that the social nets they are designed to fund will be long bankrupt by the time most of us need to start collecting. The biggest surprise to most of us, though, is that we are actually paying corporate income taxes on top of all the other taxes we pay. This hidden tax is paid every time we purchase a product or service; the corporations we patronize pass on the taxes they pay in the form of higher prices to us. In reality, corporate taxes are actually consumer taxes paid in a different way. It might be noted that the U.S. corporate tax rate is one of the highest in the world.

Implications
As you work on your taxes, and each time you get a check stub, it is advisable to think about how much money the government is taking from you. Ask yourself what you would do if you were allowed to keep most of that money; how would it help you, and how would it help the economy if you spent it? Also, remember that the funding of numerous stimulus and bailout plans will add to the amount you pay in taxes (pundits are suggesting we can expect an annual increase of $3,000 per household in federal taxes). Don’t forget the dramatic increase in the money supply to help fund these plans is stoking the flames of inflation, which is simply an especially well hidden form of taxation. The government reported yesterday that we are seeing the highest inflation rates in a couple of decades - tracking at about 5% per year – and we are just now beginning to see that rate begin to rise.
 
When you have reflected on all of this, pause and ask yourself: “Am I getting my money’s worth?” Then consider a basic tenet of conservatism, small government. Given that government is inefficient, corrupt, and incompetent, wouldn’t it be better if the free market were unshackled and allowed to address most of the needs of society, while government focused on the few things that only it can do?  This approach keeps systems and programs efficient and cost effective and ensures vital needs are met. If things get too costly or needs fail to be satisfied, competition will spur a better, less expensive alternative. When the government runs the show however, where can the competitive alternative develop?
 
Let these reflections spur you to action. Join a local tea party, pound your elected officials with input on the subject, and vote your pocketbook on your next ballot.

With only a half-year’s budget approved, the federal government is set to run out of money this month unless a budget for the remainder of the year is passed by Congress (which just happened) and subsequently approved by the president (which he will sign soon). Given the tax and spend history of the Democratic Party, it is no surprise that government spending is increasing much more than inflation and much more than can be justified in an economic environment where everyone else is tightening their belt.

Conservatives, by definition, advocate for less government, because the cost of bureaucracy is a heavy burden on the people and this burden directly limits their prosperity. So, it is no surprise that conservatives find such spending increases both unwarranted and harmful to the people of this country.

By its very nature, taxation is coercive: the government demands money from its constituents under the threat of force – you don’t pay and you are fined and sent to jail. Few would argue that this is an abuse of government power. In fact, it is a necessary evil for any functioning nation. That said, those wielding this power have a moral obligation to be wise and prudent stewards of government revenues (money taken from the pockets of fellow citizens). Unfortunately, too many elected officials have come to believe that all money belongs to the government and that the government should decide how much the citizenry really needs.

To be fair though, not all the blame can be laid at the feet of the Democrats. Under President Bush, spending also increased imprudently. Many pundits gave Congressional Republicans a bye, assuming they had voted for the spending out of a political obligation to support the leader of their party. Theoretically then, the shameful increases in government spending could be blamed on Bush – until this week anyway. Republicans offered little resistance to the spending increases and, more offensively, joined whole hog in pork spending (pun intended).

Included in the Omnibus Spending Bill (the official name for the government budget), were 9,287 pork projects at a cost of nearly $13 billion. As a reminder, pork (also known as earmarks) is a congressional tool used to fund pet programs and projects while protecting funding allocations for serious scrutiny. Most of the time, earmarks are used to reward supporters and improve an official’s odds of reelection. However, knowing how offensive the citizenry finds this practice, both Obama and McCain campaigned on eliminating such practices.

While the nature of earmarks limit scrutiny, reports indicate that 60% of the earmarks in this half-year budget are attributable to democrats and 40% are attributable to republicans. Indeed, 6 of the top 10 pork spenders are Republicans. Given the ratio of Democrats to Republicans in Congress, both parties appear to be equally guilty in fleecing the American People. Once again, Congress demonstrates that preservation of power and privilege trumps their concern for their country.

Following is a very brief sample of this bill’s pork spending:

• $332,500 to build a school sidewalk in Franklin, Texas
• $225,000 for Everybody Wins!
• $200,000 for a tattoo removal program in Mission Hills, California
• $190,000 for the Buffalo Bill Historical Center in Cody, Wyoming
• $237,500 for theater renovation in Merced, California
• $1,049,000 to combat Mormon Crickets in Utah
• $238,000 for the Polynesian Voyaging Society in Hawaii

For a larger sampling, please visit Heritage.org.

For me, the most important lesson is that there are far fewer authentic conservatives among congressional Republicans than many people thought. Increasingly, it seems that the “Republicrats” run Congress. Whether Republican or Democrat, members of Congress are all about what is in it for them and have precious few principles that they both espouse and adhere to. The silver lining, though, is that we have a much better idea about which self-proclaimed conservative Republicans are imposters. For these, their constituencies deserve better and should elect truly conservative candidates during the next round of congressional primaries.

Much of the Economic Destruction Plan recently passed by Congress shamelessly fosters the transfer of wealth. Due to the magnitude of that legislation, most of the public has no idea what it will do. Hearing very few objections from the electorate, Obama has been emboldened and is marching proudly forward with the Marxist agenda he trumpeted during the presidential race. (Click for a good and thorough backgrounder on Obama’s politics.)

Cap and Trade
Sources close to Obama have said he is moving forward with a proposal to tax carbon emissions. Leaving aside for a moment that our breath has been classified as a pollutant and that human-generated carbon dioxide has no demonstrable impact on the climate, Obama plans to tax businesses and industries emitting the evil gas. His little scheme is called Cap and Trade.

Under Cap and Trade, businesses will be forced to curtail their carbon dioxide emissions or buy permits if they cannot, or choose not, to reduce these emissions. The permits are sold by the government, which can set ridiculously low limits and charge whatever it wants. The European model of Cap and Trade has been operational for 4 years and has resulted in significantly higher costs while doing very little to lower emissions. American Cap and Trade will increase the jobless rate and act as significant tax on every American business and consumer as nearly all segments of the economy will be impacted.

Hey, but there is a bright side to Cap and Trade—the proceeds (after government administration expenses) will be distributed as welfare payments (tax credits) to the poor and to help people deal with higher energy costs. (Now there is some lunacy, tax energy because it is evil and give those tax funds back to the tax-payer to help pay for the more expensive energy they have to consume.)

Punish the Rich
Mr. Obama is also proposing to dramatically increase taxes on high-income earners, specifically those households earning a combined income in excess of $250,000. Their marginal rate will increase to 41.6% when their hidden deductions are phased-out. Additionally, tax rates are set to increase for capital gains (profits from selling items like real estate, stocks, or gold) and stock dividends. By the way, these last two taxes are paid by almost all investors regardless of their income levels. The plunder taken from rich will be used to fund the $634 billion overhaul of the U.S. health-care system. Unfortunately, these additional taxes won’t come remotely close to paying the proposed health-care bill. (see WSJ article)

Obama is confident that most Americans won’t be too offended that he is socking it to those dastardly rich folks. However, most of us are clever enough to realize that it is this group of people who take their money and invest it in the stock market, in businesses, in new jobs, and in the overall economy. If they are punished for making money, they will do what any sane person would do; find the best ways to avoid taxes. History shows that when the rich start conserving their money and avoiding heavy tax burdens, the economy slows, jobs dry up, and the stock market stagnates along with nearly everyone’s retirement funds. So who is really being punished, the rich who are preserving their wealth or you and me trying to scrape together enough to pay our bills and taxes?

The Lessons of Marxism
One hundred and fifty years after Karl Marx, our world can evaluate numerous examples of communism at work. As we all know, not one communist regime has been even nominally effective at building a thriving economy, lowering joblessness, driving innovation, ensuring liberty, or significantly improving lifestyles for its people. Communism and its close cousin, socialism, are however very effective at keeping a tight rein on the populace and preventing people from improving their personal economic situation. In other words, “tax the rich and give to the poor” translates into financially tethering the common guy.

So buckle-up and get ready for a wild ride. If Obama pursues the objectives he has written about and campaigned for, Cap and Trade and Tax the Rich are just the beginning of his unabashed drive to a Marxist America. Next on the agenda are: 1) socialized medicine, 2) disarming the public and/or curbing our right to bear arms, and 3) silencing the opposition through some form of the “fairness doctrine”.

Confidence in Stimulus Plan: On February 3rd, Gallup reported the results of their polling on Obama’s economic stimulus plan. The question was asked, “…how concerned are you that it [the stimulus plan] would not stimulate the economy quickly enough?” Of those responding 78% were either very concerned or somewhat concerned that the stimulus would not help the economy in a timely way.

A day later, Rasmussen reported that 58% of Americans did not support the stimulus plan and that half of Americans believed the stimulus plan will end up doing more harm than good.

Inflation: The Labor department reported that wholesale prices increased by 0.8% last month, well ahead of the 0.2% increase that economists had expected. This amounts to an annualized inflation rate of 10%. During the same period, consumer prices increased 0.3%, indicating an annualized rate of 3.7%. Knowing that consumer price increases lag wholesale price increases, we can anticipate even more consumer price inflation. This increase in prices should have been very predictable given the massive increase in the supply of money (think the government printing more money). In the last quarter of 2008, the money supply grew between 12-13%—an annualized rate of more than 50%. According to the “quantity theory of money,” economists expect prices will rise if the money supply increases. That theory is proving true today.

During recessionary periods it is not unusual to see price deflation. Consumer spending slows and businesses lower prices to encourage more spending. But when the government is madly printing money, this can overpower the deflationary tendency and result in markedly higher prices. To the consumer (you and me) inflation is like a tax. If we spend $50,000 year to provide for ourselves and our families and prices grow by 5%, next year we will spend $52,500 without changing our lifestyle or buying more things. Unless we get a raise to make up for the higher prices (does your employer do that?), we will find it harder to support our families on the same income.

So why does the government print more money? Controlling the money supply is a powerful tool the government uses to keep the economy within a healthy range. When done correctly, we benefit, and when that power is misused, we suffer. Earlier in the decade, the government mismanaged the money supply, contributing to the current economic crisis. By pumping up the money supply in the years following 911, the government contributed to the growing housing bubble.  Sometimes, though, the government backs itself into a corner and is forced to increase the money supply. When the federal government spends more money than it has, it must get the money from somewhere. Washington can either borrow money or print money (wouldn’t it be nice if we could do that!). In 2009, it is expected that the government will collect less than half of what it will spend, resulting in a $1.4 trillion deficit. Add to this all the money being spent in a vain attempt to help the economy, and we can fully anticipate that the government will be forced to increase the money supply, which will drive inflation rates higher still.

Wall Street: Without doubt, the financial minds on Wall Street are subject to certain frailties, greed among them. However, when they speak collectively about governmental impact on the economy, they can be quite persuasive. In the last several months, they have spoken with a loud and powerful voice. During a recession, we anticipate contractions in the market and some level of losses. It is no secret we have seen such contractions in recent months—and then some! By superimposing political events on the Dow Jones Industrial Average over the last 5 months, we get a solid sense of what the better financial minds in our country think of how the government is dealing with the economy.  We see market losses higher than a recession would normally cause and we learn that Wall Street significantly lacks confidence in the bank rescue (officially called the Troubled Asset Relief Program or TARP), the election of Obama, Obama’s presidency (one of the biggest drops ever for an inauguration), and the stimulus plan.

From Google Finance Beta

Consumer Confidence: Bloomberg, a member of the top tier financial media, reports that “U.S. consumer confidence collapsed this month.” Not prone to melodramatics, Bloomberg’s use of the word collapse does not go unnoticed. They indicate that the size of the drop in confidence was not only surprising, but very unusual historically. Consumer confidence is influenced by a number of things, including media reporting on the economy, government commenting on the economy, and the economic conditions of themselves, friends and families. Consumer Confidence is also an indicator of consumer spending and general economic changes. If confidence is low, consumers tend to spend less, which in turn slows the economy. The graph below shows clearly that, despite government spending for the last two years to revive the economy, Consumer Confidence continues to slide. The drop in Consumer Confidence then took a nosedive as the government discussed and subsequently enacted the bank rescue plan (TARP). It will be interesting to examine the data for the first quarter of 2009 to see how the stimulus plan actually impacts Consumer Confidence.

From Bloomberg