With the Obama administration’s phony debt-limit deadline just five days away, all eyes remain fixed on the ongoing debate in Washington. Per usual, nearly all members of the party in power support raising the debt ceiling with no strings attached while most in the minority party do not. The debt ceiling has been raised ten times in just the past decade with both parties playing political games. The Republican Party fell to minority status in 2006 after all but two Republican senators voted for raising the debt ceiling—every single Democratic senator voted against the debt hike. The sad truth is that most politicians care more about being loyal to their party’s leadership rather than standing on principle.
Earlier this week, Speaker Boehner released his compromised debt-ceiling plan which violates the Cut, Cap and Balance Pledge because it neither cuts, caps nor balances federal spending. To put it mildly, his sell-out plan does nothing to address our long-term fiscal problems. FreedomWorks has never been afraid to break with Republican leadership when they are wrong. During the Bush administration, we stood strong against TARP, the auto-bailouts, Medicare Part D, Bush’s “stimulus” package and so forth. And today we’re making a principled stance against Speaker Boehner’s debt-ceiling plan.
We’re not going to throw in the towel. Unfortunately, some so-called fiscal conservatives claim that the Boehner plan is simply the “best we can do.” Just because the Democrats happen to control the Senate and the White House isn’t a good enough reason to wave the white flag of surrender. As Ron Paul says, “let it not be said that no one cared, that no one objected once it’s realized that our wealth and liberty are in jeopardy. Let it not be said that we did nothing.”
Many economists agree that an economic collapse is on the horizon if we do not put up a fight to rein in out-of-control spending. It’s an absurd notion to think that a vote against Boehner’s bill is a vote for President Obama’s “plan”. Those who criticize our principled position have fallen for the White House’s scare tactics. The apocalypse isn’t going to happen on August 2nd even if we don’t raise the debt ceiling.
The Boehner plan will bring our national debt up to $23 trillion (instead of $24 trillion) over the next ten years—if all the spending cuts come to fruition. According to the Congressional Budget Office (CBO), the Speaker’s proposal will allegedly cut $917 billion over the next decade—which is less than this year’s budget deficit alone. But as Cato Institute scholar Chris Edwards mentions, “the ‘cuts’ in the Boehner plan are only cuts from the CBO baseline, which is an assumed path of constantly rising spending. If Congress wanted to, it could require CBO to increase its ‘baseline’ spending by, say, $5 trillion over the next decade. Then Boehner could claim that he was ‘cutting’ spending by $5.9 trillion, even though his plan hadn’t changed. You can see that discretionary ‘cuts’ against baselines don’t mean anything.”
We should also remember that these are promised cuts and absolutely nothing is stopping a future Congress from disregarding them. What are the chances that all of these pledged cuts will materialize in ten years’ time? Slim to none if history is any indication. As the famous quote from Tyron Edward goes, “compromise is but the sacrifice of one right or good in the hope of retaining another—too often ending in the loss of both.”
Let us remember what happened in the 1980’s. President Reagan reluctantly agreed to a debt ceiling hike in exchange for spending cuts and no tax increases in 1987. The Democrats didn’t quite hold up their end of the deal. Instead of the promised spending cuts, all we got was massive tax hikes. We should not repeat history by falling for the same shenanigans over and over again.
It’s time to draw a line in the sand. On which side do you stand: principles or compromises?
One policy issue that should unify individuals of all political persuasions is opposing corporate welfare. Progressives tend to oppose big corporations while conservatives and libertarians despise big government. The truth is that big corporations and big government go hand-in-hand. Washington Examiner writer Timothy Carney states that, “as the federal government has progressively become larger over the decades, every significant introduction of government regulation, taxation, and spending has been to the benefit of some big business.” We must stand together and call for an end to all forms of corporate welfare.
People often mistakenly assume that supporting free markets or laissez-faire capitalism means being pro-business. In French, laissez-faire literally translates to “let do” which broadly means leave it alone. True supporters of free markets advocate separating corporations from the state. This means rejecting any government handout, protection or special privilege to any corporation. In a free society, businesses must sink or swim on their own merits. Every business must compete with each other through innovation and entrepreneurship. We are pro-freedom not necessarily pro-corporation.
Another popular misconception is that most corporations lobby for less government regulation. That’s far from the truth. In fact, big corporations generally lobby for more government regulation in their industry. The Big Tobacco company Phillip Morris aggressively lobbies for heightened federal regulation of tobacco products and advertising. Companies such as McDonalds, Starbucks and Kraft have spent millions of dollars lobbying for food “safety” regulation bills. And energy companies like Duke Power have lobbied for cap and trade programs that would benefit their bottom line at the expense of consumers, who would face soaring electricity prices.
Why do big corporations lobby for more regulation? As Matt Ridley notes, “they are addicted to corporate welfare, they love regulations that erect barriers to entry to their small competitors.” Government regulation championed by major corporations is far more likely to significantly hurt their smaller rivals. Politically connected big corporations are fully aware that these harmful regulations will help to wipe out their competition. And that’s the plan.
Big corporations are often hostile to free enterprise. The late Noble Prize winning economist Milton Friedman once wrote, “business corporations in general are not defenders of free enterprise. On the contrary, they are one of the chief sources of danger.” In this big government era, it’s become easier for businesses to profit through the halls of Congress rather than the marketplace. We reject crony capitalism in which the success of a business is determined by their closeness to government officials. What’s good for businesses isn’t always good for taxpayers and the cause of freedom.
The Pentagon budget is probably the most susceptible to corporate welfare. It’s unfortunate that Department of Defense spending has long been isolated from serious scrutiny. Military spending has doubled over the past decade when adjusted for inflation. Powerful special interests benefit from our heavy military spending. Most notably, the nation’s “Big Three” weapons makers—Lockheed Martin, Boeing and Northrop Grumman—are cashing in big time.
An all-too friendly relationship has developed between defense contractors and government officials. As Dwight D. Eisenhower warned in his farewell address, “we must never let the weight of this combination endanger our liberties or democratic processes.” It is impossible to reduce the size and scope of the federal government without tackling the bloated defense budget.
Big government is in bed with big business. Let’s put a rest to the misconceived notion that pro big business necessarily means free enterprise. Tim Carney writes that “big business and big government prosper from the perception that they are rivals instead of partners (in plunder.) The history of big business is one of cooperation with big government.” Perhaps all of us share common ground on the issue of corporate welfare. In order to put an end to corporate welfare, we must drastically shrink the size and power of government. Businesses should compete for profits in the marketplace and not in the halls of Congress.
Last week, I had a private ~20 minute meeting with Ron Paul in his office. He is truly the nicest man ever. I cannot imagine any other presidential candidate taking the time to talk economic philosophy with three 20-22 year olds. I really do think it’s the youth that keeps him going.
Sometimes it’s good to do some research before making so many assumptions. Here is a list (not comprehensive) of FreedomWorks articles that say nice things about Dr. Paul.
Tell Your Representative to Cosponsor H.R. 1098, the Free Competition in Currency Act
My Speech on the Federal Reserve and the International Monetary Fund:Tell Your Reps to Support Ron Paul’s Audit the Fed Bill. Recommend reading: Ron Paul’s End the Fed.
Originally posted on Young Americans for Liberty’s website.
Transcript:
Hi everyone. For today’s video, I’m going to address the difference between isolationism and non-interventionism. We’re seeing the word isolationist tossed around in the media a lot lately. Time Magazine and Huffington Post like to call Ron Paul an isolationist. Tim Pawlently and John McCain are apparently upset about the rise of “isolationism” in the Republican Party.
The word isolationist is usually used as a smear tactic. If you’re going to criticize constitutional foreign policy, at least get your terms right. And if you’re a journalist and you write about Ron Paul and mistakenly call him an isolationist, expect your inbox to be full with a bunch of messages from Ron Paul supporters explaining the difference to you. So take note journalists: There is a big difference between isolationism and non-interventionism.
An isolationist is someone who wants their country to be isolated. They want nothing to do with any other country. They tend to oppose immigration, trade, talks with other nations and they tend to be anti-war for the most part. Libertarians are not isolationists since we tend to support free trade and see immigration as a good thing. The only thing we have in common really is our anti-war stance.
Now for the term non-interventionism. This basically means minding our own business overseas. We shouldn’t be involved in the internal affairs of other countries. Government policies always have unintended consequences and foreign policy is no exception. (Some who support a non-interventionist foreign policy would justify war only in cases of self defense). Right now we are bombing Iraq, Afghanistan, Pakistan, Libya, Yemen and Somalia. Six countries. And I don’t wait for the federal government to tell me when something is a war or not. So right now we are in six wars. We have 900 military bases around the world.
It is not being an isolationist to ask, why are we in six foreign sovereign nations meddling in their internal affairs? Is this really the best use of taxpayer dollars? No matter how many times we explain the difference, I understand that the media will probably to continue to smear Ron Paul by calling him an isolationist. But here’s hoping that I can help inform others of the correct use. And I know this video is very overly simplified but I wanted to keep it short and sweet. Thank you guys for watching.
I have lived in the state of Maryland my entire life. I was born and raised in the suburbs near Washington, D.C. and attended college in western Maryland. Now that I have recently received my college diploma, I plan on fleeing to the neighboring and lower-tax state of Virginia as soon as possible. There are plenty of great things about Maryland (see: world-famous crabs and the beautiful mountains of western Maryland), but the high taxes are not one of them. It’s time for me to pack up and leave my spendthrift home state.
Maryland is on the brink of fiscal disaster. According to Americans for Tax Reform, “Maryland is speeding down the road to serfdom.” In Noble Prize-winning economist F.A. Hayek’s classic book The Road to Serfdom, he precisely warns us against many of the government policies that Maryland has enacted. The Road to Serfdom was not meant to be a how-to manual. The state has moved in a tyrannical direction that crushes individual freedom and prosperity.
Annapolis has a severe spending problem. General Fund spending in Maryland has increased by 7 percent between 2007 and 2010. Even though the state has one of the highest budget deficits in the nation, politicians have refused to bring spending under control. Public-sector pensions are simply bloated and unsustainable in the long-run. The Maryland Public Policy Institute states that “here in Maryland, the state government pays out over $210 million per month to retired public employees. It’s a staggering number, particularly in light of the state’s equally staggering $1.6 billion budget deficit.”
Raising taxes is never the solution. Yet, Maryland politicians have repeatedly attempted—and failed—to close budget deficits by hiking taxes. The state has hiked alcohol taxes, cigarette taxes and doubled tolls on their bridges and roads. Montgomery County, Maryland has passed a 5-cent bag tax on both paper and plastic bags that kicks in on January 1, 2012. In 2008, the state sales tax increased from 5 percent to 6 percent which is higher than the national average.
Maryland ranks 44th in the Tax Foundation’s State Business Tax Climate Index which factors in five areas of taxation: corporate taxes, individual income tax, sales tax, unemployment insurance taxes and property taxes. All of Maryland’s neighboring states ranked significantly better. States with low or no income taxes attract a great deal of entrepreneurs and productive citizens. Maryland Governor Martin O’Malley raised income tax levels on wealthy households to 6.25 percent from 4.75 percent in 2008. Maryland’s millionaire tax back fired. It is estimated that Maryland lost $1 billion because one-third of wealthy residents moved or filed their taxes in other states with lower tax burdens.
Many Maryland politicians have been bought by powerful unions. The Democrat-controlled state legislature recently passed a law to force state employees to pay union dues even if they do not wish to be a member. This will affect 12,500 government employees who have chosen not to join a union for their own personal reasons. As Americans for Tax Reform says, “the state employee unions donated tens of thousands of dollars to the Maryland Democrat Party and held rallies for the Democrat Governor, O’Malley…With the unions promising to raise hundreds of thousands of dollars for the 2012 elections, this was just a corrupt way for politicians to funnel themselves more money for their campaigns.”
A Mercatus Center study titled “Freedom in the 50 States” ranks Maryland dead last in personal freedom. The state is no friend of school choice. Maryland has burdensome homeschooling laws that require all curricula to be approved by the government. The Mercatus Center states that in Maryland “centralized land-use planning is very advanced, labor regulation is severe, health insurance coverage mandates adds a whopping 50.9 percent to the cost of policies, occupational licensing is much more pervasive than average, and eminent-domain abuses is almost totally unchecked.”
The 2010 census finds that more Americans are migrating from high to low tax states. One great thing about our federalist system is that states are laboratories of democracy. Maryland’s experiment with high taxation and excessive government spending has failed. The state is a clear lesson of what not to do. Unless Maryland immediately shapes up by reducing its tax burden and job-killing regulations, many residents like me are likely to vote with their feet by moving out of the reckless state.
It’s former French Finance Minister Christine Lagarde first week as the Managing Director of the International Monetary Fund (IMF). She is replacing the former IMF chief Dominique Strauss-Kahn (DSK) who recently resigned after being arrested in New York City for an alleged rape. Shortly after DSK was formally indicted, the IMF began its month-long politicized selection process behind closed doors. In choosing Christine Lagarde to fill the vacant leadership spot, the IMF is merely replacing one French socialist with another. The country has become a hegemon with now five out of the eleven appointed IMF chiefs from France. Was Christine Lagarde the right choice?
Christine Lagarde may have a cleaner record compared to her predecessor. But all signs point to the fact that Christine Lagarde will likely be more of the same. She’s the typical “eurocrat.” Lagarde has instigated for stricter regulations on hedge funds and favors the expansion of the European Union. As Cato Institute scholar Doug Bandow writes, “Christine Lagarde appears to be a standard French statist and has been deeply involved in organizing the succession of European bailouts.” In other words, don’t expect the bailout mission of the IMF to change with Lagarde in charge.
The real question is why does the IMF exist anymore? Following the resignation of DSK, the international bureaucracy should have finally shut its doors. For decades, the IMF has propped up shaky governments and politically connected banks. As Ron Holland explains,”the IMF and the World Bank have worked together to advance the monetary and political interests of the power elite for decades. They use a good cop and bad cop strategy. Basically the World Bank loans money to corrupt governments and politicians that loot and squander the funds. Then this is followed by the IMF to the rescue by insisting on an ‘austerity program’ of higher taxes and lower government spending to ensure the loans are paid.”
The IMF is a fundamentally flawed institution. Whoever happens to be the Fund chief makes little difference in terms of the big picture. The IMF bailouts of European welfare states will almost undoubtedly continue under Lagarde’s watch. The most recent IMF bailouts include Greece, Ireland and Portugal. It has been reported that Spain and Belgium may be next in line to be bailed out followed by Greece—again.
U.S. taxpayers are financing the bailouts of spendthrift European governments. According to Cato Institute scholar Doug Bandow, “If the IMF was only spending other people’s money, then the U.S. might remain an amused bystander. But as the largest single contributor (16.67 percent, to be exact) to the Fund, American taxpayers are on the hook for a share of that organization’s lending, which ran more than $90 billion last year.” Why, again, are U.S. taxpayers are the hook for the bad economic policies of foreign countries?
The IMF is an unconstitutional and outdated international bureaucracy. The media coverage of the DSK scandal has brought much-needed attention to the Fund. But we don’t need another leader of the IMF. We’d be better off if the IMF closed down—for good.
Here is a video of my Federal Reserve and International Monetary speech from the FreedomWorks grassroots bootcamp over the past weekend:
Here is a rough transcript of the speech:
First of all, thank you everyone for being here. It’s inspirational that all of you have taken the time to travel to Washington, D.C. to attend a grassroots bootcamp. I’m going to switch it up a bit and talk about the Federal Reserve and the International Monetary Fund. Now I understand that monetary policy may not be the most exciting policy issue ever. It’s complicated and complex and that’s how the Fed and IMF like it. We owe it to ourselves to learn as much as we can about the Fed and IMF.
I’m first going to address the Federal Reserve. Monetary policy is an extremely important issue. I think we’re in huge trouble. I do believe that we will be facing a dollar crisis in the near future if we don’t return to sound money. Many notable Austrian economists such as Peter Schiff and Jim Rogers are saying we haven’t seen anything yet. Just so we’re on the same page, the Austrian school of economics is a free market school of economics. Some of its founders were from Austria but it has nothing to with the economics of the country Austria. These Austrian economists say that an even worse crisis is on the horizon.
I do have some hope though. The American people are waking up. Just a few years ago, no one with the exception of Ron Paul was really questioning the Federal Reserve in Congress. They all just let it do whatever it wanted and didn’t really pay attention to it. I’ve been in the anti-Federal Reserve movement since 2007 and I’ve seen it rapidly grow. It’s become mainstream to not just criticize the Federal Reserve but to want to end the Fed.
I’ll start with some basics. What is money? Sounds like a dumb question. But we all use money and think about it quite a bit. But we really take the time to ask some vital questions. How does this piece of paper have any value? Who controls the value of the dollar? We all should know that the value of the dollar loses value from time to time. Why is that?
Money is a medium of exchange. Long ago we had a barter economy where people would exchange goods for other goods. Someone with a sword would trade it for some bread. As you can imagine, this was very inconvenient finding someone to trade with. Overtime societies started using commodity money. Commodity money is a money whose value comes from the commodity out of which it is made. Money did not originate with government. For example, some societies used shells and beads as money. These are thought to have value. Historically, the free market has chosen gold as money. If you own gold, you can offer it to someone in exchange for a good that they have.
Today most of the money used in the world is fiat currency. The dollar is fiat money. It only has value because the government says so meaning that it is not backed by anything. Government saw people using money and wanted to get in on the action. They began printing their own money and forcing people by law to use it.
The history of paper money is long but in almost every single case, starting with China in 806 AD, paper fiat currency has failed. Government printed so much money which inflated the money supply and made the money worthless. Today, it is illegal to use anything but the paper dollar as currency. People are in jail right now for trying to start their own currency backed by precious metals.
So now that we have an understanding of money, who controls the value of the money we have in our pockets? The Federal Reserve. The same supply and demand rules apply to money. The more dollars we have in the circulation, the less value the money becomes. It’s scary that the Fed has monopoly control over our money supply.
Since the very beginning, the Federal Reserve has been the most secret and least accountable operation of the federal government. The CIA has more oversight than the Fed. The plan for the Fed started in 1910. A group of the most powerful banks and government officials held a secret meeting in Jekyll Island resort in Georgia and devised the Federal Reserve Act to serve their own self interests. They finally got the Federal Reserve Act passed on the evening of December 22, 1913 when many congressional members were home on Christmas break. That’s how America’s central bank the most powerful institution and the greatest intervention in the economy was created. These unelected bureaucrats can create as much money as they want out of thin air.
Our Founding Fathers understood the dangers of fiat currency. In 1775, the continental congress issued paper money called the continental. The currency was hyperinflated to the point of disaster. This is why the Founders banned paper money and permitted only gold and silver as money in the constitution.
Supporters of the Fed claim that the central bank is necessary to stabilize the financial system. But since the Fed came into existence in 1914, we have experienced numerous recessions and depressions. Members of the Austrian school of economics blame the Fed for these financial crises including the Great Depression.
The Fed has created a boom and bust cycle. It lowers interest rates to put more dollars into the economy which creates a false boom. This sends out misleading signals to consumers and producers. It is impossible for the Fed to continue the boom so an economic crash will ultimately happen. This is called the Austrian business cycle.
Leading economists in the Austrian school warned us about the current economic crash years ago but few people cared to listen. The Fed is the biggest taxer of them all. The Fed steals our money through inflation which is a hidden and immoral tax. Inflation is the increase of money supply in the economy. Since the creation of the Fed, the dollar has lost 97 percent of its value.The Federal Reserve printing money punishes those who safe money for the future. Instead of obvious ways to raise government revenue such as taxation or borrowing, the Fed simply prints as much money as it needs.
The Federal Reserve likes fiat paper currency because it enables them to bail out their friends. The Fed has never been audited. A true audit would reveal what the Fed has been doing behind closed doors. A few weeks ago the Fed was court ordered to release documents which showed that they have loaned to many foreign banks including a corporation part owned by the bank of Libya.
Thankfully, Ron Paul and Rand Paul have introduced the Federal Reserve Transparency Act of 2011. The bill number in the House is H.R. 459 and in the Senate it is S. 202. As Ron Paul says, the audit is just the first step to ending the Fed. The threat of an audit has Fed Chairman Ben Bernanke running scared. There is even greater momentum for an audit this year so it’s very possible that it could pass. It would be amusing to watch Obama come up with excuses to why he doesn’t support the Federal Reserve if the bill ends up on his desk. There’s no good reason why anyone shouldn’t support increasing transparency to the Fed.
There’s another monetary policy issue that needs our attention: The International Monetary Fund. It hasn’t gotten as much attention as it deserves lately and I think it’s because it’s a complicated issue. The IMF is an unconstitutional, outdated and needlessly international bureaucracy. The U.S. should withdraw from the IMF.
The IMF started in 1944 when a group of 44 nations met in Bretton Woods, New Hampshire. These governments developed the Bretton Woods agreement. This was a system of exchange rate management. The IMF would temporary loan to countries who were experiencing balance of payment problems. The Bretton Woods system fell apart in 1971 when the U.S. completely ended the Gold Standard.
The end of the Gold Standard meant dollar devaluation, instability and inflation. After Nixon ended the Gold Standard, this gave the IMF absolutely no justification to continue. Instead of closing down, it simply changed its mission. Today, the main mission of the IMF is to bailout powerful politically connected banks and spendthrift nations at the expense of taxpayers. The IMF is the last lender of resort, loaning to shaky governments that no rational bank would consider.
U.S. taxpayers have the largest stake in the IMF. Out of 187 member countries, the U.S. has the highest quota of about 17 percent. This means that we pay roughly 17 percent of the IMF total funding. Don’t be fooled by government officials who say that the IMF doesn’t cost us anything. Taxpayers subsidize the IMF to the tune of billions of dollars annually yet these subsidies are nowhere to be found in our federal budget.
The IMF is a prime example of our bailout culture. The IMF recently sent nearly $300 billion taxpayer dollars to Greece and Ireland. A bailout of Portugal is now in the works. Barack Obama remains committed to a second bailout of Greece. All of these welfare states lived far beyond their means and we were forced to pay for their mistakes.
The IMF has created moral hazard. This means that they have encouraged reckless behavior by holding out the prospect of a bailout to any nation or large politically connected bank that fails. The IMF bailouts have made financial crises much worse.
The IMF is a clear threat to our sovereignty. The former head of the IMF French socialist party member Dominique Strauss Kahn was recently in the news for allegedly raping a hotel maid in New York City. These are the kinds of people who are running the IMF. The IMF recently proposed a global currency in honor of the father of Keynesian economics John Maynard Keynes. Keynes proposed a global currency called the bancor decades ago. A global fiat currency would grant the IMF even more power while failing to stabilize the global financial system.
Who would administer the banchor? The IMF report suggests a global bank or the Federal Reserve on a global scale. Since the creation of the IMF, it has operated under a veil of secrecy. Since all major decisions require an 85 percent super majority to pass, U.S. treasury secretary Timothy Geithner has the power to veto any IMF bailout. We must put pressure on Timothy Geithner while simultaneous striving to withdraw from the IMF.
I think the most important part of these campaigns is education. I know it may be difficult to strike up a casual conversation on monetary policy but we have to. You’re probably going to be called names like a “kook” but we have to keep fighting the good fight. History will prove us right. These are complicated issues but we owe it to ourselves to educate ourselves. The Fed and the IMF doesn’t want you to understand these issues. I believe that freedom is at stake and I hope that you will join me in speaking out against our dangerous monetary policy. If you want to learn more, I suggest the following books End the Fed by Ron Paul, What Has Government Done to Our Money by Murray Rothbard and the Case Against the Fed by Murray Rothbard. Thank you.
