Feds Force State & Local Government Insolvency

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Overview

The eventual insolvency of many or most state and local governments in the United States, as well as of many major corporations, can be relatively easily shown to be the necessary mathematical byproduct of current US federal monetary and economic policy.

For decades, state and local governments were encouraged to make binding pension promises which relied heavily upon the (deeply flawed) academic theory that the lucrative compounding of investment wealth over the long term was close to guaranteed. Employee and sponsor contributions by themselves have never been enough to pay pensions, and unless investment profits deliver most of the money, then pension assets come up woefully short of being able to meet pension obligations.

However, Federal Reserve and United States government policy for the last ten years has been to knock interest rates down to near historic lows, even while propping up the prices of investment assets. This policy has simultaneously knocked out both of the mathematical pillars that long-term pension fund investments relied upon (as well as destroying the heart of conventional individual retirement planning). Because investment yields have been driven so low by the government, the pension plans are already in dire straits.

Public employees have enjoyed a guaranteed retirement age, and the numbers of boomers reaching retirement age is rapidly increasing. This means financial pressure is also building rapidly, and in order to avoid insolvency, state and local government pension plans must radically increase investment yields. The problem is that current federal policy is to effectively make these higher yields near mathematically impossible for the states to obtain, at least while following conventional strategies. And, as we will cover herein, this is likely to lead to a massive transfer of even more power from the state to the federal level, as states must meet the requirements of federal level politicians in order to avoid insolvency.

Pension Fund Mechanics: Contractually Promising The Future

The central absurdity underlying traditional (defined-benefit) pension funds is the assumption that economists and financial professionals know the future, and that they know it with such certainty that society can legally guarantee it. Governments and major corporations hire financial analysts and actuaries, and these professionals estimate that “x” will be the money coming in, they estimate that “y” will be the investment rate, they estimate that “z” is how long people will live after retirement, and then they run the equations and say that everything covers. Then the states, cities, school boards and major corporations of the United States – and their equivalents overseas – contractually obligate themselves to make payments to their pensioners that are based on these estimates.

Read More at GoldSeek.com by Daniel R. Amerman, GoldSeek.com

Will Obama Go Fascist on the Debt Ceiling?

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Barack Obama has sometimes been fond of branding his Republican foes “hostage-takers,” but officials in his administration have found a new hostage in their negotiations over raising the debt ceiling: the U.S. Constitution. The president’s advisers and several “unbiased” media outlets are suggesting if Congress refuses to raise the debt ceiling, Barack Obama can force the nation to continue borrowing money. The Founding Fathers required all expenditures originate in the House of Representatives, but Obama officials are wrapping his actions in the 14th Amendment. For the first time in living memory, the president is threatening to commit an impeachable offense if he does not get his way.

CBS News has reported the debt ceiling impasse leaves “the option of a congressional end-run by President Obama a possibility.” Reporter Whit Johnson said, “The stalemate in Washington has some asking if President Obama could simply bypass Congress and order the Treasury to keep borrowing.” Obama or his spokesman Jay Carney has been asked twice about the possibility and, despite an incredibly misleading headline from the Associated Press, neither rejected the possibility. (Carney merely said, “I don’t think that I want to get into speculation about what might happen if something does or doesn’t happen”; Obama replied, “I don’t think we should even get to the constitutional issue.”) MSNBC’s Powerwall dared the president to carry it out, claiming it would be smart politically.

Treasury Secretary Timothy Geithner, who has never shown much regard for financial laws, claims the president has this power under the Fourteenth Amendment. The fourth clause states:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

Geither made his comments at a “Playbook Breakfast” hosted by the online publication Politico, which has previously urged Obama to rule by decree. In December, John F. Harris and James Hohmann wrote, “Republican gains in Congress make it essential for him to use new avenues of power.”

Geithner is not alone in his inversion of the Constitution. Economist Bruce Bartlett intoned, “Given that the Supreme Court in recent years has been unusually deferential to executive prerogatives – I feel certain President Obama would be on firm constitutional ground should he challenge the debt limit in order to prevent a debt default.” What began as too-clever-by-half musings on left-leaning websites quickly filtered into the administration’s talking points.

Read More at Floyd Reports  by Ben Johnson, the White House Watch

Congressman Calls Obama’s Debt Ceiling Proposal “An Impeachable Act” (Video)

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Not all Republicans are rolling over in the face of President Obama’s unconstitutional usurpation of power. Rep. Tim Scott, R-SC, said if the president moves forward with a plan to raise the debt ceiling without Congressional authority, he would consider it “an impeachable act.” Scott told the Tea Party group LowCountry 9.12 on Tuesday:

This president is looking to usurp congressional oversight to find a way to get it done without us. My position is that is an impeachable act, from my perspective. There are a lot of things people say, “Are you going to impeach the president over that?” — No. But this? This is catastrophic. This jeopardizes the credibility of our nation if one man can usurp the entire system set up by our Founding Fathers over something this significant…There will be a revolt among the American people, and that’s what it takes.

Americans are fortunate some Congressmen take their oath of office seriously. And Rep. Scott is right; it is going to take a citizens’ uprising to force Congress to do what is right. We have to be willing to do our part to hold the president accountable for his crimes. Congress must have the courage to do its part and begin impeachment. And Heaven knows, Barack Obama has done his part.

Read More at Floyd Reports by Ben Johnson, The White House Watch

Checklist: America meets 90% of Karl Marx’s demands

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I recently re-read “The Communist Manifesto” written by Karl Marx in 1848.

What I read was a bit shocking. Marx had “10 planks” that this evil manifesto was based upon and he advocated the use of any means to accomplish these socialist goals including violent revolutions. The planks are listed bellow, followed by my comment on how it applies to America today:

10 planks of communism by Karl Marx

1. Abolition of private property in land and application of all rents of land to public purpose.

Dr. Elliott’s Comment: This is where eminent domain comes into the picture, and even property taxes. Once you own your property outright by paying off your mortgage, you still don’t technically own it because the government could jack up property taxes so high that it makes it unaffordable to remain.

2. A heavy progressive or graduated income tax.

Dr. Elliott’s Comment: Marginal tax rates increasing as income goes up IS a graduated income tax. This is in opposition to a more fair tax like a national sales tax or flat tax where a person is not taxed at a higher rate the more income they earn.

3. Abolition of all rights of inheritance.

Dr. Elliott’s Comment: In the U.S. these can be seen as estate taxes (i.e. the death tax).

 Read More at WND By Kirk Elliot, WND

Labor Battle at Center of Virginia Senate Race

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The new Boeing Dreamliner plant in North Charleston, S.C., is a few hundred miles from George Allen’s campaign headquarters in Richmond, but if Allen and the Old Dominion’s GOP have their way, the bitter battle between the airline manufacturer and the National Labor Relations Board will help determine Virginia’s next U.S. senator.

That race, expected to be among the most expensive and competitive of 2012 U.S. Senate contests, most likely will pit Allen, a former Virginia governor and senator, against Tim Kaine, who also served a term as Virginia governor and who most recently chaired the Democratic National Committee. The two are vying for the seat held by Democrat Jim Webb, who chose not to seek re-election after just one term.

Five years ago, George Allen was a popular Republican senator often talked about in conservative circles as a potential presidential candidate. His near-certain path to re-election was compromised when he referred to a 20-year-old Democratic volunteer as “a macaca” at a political rally. The volunteer, then a University of Virginia student who worked for Webb’s campaign, is of Indian ancestry, and the previously unheard-of term was widely perceived as an ethnic slur.

Allen later apologized, but he paid for the gaffe with his Senate seat. (He repented again at a Faith and Freedom Coalition conference last month.) Now he is attempting a comeback based not on personality but on curbing spending, growing jobs and allowing businesses to be more competitive. Specifically the GOP candidate is invoking a specter that’s also been a feature of the presidential contest: Democrats’ close ties to Big Labor.

Allen’s campaign is seeking to capitalize on a lawsuit filed by the National Labor Relations Board against Boeing for opening new manufacturing plants in South Carolina instead of in Washington state, partly to avoid the labor trouble that has prompted recent strikes by the International Association of Machinists and Aerospace Workers. The machinists union sued Boeing, alleging that moving some of its manufacturing operations to a right-to-work state was a form of retaliation prohibited by federal law.

Read More at Real Clear Politics By Caitlin Huey-Burns, Real Clear Politics

Whistleblower Testifies Obama Obstructed Fast and Furious Investigation

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The chief congressional investigators of Operation Fast and Furious released explosive testimony from the director of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) that they say indicates the Obama administration tried to stonewall Congress, deny witnesses the ability to testify freely, and fire employees who refused to conceal damning information. According to acting ATF Director Kenneth Melson not only did the Justice Department play fast-and-loose with Fast and Furious, but other government agencies may have known – and funded – the straw purchasers the ATF program was designed to catch. The agency’s investigation, which has resulted in at least two deaths, may have been entirely unnecessary.

Scorn on the Fourth of July

Congressman Darrell Issa and Sen. Charles Grassley sent a joint letter to Attorney General Eric Holder yesterday, revealing that Melson gave a transcribed interview on the Fourth of July, with only his personal lawyer present. The news must have come as a shock to Holder. Melson’s testimony had been scheduled to take place July 13, with Melson’s counsel and Obama administration lawyers from the DoJ and ATF taking part.

According to the letter, Melson testified that the administration had not informed him of his legal right “to attend a voluntary interview with [his] own lawyer… rather than participate with counsel representing the Department’s interests.”

“We are disappointed that no one had previously informed him of that provision of the agreement,” they wrote. “Instead, Justice Department officials sought to limit and control his communications with Congress. This is yet another example of why direct communications with Congress are so important and are protected by law.”

(Obstruction of) Justice Department

The Congressmen’s recounting of Melson’s testimony includes mistakes he admitted making, including not personally reviewing hundreds of documents relating to Fast and Furious until March of this year. “By his account, he was sick to his stomach when he obtained those documents and learned the full story,” they write.

Read More at Floyd Reports  by Ben Johnson, the White House Watch