How Do We Stop The Great Food Stamp Binge? A Look At The Mormon Welfare Program

Fox News renewed a fierce debate over how the U.S. Government takes care of its poor and needy citizens when it aired Bret Baier's special report, titled "The Great Food Stamp Binge." You can see the entire documentary below: 

This documentary is very educational. But everyone is focusing on the interview John Roberts did with a willfully unemployed and unmotivated surfer who lives a life of leisure in a very wealthy suburb of San Diego, California called La Jolla. To put La Jolla in perspective, Its the same place where Mitt Romney bought a  house that is worth $12 million.  

This surfer makes people angry for many reasons. He unabashedly admits on television that he chooses not to work despite living in San Diego's richest suburb, La Jolla. He is happy that other people are subsidizing his life style and seems to relish that fact. He is doesn't appear that he really needs the food stamps that he uses. His lifestyle is offensive for two reasons. He's accepting money from people who work hard only to have the government squander it on losers like him and he's taking the money from people that really need the help.

The Fox News documentary was designed to provoke people to debate this issue. We need to have this debate, especially when these entitlement programs are the largest driver of our national debt. This program is also pushes people to wonder if there is different approach that our government could take to help the poor and the needy. 

Actually, the answer just might be found in a Church that has its headquarters in Salt Lake City. Yes, I am talking about The Church of Jesus Christ of Latter Day Saints, other wise known as the "Mormons." 

Ronald Reagan was a big fan of the Mormon's Welfare Program. After he taken a tour of the Church's welfare program, he made the following comment to the press: "What I think is that if more people had this idea back when the Great Depression hit, there wouldn't be any government welfare today, or need for it."  He also told his aides after the tour that, "You know, there is a program that comes very close to being the most ideal way dealing with those who are poor and unfortunate; and that is the Mormon Welfare Program."

The reason why the LDS Church has been a model for how to help the poor and the needy is because it runs their welfare program in the exact opposite way that the U.S. government does. There are no freebies. No hand outs. People are required to work or help as a condition for receiving assistance. Here's how the Mormon Welfare Program works:

The system is supported by the generous “fast offering” donations of 13 million Church members throughout the world. Mormons fast, or skip two meals each month, and give the money they would have spent on the food (and often much more) to their local Bishop. The money they give is called a “fast offering.” The bishop then uses those funds to help members of his congregation, and others, who are in need.

But it is not a handout. The bishop gives the needy individual or family assignments to work for the assistance they receive. The work might include cleaning a church building or using skills to help someone else in need.  Fulfilling these assignments helps those receiving assistance to maintain their dignity and self-respect and provides a way for them to give back.

The Church Welfare program helps both members and non-members alike. The person who requests assistance from the LDS Church works with the local Mormon ecclesiastical leader, known as a Bishop, to make sure that their needs are being met. The ecclesiastical leader also makes sure that the person has some work assignment to do as they are receiving the help that they have requested for.  

The goal of the LDS Welfare program is based on the idea of getting people who need help the immediate help they need, but then weaning them off of it and making them productive in society.  The LDS Welfare system works hard in helping as many people as they can. During the 2012 election, Brian Williams did a report about the Mormon Church. Below is a clip where they reported on the Church's Welfare program: 

Despite the massive size and scope of the welfare program, the LDS Church is very efficient and successful in helping people get back onto their feet quickly as possible: 

According to Rick Foster, who oversees a smaller storehouse in Salt Lake City along with the cannery and dairy at Welfare Square (the original site of all the church’s welfare services), people depend on the food at the storehouse for an average of three to six months. (emphasis added)

The LDS Church's Welfare program is so efficient and cost effective because it operates on the singular goal of helping people become self sufficient and reliant as soon as they can. The Church has a system in place to make sure that nothing is wasted, people get what they need and they get it quickly so that they are back on their feet again. 

In fact, the Mormon Welfare program is so efficient that it is usually the first organization on the scene after a major disaster of some kind. See John Stossel explain this below: 

Additionally, the program is also extremely effective because it has mechanisms and incentives in place to prevent people from free loading which ensure that slackers (like the La Jolla surfer) do not drain the welfare system dry. The Church does not allow for situations where food and money are doled out with no accountability.

Thus, the idea of receiving help but also being able to live a leisurely lifestyle is completely unacceptable in the Mormon program. The LDS Church would simply not tolerate nor appreciate the La Jolla surfer's attitude or thinking. You don't get to play while others are helping you. You do what you can to help yourself or pitch in to help others.  

It is clear that entitlement reform is needed in America. The LDS Church provides some good ideas on how to create a program that works on helping people who really need it in a quick, efficient and cost effective manner. The only only problem is this: Will our government actually put these ideas into practice?

For more information on the LDS welfare program: http://www.providentliving.org/

You can also make a donation to the Church's Charity program here: http://www.ldsphilanthropies.org

2012 Presidential Debate: Educating Yourself On The Candidate's Economic Records

Many of you have been doing your due diligence of conducting your own research into who you should vote for in November. Tonight's 2012 Presidential debate will focus on the economy. A few months ago, I wrote a series of blog articles analyzing various aspects of Mitt Romney's record which will help you educate yourself in preparation for tonight's debate. You can now read the entire series below: 

1. Getting To Know Mitt Romney's Record 
2. Mitt Romney's Faith & Economic Leadership
3. A Look At Mitt Romney's Business Career
4. Mitt Romney's Rescue of the Salt Lake Olympics 
5. How Mitt Romney Turned A $3 Billion Deficit Into A $2 Billion Surplus 
6. Govenor Mitt Romney's Record On Taxes And Fees 
7. RomneyCare 
8. Govenor Mitt Romney's Impressive Record of Job Creation 
9. Mitt Romney's Leadership Style 
10. Concluding Thoughts About Mitt Romney's Record

In contrast, I have prepared a few articles which highlight's Obama's economic record. 

1. Obama's Economic Record: Hope Is Fading For Americans
2. Obama's Dismal Economic Record
3. Who Has A Better Economic Record: Obama Or Romney? 
4. President Obama Has Never Been Serious About Reducing The Deficit 
5. Obama Still Isn't Serious About the Economy
6. Obama Now Irrelevant On The Economy
7. David Axlerod Not Telling The Truth Mitt Romney's Economic Record
8. A Contrast In How Obama And Mitt Romney Have Handled A Down Grade In Credit Rating
9. Obama's Numerous Broken Promises To Focus on Jobs
10. Who Is Right: About What Is The Biggest Driver Of Our Deficit: Obama or The CBO?

Are We Mature Enough To Face Our Economic Problems?

Although we are currently $15 trillion in debt, the forecast of our economic future is bleak. Recently, a report was published that looked at the future liabilities to future revenue to be $222 trillion:

The U.S. fiscal gap, calculated (by us) using the Congressional Budget Office’s realistic long-term budget forecast -- the Alternative Fiscal Scenario -- is now $222 trillion. Last year, it was $211 trillion. The $11 trillion difference -- this year’s true federal deficit -- is 10 times larger than the official deficit and roughly as large as the entire stock of official debt in public hands.

This fantastic and dangerous growth in the fiscal gap is not new. In 2003 and 2004, the economists Alan Auerbach and William Gale extended the CBO’s short-term forecast and measured fiscal gaps of $60 trillion and $86 trillion, respectively. In 2007, the first year the CBO produced the Alternative Fiscal Scenario, the gap, by our reckoning, stood at $175 trillion. By 2009, when the CBO began reporting the AFS annually, the gap was $184 trillion. In 2010, it was $202 trillion, followed by $211 trillion in 2011 and $222 trillion in 2012.

The ultimate issue of this election and beyond is the question of how mature are we going to be about the economy. Are we going to take the economy seriously and handle these issues like adults or are we going to be immature about it? Adults deal with serious issues in a mature way and take a long term perspective in dealing with problems and has a willingness to make tough and painful decisions. Being immature means taking a short sighted view of the problem and only considering our wants at the present moment regardless of how it affects others.

Mitt Romney picking Paul Ryan as his running mate for 2012 is a call for a serious discussion about our nation's economy. More specifically, we need to have a serious discussion about our entitlement programs. Voters will be learning alot about Paul Ryan's “Roadmap” to prosperity plan which is a fabulous plan to reduce our national debt and reform our entitlement programs. Here's a brief synopsis of his plan: 

1)    It would spend $40.135 trillion over 10 years, compared with the $46.959 trillion the White House said its budget would spend over 10 years.

2)    It would bring in $37.008 trillion in tax revenue over 10 years, compared with $40.274 trillion in the White House plan.

3)    Lowers tax rates and cuts tax breaks. But the report doesn’t say which tax breaks would be targeted for new limits or elimination.

4)    Overturns the White House’s health care law and replaces it with changes. New Medicare rules would not go into effect for those already using the program or about to qualify for benefits. They would be able to use the existing program.

5)    On Medicare, it would give Americans a choice to enroll in a Medicare-type plan. The government would subsidize part of the payments for private-run insurance plans. Mr. Ryan believes this competition between firms “will help ensure guaranteed affordability.” For the poor or those with more health risks, Medicare would offer additional assistance.

6)    The Medicare piece is perhaps the biggest flashpoint in the entire plan. The White House and Democrats have said it would gut benefits for seniors, and even former Massachusetts Governor Mitt Romney has kept some distance from it.

7)    On Medicaid, the budget would turn it into a federal block grant program, “thus freeing states to tailor their Medicaid programs to the unique needs of their own populations.”

8)    The plan offers no details for changes to Social Security, other than calling on Congress and the White House to pursue modifications to it.

9)    On taxes, the plan calls for two individual income tax rates – 10% and 25%. It also proposes “clearing out the burdensome tangle of loopholes that distort economic activity,” but it doesn’t identify which ones should be cut.

10)   It calls for overhauling the corporate tax code by gutting exemptions and lowering the top corporate rate from 35% to 25%.

11)   The Ryan budget would reduce the deficit to just 3% of gross domestic product by fiscal year 2014, three years faster than the White House estimated its plan would reach that level. For comparison, the deficit is expected to be $1.2 trillion this year, 7.8% of GDP.

12)   The Ryan budget would not, at least according to its 10-year window, balance the budget, as tax revenue would always lag behind spending.

Although Romney certain parts of Ryan's plans, Mitt will offer his own proposals for Medicare which will be different in many ways from Paul Ryan's plan.

However,  it appears that the public is not mature enough to handle the cuts required to maintain America's financial security. Furthermore, Americans want to keep their entitlement programs as they have it yet somehow reduce the debt. Americans want to have their cake and eat it as demonstrated in a recent poll showed that 78% of Americans oppose cutting spending on Medicare while another poll shows that 48% of Americans are willing to see Medicare spending cut to reduce debt. At the same time, people are loosing faith in programs such as Social Security.

We cannot have it both ways. It is clear that Americans are conflicted and inconsistent on what to do about entitlement programs. This election will require the voters to make up its mind in dealing with the entitlement programs that drive up our national debt.

It is an undeniable fact that entitlement programs are the single largest driver of our debt. The only solution to reducing our staggering debt is to reform these programs. If we do not fix this problem right now, it will be the beginning of the decline of our great country.

Democrats, liberals and progressives have absolutely zero interest in reforming our entitlement programs because they believe in redistribution of wealth despite the fact soaking the rich cannot sustain the way our government operates right now. They are in denial that social security is having problems. Instead, their solution is to preserve the entitlement programs as they are now and make deep cuts in other programs. This plan will not work because no matter how much you cut in other programs, the amount we spend in entitlement programs is larger than what we spend in other programs.

Democrats have already gone on the offensive by engaging in "Mediscare" attacks on Mitt Romney and Paul Ryan. Both men have already defended their position on reforming Medicare and other entitlement programs. 

The effect of these Mediscare attacks on this election remains to be seen but the effects of these attacks isn't as important as what it reveals about the democratic party. The Democratic party wants to keep the public from acting like adults in addressing our nation's economic problems. That's why they have make complete lies about Republicans wanting to end Medicare in order to keep the voters from having the confidence to make the tough decisions that we need to make. Democrats know that a large majority of Americans are on these programs, that they are dependent on these programs even though some or most don't want to be but that due to the poor economy and that they get extra money, they don't want to let go of these benefits. They also know that if the voters can vote themselves to get benefits, they will vote for the party that will deliver it to them.

Obama and the Democratic party have not been responsible in managing the economy and they don't want you to keep them responsible for it. Unemployment is above 8%, our deficit is exploding, they have not passed a budget since Obama has been in office and the President hasn't meet with his economic advisors for a while now. 

Unlike Obama, Mitt Romney and Paul Ryan recognize that Washington has a spending problem not a revenue problem and that despite attacks from the left, they and their fellow Republicans do have clear, actionable plans for balancing the budget and reducing the national debt.

Mitt Romney picking Paul Ryan as his running mate for 2012 is a call for a serious discussion about our nation's economy. That discussion starts with the American people looking introspectively and asking themselves if they are mature and adult enough in making the necessary cuts, reforms and changes to fix the problem. That also means accepting the the truth is that as much as Washington D.C. is the problem, we are also the problem if we cannot face these problems maturely. We get the government we deserve since our political leaders come from our communities to our nation's capital. Plato is to have said, “The states are as the men are. They grow out of human characters.” 

As a result, the central question of the 2012 election will be: are we mature enough to make the tough choices ahead? If we are, then the mature choice in this election is to vote for Mitt Romney and Paul Ryan. 

The Tyranny Of Entitlement Programs

Now that we have raised the debt ceiling, we still haven't made any real serious reforms to reducing our budget because it still leaves the nation facing a projected $22 trillion debt ten years from now - an increase of more than $7 trillion from today.

Obama is in denial that entitlement programs are the main reason why our national debt continues to skyrocket despite overwhelming evidence showing that they are the largest driver of our debt. In fact, lets look at the current estimates for these programs:

According to the program's 2011 annual report, Social Security added $46 billion to this year's deficit and will add $9.1 trillion to the national debt over the long term. Medicare was also in the red by $66 billion this year and will add $24.6 trillion to the debt over the same period. Income tax rates for all Americans would have to double to cover this level of spending. No wonder Americans are turning against the welfare state.

A long time ago, Progressives offered a social contract to the American people called the New Deal. It was a Faustain bargain that was to difficult to resist in the Great Depression. The New Deal was a Bad Deal. They traded away independence in exchange for care from the government. What the people didn't realize is that the bad terms of the faustain New Deal wouldn't fall on them but their children in the future. The elderly today continue uphold the terms of this social contract in that they are willing to sacrifice the financial security of the future in order for their government to subsidize their needs and wants today just as their parents and grandparents did before them: 

As it is, the U.S. is turning into a tyranny of the gerontocracy, one willing to sacrifice its grandchildren so the oldies can live comfortably in their Florida condos as they consume vast quantities of high-tech health care in a futile effort to extend their lives forever. As the thinker Walter Russell Mead puts it, the U.S. health system marries the greed of the private sector to the ineptitude of government. This health-care industrial complex will soon account for one-fifth of the economy. Most health care is consumed by seniors. This isn’t a formula for national greatness.

One of the reasons why entitlement programs have become sacred programs that cannot be cut is of the myth that it helps the poor and the vulnerable. Yet, when it comes to helping the elderly, most of them are not poor but are in the middle and upper class: 

True, some elderly live hand-to-mouth; many more are comfortable, and some are wealthy. The Kaiser Family Foundation reports the following for Medicare beneficiaries in 2010: 25 percent had savings and retirement accounts averaging $207,000 or more; among homeowners (four-fifths of those 65 and older), three-quarters had equity in their houses averaging $132,000; about 25 percent had incomes exceeding $47,000 (that’s for individuals, and couples would be higher). 

The myth doesn't apply just to the elderly but the to the 30 million of Americans who are classified as being in "poverty" in America. The Heritage Foundation provides two graphs that provide an eye opening comparison Americans in general and poor Americans:

If we want to be serious about taking care of those who really are vulnerable and poor, we're spending way too much because we're also helping the middle class and in some cases, the rich. As the Heritage Foundation points out, the exaggeration and misinformation about poverty in America has led us to divert more resources to the problem of poverty than is needed: 

Over the long term, exaggeration has the potential to promote a substantial misallocation of limited resources for a government that is facing massive future deficits. In addition, exaggeration and misinformation obscure the nature, extent, and causes of real material deprivation, thereby hampering the development of well-targeted, effective programs to reduce the problem. Poverty is an issue of serious social concern, and accurate information about that problem is always essential in crafting public policy.

As we can see, entitlement programs goes to support people who may not really need the support of these services. As a result, our government has created a unique special interest group and voting bloc that consists of people from all walks of life that have have an inordinate amount of power over the affairs of our government's domestic policy. The current debate over raising the debt ceiling proved it. 

Spending on entitlement programs are on autopiliot and we cannot make any cuts to it despite the fact that past payments into these programs were never “saved” to pay future benefits because they were "borrowed" to pay for other things. In the future, entitlement spending will demand more money at expense of all other programs until it becomes a struggle to pay for infrastructure, education, space exploration, science and defense. Yet, we can't make any changes without enraging the entitlement voting bloc/special interest group.

Their needs take priority over everything else and they want their needs met right now regardless if we can't afford it. We give into their demands with full knowledge that we are giving in to their requests even if it means our nation's financial security is at risk. 

The only way to save this country is to stand up to the tyranny of the entitlement takers and engage in entitlement reform so that we can truly help the poor so that we're no longer misallocating our resources but using them wisely. 

Its time release ourselves from the Faustain bargain we've made and rewrite the social contract. The sooner we do this, the better our future will be.

The Consequence Of Churches Promoting Entitlement Programs

As the August 2nd deadline to raise the debt ceiling comes closer everyday and as our politicians squabble on entitlement reform, its important to remember that there was a time in America when our government was not involved in running entitlement programs. Charity used to be a private enterprise. However, all of that changed when some religious organizations lobbied for government intervention:

The American experiment sought to wed the idea of freedom and virtue without the need or desire for a strong government to administer the details of life for every citizen. The American idea was an elimination of restraint by the government to be replaced by the constraint of virtue taught by institutions in society other than the government. The home, the church, the school and other voluntary associations were to be the primary relationship of life through which order and honesty were maintained.

The Great Depression, with its widespread economic emergencies, tested this idea and caused many to desire a government-run economy where predictability and security would be normal because most (if not all) personal and business decisions would largely be regulated by a governmental bureaucracy. New Deal legislation brought with it price controls on food, government insurance, monetary subsidies for bad years on the farm or in business, tight regulation on industry, new and expensive regulations for business and high tax rates.

Immediately following Roosevelt's speech in San Francisco, many theological journals and Christian denominations used the exact phrases of the soon-to-be president in their publications. Many discarded traditional interpretations of key Scripture texts to support a new political theology which mirrored Roosevelt's revolutionary New Deal. The close connections were not noticed at first, but after the laws were passed, it clearly was seen that without the church, much of the legislation could not have passed Congress. The president designed the policies, the church applied the pressure and the nation inherited the consequences.

The fact that many pastors and religious institutions encouraged the government to take over their role in providing charity has not come without terrible consequences for religious institutions: 

What is disturbing when reviewing the history of this time is how many Christian ministers defended the actions of government as fulfilling Holy Scripture's mandates to care for the poor, provide for parents in their old age and give to those who ask of you.

With this shift of thinking, the state began to function in roles once reserved for the church—to the detriment of any who would question the legitimacy of the legislation on theological grounds. The same reception awaits those in the modern day who seek to resist any "progressive" social policy in any way for fear that they will be branded as uncaring or un-Christian in their ideas.

Has government power expanded to such a degree that the church now has no voice at all in the public square? Perhaps, but the modern era of public policy reveals just how much the government has gained and how much the church has lost.

Its worth noting that the consequences of churches abandoning their role in providing charity are not limited to religious and private institutions. It has come at a huge cost to the American people. Look at the chart below: 

As you can see from the chart above, the explosive growth of spending on entitlement programs are startling. However, what's even more startling is the future of these entitlement programs:

What private institutions have done is lay a financial burden on the American people that grows larger and larger until it becomes financially unsustainable. As you can see by these graphs above, there is no dispute that entitlement programs are the single largest driver of our nation's deficit.

The reason why the costs of entitlements have sky rocketed is because these progressive and liberal churches weren't content with just getting social security into law in the 1930s. As time marched on into the 60's and 70s, many churches pressed for government intervention in medical care, housing, and education. As a result, our government had spend to spend more of our tax payer money as more entitlement programs were being created.

These churches promoted a culture of dependency on government rather than on religion. Everyone knows that  dependencies develop quickly. If you want to kill a bad entitlement, kill it quickly before expectations calcify. However, thanks to private institutions like churches and private insurance companies in the 1930s, they didn't work hard to kill these entitlement programs in its infancy but labored diligently to ensure that its existence would calcify into a permanent fixture in American government.

Yet, what is so fascinating about entitlement programs is that they are considered mandatory spending programs even though it is really a discretionary program:  

People are often shocked to learn that Social Security and Medicare are not “entitlements” at all.  Congress could pass a law stopping all Social Security and Medicare payments tomorrow, and no citizen would have a legal claim against the government based on how much payroll tax he or she had paid into the so-called “Trust Fund.”  Because Medicaid is financed by general tax revenue, its constitutionality under the general-welfare clause is even more secure, according to current legal reasoning.

Given that America's dependency on these entitlement programs have calcified, the idea of government stepping away from the enterprise of helping others isn't politically feasible or acceptable. As a result, entitlement reform is not only necessary but should be easy to do. However, the reason why they've become the third rail of American politics is that politicians are afraid to make the crucial and necessary reforms to entitlement programs for fear of provoking the wrath of those who rely completely or partially on these programs.   

At some point, we have to realize that these programs are not mandatory and that spending doesn't have to be on autopilot. Politicians and citizens alike will realize that the third rail of American politics was as only as dangerous as we believed it to be. As a result, the biggest reform we will have to make is not with the entitlement programs themselves but in changing the hearts and minds of the American people.

That means we need to educate people about the real history of charity in America. I highly recommend two books that look at what America was like before the government became involved in entitlement programs. Those books are The Charity Organization Movement in the United States; A Study In America Philanthropy and The Tragedy of American Compassion.  

It also means we need to promote a culture of independence not dependence. That means we need to teach self-reliance, independence and accountability at home, in churches and in school. The more people learn that they can make their own success and that if they ever fall on hard times, they rely on individuals and private institutions who will work to ensure that they get back on their feet again. 

We also need to push for a greater role in private institutions in helping people out and reduce, but not eliminate, the government's role in helping people. There was a time when private corporations and religious institutions provided social security, rent assistance and medical assistance and that time needs to come back again.

People don't mind helping the poor, the elderly, the sick and the disadvantaged and they will continue to help people long into the future. The problem is that one institution is not suited or capable of helping people while the other institution is. Governments cannot provide that kind of service at the same quality or cost that private institutions can. 

Governments can still play a role in helping people but its role must be minimal. The government can't take care of everyone which it has promised with the passage of all these entitlement programs. If we can make entitlement reforms, reduce the government's role in helping people while increasing the role of private institutions in helping people and reintroduce the ideas of self reliance and accountability, our national deficit would be reduced, if not, eliminated completely.

Which Program Is The Efficient Use of Tax Payer's Money: Defense or Entitlement Programs?

With the budget ceiling deadline coming soon on August 2nd, Obama is meeting with Congressional leaders to find some kind of solution on the real issue of reducing the national debt. So far, no deal has been reached. Some are pointing fingers at House Speaker John Boehner for walking away from $ 4 trillion deficit reduction deal. However, John Boehner did the right thing by walking away from this "grand bargain" because Obama reneged on the deal by insisting on more taxes and withdrew his support for entitlement reforms:

The White House dished out the spin that suddenly the Tea Party crowd had nixed a deal. In reality, the White House had upped the ante on taxes. A Republican House aide told me that the White House “started to backpedal on entitlement reforms too.” He explained, “They [the White House] had started to go back on some of the Medicare and Medicaid reforms they had previously said they were ok with.” In other words, either the White House never intended to present a viable grand bargain, or, if Obama did, the left got to him. 

The Republicans insist that they can reduce the deficit without raising taxes by simply cutting the budget. However, the Democrats insist that they can turn the economy around by raising taxes, keeping the status quo on entitlement programs and slashing the defense budget. 

It isn't a surprise that Democrats want to raise taxes and preserve entitlement programs. It isn't surprise that they want to make deep cuts in military and intelligence programs. But their insistence on cutting the defense budget is unrealistic and stupid since no one disputes that entitlement programs, in the long run, will increasingly consume a larger share of the United State's income. At some point in the future, the only thing can spend money on is entitlements and we won't be able to spend money on anything else such as education, defense, transportation, or anything else. The Democrat's denial of our country's dire need for entitlement reform is dangerous for America. 

The Democratic position to save entitlement programs at any and all costs at the expense of our nation's national security at a time when our President has engaged in another war on humanitarian grounds is illogical and unrealistic. You can't simultaneously maintain entitlement programs and make cuts in defense spending while keeping our military in Iraq, Afghanistan, Libya and other places around the world. Yet, the President and the Democratic Senate insist this is possible. But it isn't.

The liberal and progressives want to reduce what we spend on the military in order for us to afford the entitlement programs we have. One blogger, Omri Ceren, points out that this approach to fixing the economy shows that Democrats are incompetent on the economy because they're pouring the taxpayer's money into programs that will not help the economy or reduce the debt:

In fact, everything else being equal, Democrats are politically and institutionally inclined to divert resources to the least efficient sectors of the economy, which is where their permanent constituencies have quite literally set up shop. Those groups — construction unions, green tech companies, etc. — not coincidentally, require government intervention to remain financially viable. That’s the deal they have with the Democratic Party. Democratic politicians insulate uncompetitive constituencies from the market via onerous regulations and the occasional wave of government fiat. In turn, those groups mobilize electorally for Democratic politicians. So we end up in a situation where progressive groups targeted for Democratic largesse are in sectors that have been most distorted by government intervention. Maybe that’s justifiable on social grounds — unions are the bedrock of the middle class, green tech will save us from rising oceans, whatever — but it’s flawed economic policy.

I'd like to point out that while defense and intelligence programs are not known for being efficient spenders of taxpayer's money but that is acceptable because we don't look at the defense industry for economic prosperity but for national security.  Which is why we we will spend money on national defense regardless of how the economy is doing. As a result, the tax payers are willing to tolerate such the excesses of military spending because its the one part of government that produces tangible results of having the best and most advance military on the planet. The tax payer knows their money is being put to good use even the money isn't handled more efficiently as it could be. 

Omri Ceren explains that if Democrats wanted to put tax payer money to good use while minting their support for bigger government, they put it in defense spending: 

The defense sector isn’t completely efficient and defense procurements are notoriously Byzantine. But at least it’s not a part of the economy that’s designed by regulation to be economically inefficient. The defense spending multiplier is usually pegged at somewhere between .05 and 1, which isn’t great but is a lot more than the zero we get from funding education and plugging up state budget shortfalls. And we can be certain that defense appropriations will be spent quickly on stuff, which is what Keynesians are looking for anyway. In the worst case, we can just ship weapons over to our NATO allies, who — thanks to decades of propping up their welfare states at the expense of their militaries — are now running out of bombs to drop on Libya. At least they’re guaranteed to be used.

In contrast, entitlement programs are a poor investment for American taxpayers. These programs are designed to be inefficient. like most government programs but they also produce inefficient results. American doesn't get benefit from these programs financially or socially. These programs get bigger and bigger and require more and more money to keep it afloat. Furthermore, many of these programs produce dependency on the government rather than self reliance on one's own skills, education and character to be financially independent. 

A blogger named Ace gives us the best explanation of why entitlement programs are economically and mathematically unsustainable: 

It is not wrong to wish that every citizen have free health care, free food, free housing, and some money to spend even if they have no job. It's not wrong; it's just impossible. Health care is a service that has huge costs associated with it. These costs cannot be "magicked" away just because we find them inconvenient. Food must be grown, transported, packaged, and prepared -- all costs that must be accounted for. Shelter does not precipitate out of thin air. We cannot delude ourselves into thinking that "the government" can provide these things to us at no cost, because "the government" must pay for these things just as individuals do, and because the government has only one source of wealth -- the citizens -- that's where it must go for the money. So if Bob is given 'free' health care, 'free' food, and a 'free' apartment, the government isn't paying for it; Tom, Jane, Howard, and Sue are paying for it. And at a vastly inflated cost due to the innate governmental inefficiency that dilutes every dollar that passes through their hands. Soon the social welfare costs eat up the money intended for good and necessary governmental expenditures like the military, the police, and infrastructure. Social welfare becomes a beast that eats everything.

Its not just that these entitlement programs are inefficient but it has given life to liberal/progressive programs, causes and organization that survive directly or indirectly from entitlement programs. In fact, Omri Ceren, points out that the taxpayer's money often times doesn't go to the very programs the democrats claim they are defending: 

But academic Keynesian economists don’t direct stimulus funding. Elected big government liberals, beholden to permanent Democratic constituencies, are those who actually make the decisions. So as a matter of policy, if not economic theory, money ends up getting diverted into progressive causes rather than into expansionary programs.

In the end, there is only one true solution to the deficit problem. The Republicans know it and the Democrats refuse to believe it because they're blinded by the special interest groups that they're beholden to. 

Democrats insist that America should keep on investing in these entitlement programs and remain loyal to these very programs that are bankrupting us. They demand that we make no major or substantial changes in the programs that are the main drivers of our national debt while taxing the rich and cutting defense in order for us to afford the entitlement programs we have because its they only way they can keep these liberal/progressive organizations afloat. 

The Democrats plan for reducing the debt is really just accelerating our downward spiral towards bankruptcy by shoveling more and more money to keep entitlement programs going. What this really means is that they're ballooning the deficit just to keep the liberal/progressive special interest groups happy and financially sound while making it harder to afford other government programs in the future. Not only will we not be able to afford defense spending, but other government programs.

Americans can accept the the fact that our government will use taxpayer money inefficiently if we get a major benefit from these programs. However, Americans cannot and will not tolerate taxpayer money that is being used for programs that produce little or bad results while it benefits liberal and progressive organizations.

Its obvious that the Democrats haven't learned their lesson from the Republican victories of the 2010 midterm elections. Its clear that they need to learn those lessons again in 2012.

Who Is Right: About What Is The Biggest Driver Of Our Deficit: Obama or The CBO?

During President Obama's twitter townhall meeting yesterday, he made an astounding claim: 

"I will say that today, welfare payments are not the big driver of our deficit or our debt. There are work obligations attached to welfare," President Obama said at his Twitter Town Hall.

Yet, the Congressional Budget Office, known as the CBO, explicitly states in its findings that entitlement programs are the biggest drivers of our national debt: 

The retirement of the baby-boom generation is a key factor in the nation’s long-term fiscal outlook. It portends a significant and sustained increase in the share of the population receiving benefits from Social Security, Medicare, and Medicaid. Moreover, under current law, per capita spending for health care is likely to continue rising faster than spending per person on other goods and services.

As a result, if current laws remained in place, the federal government’s spending on Social Security and the major mandatory health care programs (Medicare, Medicaid, the Children’s Health Insurance Program, and the health insurance subsidies that will be provided through insurance exchanges) is projected to grow from roughly 10 percent of GDP today to about 15 percent of GDP 25 years from now. (By comparison, spending on all of the federal government’s programs and activities, excluding interest payments on debt, has averaged about 18.5 percent of GDP over the past 40 years.) That combined increase of roughly 5 percentage points of GDP is equivalent to about $750 billion today.

Despite the overwhelming evidence that entitlement programs are, indeed, the single largest driver of the U.S. Debts, politicians like Obama are wrong in continuing to ignore the truth by proposing cuts in areas that could use budget cuts but really won't make real dent in reducing the deficit. 

For example, there are rumors that defense and national security spending could face a $700 Billion cut. While we can debate on whether or not making drastic cuts is a good, necessary or wise idea, there is no dispute that these cuts will not have any significant or substantial impact on shrinking the national debt. Those who are seeking reductions in defense spending as a compromise to the debt ceiling debate are foolish and reckless. Making these cuts while in the middle of fighting terrorism around the globe will not make our country safer nor will it fix our deficit problem. 

Another foolish compromise that some politicians are willing to make is to raise taxes in exchange for tough austerity measures to reduce the debt. It boggles my mind that they are willing to raise taxes at a time of high unemployment when most people don't have jobs which makes it possible for government to collect revenue. Moreover, only half of America pays taxes which means that taxes will go up for 50% of Americans that do pay, especially the wealthy. Yet, it won't change the amount that the government collects in revenue. Tax reciepts have traditionally remained around 19% to 20% of  our GDP. 

Finally, Senator Marco Rubio makes a great speech about how raising taxes will not create jobs: 

Here's the bottom line: These tax increases they're talking about. These so-called revenue enhancers, they don't solve the problem. So what do we do then? Because clearly we have to do two things.

"One, we have to hold the line on spending, if you keep digging yourself in the hole, the hole is going to bury you, the other thing is how do you start generating revenue for government so you can start paying down this debt? That’s what the debate should be about.

“We already know these taxes don't work. Here is what I suggest works in a balanced approach, using the President's terminology. Let's stop talking about new taxes and start talking about creating new taxpayers, which basically means jobs.

“Here in Washington, this debt is the number-one issue on everyone's mind, and rightfully so. It is a major issue. But everywhere else in the real world, the number one issue on everyone's minds is jobs. …

“We don't need new taxes. We need new taxpayers, people that are gainfully employed, making money and paying into the tax system. Then we need a government that has the discipline to take that additional revenue and use it to pay down the debt and never grow it again. That's what we should be focused on, and that's what we're not focused on.

“You look at all these taxes being proposed, and here's what I say. I say we should analyze every single one of them through the lens of job creation, issue number one in America. I want to know which one of these taxes they're proposing will create jobs. I want to know how many jobs are going to be created by the plane tax. How many jobs are going to be created by the oil company tax I heard so much about. How many jobs are created by going after the millionaires and billionaires the president talks about? I want to know: How many jobs do they create?

So while our political leaders in Washington D.C. plan to "go big" on budget cuts, they're going to do it with bad and failed solutions that will have no impact on reducing the national debt. Cutting the military and intelligence budget isn't going to shrink the debt. Raising taxes isn't going work either. Both will have a minimal impact on reducing the debt.

The only thing that will eliminate the national debt is reforming and/or cutting entitlement programs. Although Obama doesn't believe that entitlements are the single largest driver of the U.S. Debt, he is on the right track in proposing substantial reforms to our welfare programs.

In fact, entitlement reforms should be the only topic our politicians should be talking about in their discussions over raising the debt ceiling. Once they agree to these reforms and actually follow through on their agreements, then we can talk about making changes/reductions to the budgets of other government agencies and tinkering with the tax code.

The Only Solution To Reducing The Deficit Is Entitlement Reform

With the political showdown over raising the ceiling, President Obama, Ron Paul and Gary Johnson and others would have you believe that best way to get out of the red and into the black is to reduce defense spending rather than reductions in entitlement spending. 

For example President Barak Obama and Ron Paul are in agreement that America ought to withdraw from Afghanistan because of the cost incurred in fighting that war. However, the cost of fighting in Afghanistan is a small drop in the bucket compared to the amount of money we spend on entitlements:

Next year the Pentagon plans to spend $107 billion in Afghanistan—this, in comparison to the $3.7 trillion that the Obama team plans to spend overall. Put another way, Afghanistan amounts to all of 0.75 percent of the nation’s $14.1 trillion GDP. So, no—war bonds, scrap drives, and rationing won’t be necessary. Quite the reverse: while the government spends $100 billion on America’s fighting men and women in Afghanistan, it will funnel 20 times that—more than $2 trillion—to its citizen-spectators through Medicare, Social Security, Medicaid, and other varieties of domestic spending.

The amount we spend in fighting terrorists, not just in Afghanistan, Iraq, or Libya but around the globe is tiny in comparison to the amount we spend on entitlements: 

Despite these facts, the anti-war left and right stubbornly contend that defense spending is the main driver of our national debt. They point to the fact that since 9/11, America has increased the amount of money it spends on defense spending. Here's a chart that gives a visual demonstration of their argument: 

While it is true that we have increased our military spending since 9/11, they neglect to give you a fuller picture of how much money we spend on defense in comparison to how much we spend on entitlements:

The problem with entitlement spending is that that it consumes more than half of what we spend currently and we can't even afford it now since these programs are already set to run annual deficits starting this year until it is completely drained in 2037. Furthermore, the amount we will spend on entitlements will continue to grow until we won't be able to afford it in the future. 

The graph above projects that entitlement spending will consume all revenues by 2052. However, there are other projections that predict that we won't be able to afford entitlements much earlier:

Regardless of the timing of when welfare spending will consume all revenues, the fact remains that while our defense budget has increased since 9/11, it is only a small fraction of the amount we currently spend on and it will continue to be a small fraction of the government's expenses in the future. In fact, we would have to engage in a multitude of wars before defense spending starts to eclipse all the revenue we receive. Conversely, we could eliminate all defense and national security spending, it still wouldn't make a dent in our national debt. 

Even more daring, we could eliminate all spending except entitlement spending and it still won't solve our debt problem.

The truth is that we have been reducing spending on defense while increasing the amount on entitlements since the 1960s:

Ladies and gentlemen, the reality is that defense spending is not something that on course to exceed government revenue. Nor will it ever. Furthermore, defense spending is not on autopilot like entitlement spending is right now. We can control what we spend on wars, weapons, troops, intelligence gathering, research and development and administrative agencies but we can't control what we spend on welfare programs because those expenses are locked in and mandatory. They're automatic. No questions asked.

It amazes me that there are politicians on the left and the right that want cuts in the defense budget despite the mountain of evidence that entitlement spending is the real driver of our deficit and will be in the future. Even the CBO acknowledges this fact.

That means we have a spending problem. Entitlements have taken on a life of its own unless we do something about it. Any denial that entitlement spending is the main driver of our deficit reveals the astounding inability to assess the seriousness of our financial problems and fundamentally skewed set of priorities on what to put on the chopping block. 

We've been cutting defense for a long time now.  We have never made any cuts since the we've started the war on Poverty.  Instead, we've been increasing spending on this war and somehow we're supposed to make more reductions on defense in the real wars we're fighting overseas.  That doesn't make any sense.

Thus, any politician, both on the left or the right, who is too cowardly to take on entitlement reform is not worth remaining on office. Politicians are more concerned alienating the check takers rather than the taxpayers. As a result, they're putting the entire nation at risk, both financially and militarily,  if we do not fix entitlements, just to keep these programs afloat.

The only solution to reducing the deficit is entitlement reform. No other austerity measure will have an impact on shrinking the deficit. The sooner we get on our way to making these reforms, the better our future will be.

Rand Paul Wants To Cut Foreign Aid To Israel

Rand Paul has stirred up some controversy by suggesting that America eliminates its foreign aid to all nations including Israel. 

Although every "option" is on the table in terms of reducing the debt, we should be talking about the one and only one reason why America is going broke: ENTITLEMENT spending. 

Social programs makes up the largest bulk of America's government spending as indicated in the pie chart below: 

Not only does the "mandatory" (entitlement) spending dwarfs all other money spent on other domestic programs, entitlement spending will keep growing as our  population gets bigger and older every year. The CBO just released a report about the financial future of entitlement spending and shows how the growing elderly population will have an effect on expenses over the next 10 years:

The CBO also provides a chart for the offsetting receipts:

If you don't understand the charts, the basic conclusion is that entitlement spending programs are set to run annual deficits starting this year until it is completely drained in 2037. Not only are entitlement programs are due to run in the red this year, but entitlement programs are set to consume all tax  revenues by 2052 as indicated by the chart below:

Which brings me back to my point about the talk about reducing the deficit. Cutting all other domestic and foreign programs will not resolve our debt problem. You could slash every domestic program and foreign aid to zero and we’d still be in debt. How is that possible? Look below: 

The idea of putting all "options" on the table is meaningless unless our Congress is serious about dealing with entitlement reform. Various presidential administrations and Congressional sessions have been cutting back on programs, including defense programs, in our nation's history and it still didn't make a dent in the reducing the national debt

As a result, entitlement reform should be the ONLY option on the table given all the facts above.  

However, we both know that entitlement programs will be the last program on the chopping block. All three branches of our government, for one reason or another, is enamored with entitlement programs.

There another reason why we'll never get entitlement reform or eliminating entitlement programs completely: Americans love their entitlement programs. Even TEA partiers who want entitlement reform support the idea so long as its other people’s benefits getting cut and not theirs. 

Yes, the government is part of the problem due to its reluctance to deal with the one and only issue that threatens the financial stability of this nation. But the other source of the problem is the American people. 

We’re too dependent on entitlements now.

Unless Americans are willing to let go of their own entitlement checks, Congress will have no motivation to act on reform or elimination of entitlement spending.

The Welfare State Is The #1 Leading Killer Of Modern Nations

In modern history, the #1 killer of modern nations is the welfare state. The concept of the welfare state exists in many different forms such as Nazism, Socialism, Communism, or Progressivism. The common theme among the different variations of the welfare state is that it always fails in the end. Even states that attempt to mix different economic systems cannot survive long since it will be corrupted by its own welfare programs. 

The welfare state is a failure both in theory and application. It produces misery in so many different forms. It can come in the form of brutality, oppression, poverty, death, and misery as demonstrated by former Communist Russia, China, Eastern Europe, Cuba and North Korea.

It can also come in the form of reducing human beings to immature children as the nanny state looks to their every need and want. As a result, it robs human beings of the ability to be free to make decisions for himself. Immanuel Kant explains the tragedy of the welfare state:

"It is so easy to be immature. If I have a book to serve as my understanding, a pastor to serve as my conscience, a physician to determine my diet for me, and so on, I need not exert myself at all. I need not think, if only I can pay: others will readily undertake the irksome work for me. The guardians who have so benevolently taken over the supervision of men have carefully seen to it that the far greatest part of them (including the entire fair sex) regard taking the step to maturity as very dangerous, not to mention difficult. Having first made their domestic livestock dumb, and having carefully made sure that these docile creatures will not take a single step without the go-cart to which they are harnessed, these guardians then show them the danger that threatens them, should they attempt to walk alone. Now this danger is not actually so great, for after falling a few times they would in the end certainly learn to walk; but an example of this kind makes men timid and usually frightens them out of all further attempts.

Thus, it is difficult for any individual man to work himself out of the immaturity that has all but become his nature. He has even become fond of this state and for the time being is actually incapable of using his own understanding, for no one has ever allowed him to attempt it. Rules and formulas, those mechanical aids to the rational use, or rather misuse, of his natural gifts, are the shackles of a permanent immaturity."

However, the fundamental flaw of the welfare state is that it violates the immutable mathematical or economic laws of the universe. The philosophically behind the welfare is complete failure because it thinks it can overcome the inflexible rules of  nature. As a result, the welfare state is a story that never ends well. 

Marget Thatcher famously quipped that the "the problem with socialism is you run out of other people's money.” In other words, the ultimate fate of all welfare states is financial death. Whenever government extracts money from one segment of society and gives it to another segment of society, it is ultimately bound to fall. A blogger known as Ace explains why:  

As in France, we have let an enormous segment of our population -- perhaps as much as half -- fall into a state where they depend on government largesse for a substantial part of their income. This is not money they earned themselves, not wages or savings, but rather money squeezed from the more productive half of the country. Half of our citizens pay no income taxes at all. An increasing number will draw public-sector pensions, Social Security, and medical insurance (Medicare/Medicaid) in amounts that far exceed what they contributed to those plans. Half of the US population, in short, lives not by the fruits of their own toil but by the (coerced) charity of others, as filtered and distilled through the hand of the government. This can not -- it can not, by the laws of economics and simple physics -- continue. The mathematics of the problem trump even philosophical issues of fairness, of governance, of ethics or law. The mathematics simply will not allow it.

In other words, entitlement programs are mathematically unsustainable. Governments cannot get around the immutable laws of economics and mathematics. Period. Why? Ace provides the answer:

It is not wrong to wish that every citizen have free health care, free food, free housing, and some money to spend even if they have no job. It's not wrong; it's just impossible. Health care is a service that has huge costs associated with it. These costs cannot be "magicked" away just because we find them inconvenient. Food must be grown, transported, packaged, and prepared -- all costs that must be accounted for. Shelter does not precipitate out of thin air. We cannot delude ourselves into thinking that "the government" can provide these things to us at no cost, because "the government" must pay for these things just as individuals do, and because the government has only one source of wealth -- the citizens -- that's where it must go for the money. So if Bob is given 'free' health care, 'free' food, and a 'free' apartment, the government isn't paying for it; Tom, Jane, Howard, and Sue are paying for it. And at a vastly inflated cost due to the innate governmental inefficiency that dilutes every dollar that passes through their hands. Soon the social welfare costs eat up the money intended for good and necessary governmental expenditures like the military, the police, and infrastructure. Social welfare becomes a beast that eats everything.

America would do well to understand how that story ends.  Just as prophets who came to Jerusalem to warn its inhabitants of imminent dangers were ignored in Jerusalem, I fear that many of those voices who warn of imminent financial dangers are being ignored today.

Europe: The Canary In The Coal Mine

However, one doesn't have to receive messages from a heavenly source or be a financial wizard to know that America is on a dangerous course to financial collapse. We don't even need to look to the past or the future to see what might happen to us. All we have to do is look across the ocean to Europe. And we've been seeing the warning signs for a long time. 

Take a look at the chart on the right side of this article. It is a long list of government debt held by each European country. 

In 2008, Iceland was the first European nation to financially collapse. Greece almost fell until it received a bailout from other European nations. Ireland is also on the edge of a financial collapse and is looking for a bailout from Europe. Other countries like Spain, Portugal, France and England are also struggling with debt and may be next in line to need a bailout or face a financial meltdown. 

Europe is quickly realizing socialist programs do not work. They are finding that they must slay the entitlement beast by enacting austerity measures if they wish to survive. Which is why nations around the world are scrambling to reduce their debts. England is making huge budget cuts which have not been done since World War II while France faced some riots when Nicolas Sarkozy reformed the state's pension system and is working to reduce its debt. Voters in Latvia voted to reelect their government that cut public-sector workers' pay by 50 percent.

Another consequence of Europe's debt due to massive government programs and financial irresponsibility is that their credit rating gets down graded. Countries like France and Ireland have either had their credit rating lowered or are under threat of having their credit rating lowered by Moody’s Investors Service.

Even countries outside of Europe are recognizing that the welfare state is unsustainable. Especially the few countries who remain communist today.  Cuba is recognizing that its communist system is financially unsustainable. North Korea is flirting with capitalism since this welfare state cannot feed its own people. Those countries that have not engaged in financial reform are alive only because of brutal totalitarianism and outside economic assistance. For example, Communist Russia would not have lasted as long as it did had United States provided economic and agricultural assistance. 

The Economic Crisis In America  

What does Europe have to to with America's debt crisis? Well, the common denominator in Europe's financial woes is that each country was spending more money than they had on social programs. And that same problem that exists in Europe is the same problem that exists here in America.

Judd Gregg (R-Nh) is merely another voice who has raised concerns about the U.S. spending and how it contributes to the increasing U.S. deficit. He has recently stated that the financial future of the United States looks grim unless makes major changes in its spending habits:

Chief among Gregg's concerns is the massive deficit under which the U.S. is currently operating. Gregg says the economy is on an "unsustainable track" that, if continued at its current pace, "will double the federal debt in five years, and triple it in 10 years." Gregg compared financial problems here in the U.S. to those Greece is currently having, noting that while the U.S. is a "more vibrant nation, we are still on the exact same track" as the troubled country when it comes to finances.

Gregg insists we need to cut spending, especially as the nation gets ready to take on "70 million retirees" as opposed to the "35 million retirees" the U.S. is currently sustaining via Social Security, Medicare and Medicaid programs. 

In other words, the financial story of America will not end well unless we do something about it.  Social programs makes up the largest bulk of America's government spending as indicated in the pie chart below: 

No nation, business or family can survive financially when almost 60% of its budget is going  paying mandatory bills. If America does not find the will or courage to touch the third rail of American politics and either reduce or eliminate its entitlement spending, we will collapse financially. 

Any other budget cut  for another other program will not solve the problem. Even if you did cut all other programs, including the military, our nation will still be in debt due to our irrational commitment to entitlement programs. Why? Because if enlistment spending is left unchecked, it will become the beast that will consume all of our available finances at some point in the future as seen in the chart below:

Today, Moody's has expressed concern about our debt and may have to down grade our credit rating. Which is very bad news for America. As I said, we don't have to look into a crystal ball for what happens if we loose our credit rating because we were unable to get our entitlement spending under control. All we have to do is look to Europe.

Some people feel that we are witnessing the end of the welfare state in Europe and round the world as governments make a mad dash to avoid financial collapse. However, that remains to be seen. It could go either way. Some states will insist on maintaining the entitlement state while others will ditch it altogether.  

But a choice has to be made: either the entitlement programs die or the entitlement state dies. 

And there is no middle ground. Mix economies eventually fail too since they eventually morph into a welfare state and then its only a matter of time before they are on their way to financial collapse. In the end, they all collapse because the very programs that they use to support the people can no longer support the state.

America risks falling into same sad story of welfare states. The important question for America is whether or not we can let the story be written for us or do we dare to change the story? How do you want the great American story to end?