Poor, African, Muslim AND a Democracy

Add illiteracy and a sun baked climate and that would be Mali. Mali is the place where the “roots” of terrorism and unrest have flowered into a tolerant democracy. How’d it happen and can outsiders help? Yesterday Mali signed up to received aid under the Millennium Challenge Corporation, a new style aid program proposed by President Bush that rewards countries that rule justly, invest in people and encourage economic freedom.

The old thinking foreign aid often created as many problems as it solved. The motivations were usually good, but by giving aid to governments with little regard to their merit, aid often encouraged inefficient socialist kleptocries. The big winners were manufacturers of luxury cars, Swiss bankers, custom suit/uniform makers and for a while brewers of Guinness Stout (some of the big men thought it gave them vigor). Meanwhile the people not only languished in poverty but also were often driven even farther into the dirt as subsidies paid to favored groups drove up prices of manufactured goods and various types of government controls and development schemes destroyed rural economies and environments.

But over the years, we learned that some things worked. General infrastructure improvements were better than trying to target specific groups of people. Small projects were often better than large ones. Small loans (microfinance) to help individuals establish their own businesses were successful engines of development and sometimes even turned a profit. We learned what we should have known: that the engine of wealth creation is individual energy in the context of a free market. Governments can help stimulate wealth production, but they cannot by themselves produce wealth and that too much government "help" will smother innovation.

Mali has a glorious history as the seat of one of Africa's great cultures, but times have not been so good recently and the place has a long way to go. The country has a $380 per capita income. It sits on the edge of, or in the middle of, the world's largest desert and some years that desert grows. Recently Wahhabis have opened 16 mosques in Timbuktu in hopes of making Mali’s tolerant brand of Islam more like their own. The place will not be a paradise any time soon. But the very fact that democracy and tolerance can grow at all in the poor, dry soil of Mali is a tribute to the people there and the human sprit. We certainly should celebrate this. It is at least a place we should mark better on our mental maps. Kudos to the people of Mali.

Posted by Jack at November 14, 2006 12:50 PM
Comment #195008

Jack, I’m glad you’ve come around to Jimmy Carter’s ideas about aid and diplomacy.

Posted by: gergle at November 14, 2006 1:13 PM
Comment #195009

Jack wrote: “new style aid program proposed by President Bush that rewards countries that rule justly, invest in people and encourage economic freedom.”

So, it appears justice, democracy, and free enterprise are insufficient as rewards in and of themselves, America now has to bribe good folks to stay good? No wonder our national debt will hit 10 Trillion dollars by the time Bush leaves office.

Posted by: David R. Remer at November 14, 2006 1:16 PM
Comment #195011


It is a different idea. You can throw good money after bad trying to help places that will not or cannot contribute to their own development, or you can invest aid where it will create the most benefit. That is CAN be done in a place as poor as Mali is encouraging.


Carter has been a good ex-president. He might have saved us all a lot of trouble if he had moved directly to that role.

The MCC is a departure from old thinking aid in that it resembles investment as much as charity. You identify worthy AND viable projects.

Posted by: Jack at November 14, 2006 1:33 PM
Comment #195014

So, Jack, is this in addition to our already established aid? So, an extra government expense? Or has it been offset by a reduction in aid to countries not meeting the criteria?


Posted by: womanmarine at November 14, 2006 1:44 PM
Comment #195017

President Bush has greatly increased foreign aid in general. I am not sure that is a good thing or not, but I have not actually looked up those numbers.

Posted by: Jack at November 14, 2006 1:57 PM
Comment #195018

Re Africa, a quick google search turned up this:

The U.S. provided $3.2 billion in official development assistance to sub-Saharan Africa in 2004 to help relieve poverty, provide essential health and medical services, and spur economic growth. This is nearly triple the amount provided in 2000 ($1.1 billion), and the fastest rate of growth in U.S. foreign assistance since the Marshall Plan.

So it is on top of a bigger total aid pie.

Posted by: Jack at November 14, 2006 1:59 PM
Comment #195020

Terrific article. Thanks!
Compassion should be sufficient reason to provide aid to countries such as Mali. “If you want to help someone, practice compassion. If you want to help yourself, practice compassion.” It is its own reward, and for relatively small sums, we can have a great impact through programs such as microfinancing, and funding of small but essential projects. Everyone wins when we create a “bigger pie.” It enhances our reputation, and through the exercise of this kind of Soft Power, we take small but realistic step towards integrating & providing access for such nations in the world economy.

If that is insufficient reason to invest, the darker side still demands we do the same. Failed states and impoverished states represent a very real, long-term danger to our security. Anyone remember what happened in the failed state of Afghanistan? We constantly discuss Iraq- for which we spend $2 billion per week- yet we blithely ignore desperate states such as Somalia, Yemen, and many others; countries which have every bit of potential to harbor the likes of future Osama bin Ladens.

Again, well said.

“Carter has been a good ex-president. He might have saved us all a lot of trouble if he had moved directly to that role.”

Snort. Ok, that is pretty funny, I have to admit. But it is precisely the ideals advocating Human Rights which exhibit the best of our nature; statements supporting Human Rights are the sounds of the still, small voice within us all.

Posted by: phx8 at November 14, 2006 2:04 PM
Comment #195028

The Millennium Challenge Corporation (MCC) and the Republic of Mali have signed a five-year, $460.8 million Millennium Challenge Account Compact to reduce poverty and increase economic growth.

Okay, I understand this is a good idea, but let me get this straight. We’re way in debt, can’t afford books for some of our own schoolchildren, and we’re giving away hundreds of millions of dollars?

Jack, you are a Bush diehard. There is no way you would have supported something like this if it came from a Democrat. Bush can do anything and you’ll go for it. Let’s face it, part of Bush’s plan is to simply burn through as much money as he can any way possible.

Posted by: Max at November 14, 2006 3:07 PM
Comment #195033


I support this kind of aid because it is performance based. It will (as the Marshall Plan) increase our collective prosperity & security in its small way.

If you go to the link on making a profit on microfinancing, you will find the Polish American Enterprise Fund. That happened mostly under the Clinton watch. I supported that too.

Now that Dems control Congress, they can cut Bush’s increase in foreign aid if it offends you.

Posted by: Jack at November 14, 2006 3:46 PM
Comment #195037
So it is on top of a bigger total aid pie.

That’s the problem. I agree that this is a good idea, but what the hell happened to cutting something? That negates it’s good idea aspect.

I think we should apply this to ALL our foreign aid.

Perhaps then any monies saved could be used to fix things like, oh, social security. Would it be enough? Maybe not, but it might be a help, and could be expanded to other costly fat in the budget.

Posted by: womanmarine at November 14, 2006 4:07 PM
Comment #195040

But Jack, you contradict yourself. According to you in many previous posts, democracy and free enterprise are sufficient to supply any nation with its own needs. Ergo, why the need for aid from the U.S.? Perhaps there is a flaw in your argument that democracy and free enterprise are sufficient?

Posted by: David R. Remer at November 14, 2006 4:14 PM
Comment #195045


I always say free market, democracy, rule of law & moderate regulation. I wrote about that a long time ago.

This is kind of a jump start. What did FDR say? Prime the pump. You will also know from my writings that I always say that many of FDR’s programs were good and necessary FOR THE TIME.

I think this has a decent payoff. I have been thinking about the ownership society idea. It seems to be a useful role for government to stimulate wealth creation in a way that requires recipients to add their own sweat to the mix. The MCC is very much a ownership society type program. It helps people create wealth for themselves and so helps them create wealth for society. Going the other direction, BTW, does not seem to work very well.


As I wrote to Max, Democrats are now driving the budget. They can cut anything that offends them. Tell your representative if you do not like this program. It should be relatively easy to cut, since there are few voters from Mali. I think it would be wrong to do that, however.

Posted by: Jack at November 14, 2006 4:46 PM
Comment #195047

Jack, OK, then let’s talk priorities. Mali is no longer a threat. How about we invest in Indonesia where a potential threat is very real, and growing? Shouldn’t we prioritize our foreign policy money, taking more immediate threats first: or, are we going to “stay the course” acting as if there is no end to our treasury’s printing presses and no debt limit and there is no entitlement crisis on the horizon?

Posted by: David R. Remer at November 14, 2006 4:51 PM
Comment #195048

Mali used to be called French Soudan. It shares the same sorts of geography with Sudan and many of the same potential problems. Spend a little there now, avoid Sudan, Somalia situations later. Spend a little now and we may develop a prosperous trading partner. Besides, the money we are spending is very well targeted.

MCC is also in Indonesia. Speaking of aid, just because some is good does not mean more is better. Like medicine (or poison) the dosage is important. We should be spending the appropriate amount. I am not expert enough to know what that is.

But as I told Max & womanmarine, the Dems can cut any of these programs if they find them offensive. That part of the equation is no longer my business. It is one of the plus sides of a Dem victory for me. I am able to “redeploy” my argument forces.

Posted by: Jack at November 14, 2006 5:06 PM
Comment #195052


Good article.

The U.S. federal government plans to spend $31 billion on foreign aid in fiscal 2007.

Sounds great, eh?
However, often, foreign aid has disastrous consequences. Often it props up some dictator, corrupts the government, or undermines, or disrupts barely functioning economies and markets.
Take former Liberian dictator, Charles Taylor. He used foreign aid to build an army and wage war.

The results in Somalia was even worse.
The foreign aid depressed food prices, and undermined the local food economy.
And President Siad Barre waged war on his own people..
Hence, foreign aid CAN cause corruption, war, chaos, and other far reaching problems.

Uganda is another example. Foreign aid led to a bloated and corrupt government.
In 1999, the World Bank forgave $650 million of debt.
Guess what the president (Yoweri Museveni) did almost immediately afterward?
Yoweri Museveni purchased a new Presidental Jet.

More than 50 offices in the U.S. federal government are involved in distributing foreign aid (of course, with massive waste and duplication … no one is more wasteful than the U.S.). The World Bank audits revealed that 50% of the foreign aid projects in Africa were failures.

Charitable organizations can do a better job than government, because they are more motivated to produce results, so that they can get more charitable donations. Thus, private aid is more effective.

A Hudson Institute study (2005) found that donations to developing nations, from individuals, charitable organizations, corporations, non-profits, universities, and religious organizations totaled $62 billion in 2003 (much larger than the $16.3 billion in aid from the U.S. federal governmentin 2003).

Therefore, the best thing the U.S. government can do is to stop sending foreign aid directly to foreign governments, because it breeds corruption, chaos, and in some instances, war.

Of course, the so-called bleeding hearts in the U.S. government are going to try to perpetuate the system. Why? Is it because they are being left out-of-the-loop, or because they simply don’t udnerstand the unintended harmful consequences of foreign aid directly to foreign governments?

Posted by: d.a.n at November 14, 2006 5:46 PM
Comment #195056


Your points are good. That is precisely why President Bush wants to work through MCC type aid rather than the traditional lines.

BTW - you are right to point out American private generosity. When you add private and public, we are not only by far the world’s largest donor, but also very high on % of GDP. We are often unfairly criticized for our aid giving. It is just that U.S. tends to do privately what others do with public money. Public money is often misspent anyway.

Posted by: Jack at November 14, 2006 5:57 PM
Comment #195065

You write: “The results in Somalia was even worse. The foreign aid depressed food prices, and undermined the local food economy.”

Depressed food prices? Well, I suppose. Those kinds of things, you know, high food prices, do tend to happen during massive famines. It is amazing what people will do or offer to pay for food when they are starving to death. People eat the seeds for crops next year, grass, bark, anything at all, which probably does more to undermine the local food economy than foreign aid.

Posted by: phx8 at November 14, 2006 6:46 PM
Comment #195068


It’s the way aid is provided.
If done irresponsibly, it makes the recipients too dependent, and destroys the existing markets, making the entire population irreversibly dependent on food aid.
Proper aid should understand this, and also strive to preserve current markets.
The point is that foreign aid, if improperly administered, can have bad consequences.

Posted by: d.a.n at November 14, 2006 7:04 PM
Comment #195070
We are often unfairly criticized for our aid giving. It is just that U.S. tends to do privately what others do with public money. Public money is often misspent anyway.
And it should stay that way.

Here’s one I heard about the other day that is truly ridiculous.
The U.S. gives Mexico $40 million per year to help patrol and secure the U.S. / Mexico border.
Obviously, that’s a waste of $40 million.

Posted by: d.a.n at November 14, 2006 7:12 PM
Comment #195078

A couple of points. I see Democrats attacking you for being a big spender here. Is that a joke? Do democrats have any plan for a balanced budget? When? where is the plan? Have democrats who controled congress EVER balanced the budget? My understanding is that no democratic controlled congress has ever put forward a balanced budget. Am I wrong?
Foreign aid, that democrats certainly want to give to the poor starving africans, is fine. If Bush had eliminated foreign aid the left would be smearing him for doing so.

But the real fix is beyond foreign aid. It’s to bring help these nations into the global economy. To get them to produce products, goods, services and to buy same. When you spread the global economy, you turn on the lights and drive out the darkness. Opression and isolation turns into open societies looking to improve their economies and all that goes along with that.

President Bush said that in the end, the war against terrorism could not be won with force. He was smeared mightly from the left for saying that. BUT HE IS RIGHT. In the end, we have to bring Iran, Syria, Somallia, N. Korea, etc into the global economy. We need to work on the dark holes of the planet which spwan hate, death, tyrany depression and gradually let in the light. You defeat terrorism with hope, education, futures for their children that envolve a good life as opposed to blowing themselves up. That’s what will win the clash of mid-evil islam vs the west.

I do not see your plea to be SMARTER about how we use our foreign aid as a plea to spend more than we can afford.

Lets admit it, the real problems in US spending, the problems that break the budget are not FOREIGN AID related. The real problems that need to be resovled (and the democrats apparently are going to refuse to fix) are Balancing the Budget, Social Security, Medicare. I’m hearing no plan from the democratic party on these major issues at all. And I’m talking about a fix, not an expansion of benifits or a band-aid.

So smearing the idea of using our foreign aid in a more produvtive way and pretending Bush foreign aid is a wasteful, budget breaking deal just doesn’t cut it.

Posted by: Stephen at November 14, 2006 8:09 PM
Comment #195088
Stephen wrote: The real problems that need to be resovled (and the democrats apparently are going to refuse to fix) are Balancing the Budget, Social Security, Medicare. I’m hearing no plan from the democratic party on these major issues at all. And I’m talking about a fix, not an expansion of benifits or a band-aid.

Yes. However, neither party has done much to resolve the nation’s pressing problems , and in some cases, BOTH have made them much worse.

However, on this topic, I agree, foreign aid should be done carefully, because it has actually made things MUCH worse in many places, when done irresponsibly.

Posted by: d.a.n at November 14, 2006 9:52 PM
Comment #195093

Jack I just love how you try to twist what I say. I did say I thought the program was a good idea. You are the one who said Bush raised other foreign aid spending. Will the Democrats cut it? I don’t know.

But quit trying to twist what I say to suit yourself.

Posted by: womanmarine at November 14, 2006 10:05 PM
Comment #195097


So you are congratulating Bush on his policy?

Posted by: Jack at November 14, 2006 10:23 PM
Comment #195101


Yes. This is what I posted:

I agree that this is a good idea, but what the hell happened to cutting something? That negates it’s good idea aspect.

I think we should apply this to ALL our foreign aid.

I think it is a good idea, I just think it should be in place of the other foreign aid. Replace one with the other.

I thought I was pretty clear, I try to give credit where credit is due, of course my opinion :)

But to reiterate, yes, I think this is the way all foreign aid should go, it’s a good idea.

Posted by: womanmarine at November 14, 2006 10:49 PM
Comment #195103

You know what Jack, if you recall, I also agreed with you about raising the price of oil and gasoline, that it was needed. I’m not sure why it is so hard for you when a liberal agrees with you or your ideas, but it’s disheartening. This is part of what happens everywhere, and why people aren’t listening to each other. They make assumptions, no matter what is said. I wish it were different.

Will the democrats do the right thing? I hope so, and I am a little more hopeful now than I was before the election, but not overjoyed. I will be if I see anything significant, but I’m not holding my breath.

Posted by: womanmarine at November 14, 2006 11:11 PM
Comment #195115

Dan: That $40 million given to Mexico is used to prevent illegal immigrants from sneeking across the border into Mexico.


Posted by: jlw at November 15, 2006 1:04 AM
Comment #195117


Great article. One thing that sets Bush apart from his predecessors is that he is the first President to have an MBA. Based on this, he has taken a business approach to both foreign and domestic spending programs. In both cases, he has stated that funding will be based upon performance. I realize that to many liberals, performance is secondary to the motivation to spend government funds in the first place and that basing funding on a quantifiable measure of what a program actually accomplishes is anathema to many liberals (and to be fair, many Republicans whose constituencies receive funds from these programs) but it is needed.

One thing to add. My understanding of these aid programs that Bush has set up is that they are strictly voluntary and pegged to performance initiatives that encourage good governance. For example, once a country modifies its budget such that a certain percentage goes to infastructure development, education, and other benchmarks designed to foster good governance and a building of prosperity, further funding opens up to them. Again, this is all voluntary. The war in Iraq has obviously been a huge distraction that prevented word of these programs from reaching the media, but I think this will be remembered as both an important and exellent program. Without any compulsion, it encourages good governance as well as economic prosperity and the rule of law.

Posted by: 1LT B at November 15, 2006 2:53 AM
Comment #195124

I like this program. I really do. It would have been a great part of an overall strategy of dealing with terrorism, in part, by providing monetary incentives. But now we’re so many years down the road of putting all our eggs into the Iraq basket, I don’t know that we can afford it. Get over the Republican versus Democrat stuff. If we want to do something like this we need to drastically reduce military spending. Perhaps we can stop paying hundreds of millions of dollars for upkeeping the many thousands of nuclear bombs we will never use. If you don’t like that, pick something else.

It’s common sense that if someone is this far in debt, they can’t keep borrowing and spending on new things. At least not without seriously cutting their expenses. That’s our position. If Bush likes this program and its successful great, but I want to see him cut out pork from somewhere else to pay for it.

Am I dreaming? Or am I really lecturing Republicans on the fact that they can’t keep spending without dire results? Again, I like the program. Now, where are the cuts we need to make to afford programs like this?

At this point the president should be eating nothing but bread and water until America income outweighs its spending again. Any idea that’s smart or good needs to come at the expense of something else. Right now, it’s all coming out of the next generation’s pockets.

Posted by: Max at November 15, 2006 7:02 AM
Comment #195125
Great article. One thing that sets Bush apart from his predecessors is that he is the first President to have an MBA. Based on this, he has taken a business approach to both foreign and domestic spending programs.

I give him on F on his business approach. The same grade I give his close friend Kenneth Lay, whom he praised over and over again.

Posted by: Max at November 15, 2006 7:05 AM
Comment #195126


We do not spend all that much on nukes, and what we do spend is well worth it. To match the deterence value of nukes, we would need to massively increase our conventional military. Nukes are very effecient and an excellent value for what they provide. Also, the idea that we will never use them, while a good hope, is false. As long as nukes exist, and they will until we come up with something even more destructive, we need to be able to present a credible deterence. As far as military spending coming out of the next generations’ pocket, why don’t we talk about social security? our current debt from that stupid program would fund our military budget today for the next 50 years.

As far as Bush’s foreign aid plans go, what would you prefer? Based on our aid spending, Africa should be rich and the Asian tigers should be broke. For far too long, through both Democratic and Republican adminstrations, we have dumped money down holes without making any real difference in the lives of the people we were trying to help. by encouraging governments to make investments in infastructure, education, and other priorities that have been proven to improve nations, we help them as well as ourselves. I think that Bush’s model for foreign aid is excellent, and an oft overlooked bright spot that was farsighted and will continue to pay dividends long after he is out of office for the entire world.

Posted by: 1LT B at November 15, 2006 7:26 AM
Comment #195130


You are wrong.


Posted by: Max at November 15, 2006 8:53 AM
Comment #195131

As far as social security is concerned we had a solution for that. It was called “lockbox”, and involved investing the money we had already SAVED and not touching it. This is just not sexy enough for Republicans, who would prefer to put all our senior citizens savings on a roulette wheel.

Posted by: Max at November 15, 2006 8:56 AM
Comment #195133


Sadly, youtube is blocked out here by our security software. Since you talk about Social Security in your next blog, I’ll assume you think I’m wrong about nuclear weapons. If this is indeed the case, then I’m sorry to break it to you, but I’m right. We could very well reduce the number of nukes we currently keep in commission. In point of fact, Bush and Russia concluded an agreement before 9/11 to cut our arsenals in half, yet another thing he never gets any credit for.

In point of fact, our nuclear arsenal is based off of threats. From the time we invented nukes until the Russians stole them, we had nuclear primacy, ie the ability to strike an enemy with nuclear weapons without fear of a counterstrike. As the Russians built up their arsenal, we had to keep pace and vice versa to ensure that we would not be in a position where the Russians could attack us and destroy our entire arsenal. That rationale is the reason behind the “triad” of our nuclear forces, with land based missiles, land based bombers, and submarine launched ICBMs as the three legs.

Russia, China, the UK, and France all have ballistic missiles capable of striking the United States with atomic warheads. North Korea has yet to build a missile capable of carrying a nuclear payload that can hit the US, but it is possible they could develop one. Iran also may develop this technology. I’ll say it again, as long as these weapons exist, they are a threat we must address. Any thought of getting rid of our nuclear arsenal is foolishly naïve and will only make us vulnerable to nuclear blackmail at the least, to an annihilating strike against us that will completely wipe out our country and our way of life as the worst case.

As far as social security goes, you do make a point that we would benefit from not raiding the fund. It might interest you to know that it was a Democratic Congress that passed the bill that allowed this to happen in 1983. http://en.wikipedia.org/wiki/Social_Security_%28United_States%29 Since then, the government has essentially been writing IOUs to itself. Democrats and Republicans approximately split the time since then in control of Congress with 11 and 12 years respectively. This is a bipartisan issue.

That being said, simple demographics say that SS can’t work, even if you didn’t touch it. Surpluses built up while the baby boomers were working might fund them, but the lower number of workers and the higher numbers of people drawing down from SS, both in absolute numbers and as a percentage of the population, essentially guarantees that the system is unsustainable. SS was a good idea at a time when, through no fault of their own, millions lost their life savings as banks collapsed and jobs were lost. The reforms of Roosevelt have basically made this impossible now. SS was intended as a temporary stop-gap measure to help people during the Depression. Its continuance was a massive mistake which we will pay for in huge debts for generations. Any argument that SS should be kept is wishful thinking that fails to acknowledge facts.

Posted by: 1LT B at November 15, 2006 9:36 AM
Comment #195139


Foreign aid makes up a very small percentage of the U.S. budget. I think it is less than 1%. Even military spending is not so much anymore. The big spending - more than 2/3 of the whole pie, is entitlement spending and it is growing fast. That is why we have to address that part of the budget.

The current debt as % of GDP is really not a problem. It is about the same as it was in 1996. Tax revenues are also at an all time high. The reason we are worried about this is because of the oncoming iceberg of entitlements. To extent the iceberg metaphor, all the other things we do with the budget is like arranging the deck chairs on the Titanic if we fail to deal with the entitlements iceberg. Remember that entitlement rise AUTOMATICALLY. There is no possibility of Paygo unless you continually raise taxes or cut discretionary program. Sometime around 2025, entitlements will make up ALL of the budget we spend today, unless we do something about them.

Re lockbox - that is just rhetoric. The government creates the money. Having a lockbox is like you writing checks to yourself and putting them into a lockbox under your bed. In ten years, you take them out and cash them. They may or may not be honored. It does not depend on how many check you have or how storng the lockbox. All that matters is how much money you have in your account at the time you want to cash the checks. In the government case, all the money you have this year is paid by the taxpayers of this year. Government cannot save money like private citizens. If it takes money out of circulation, it changes the money supply, which it controls anyway. Expanding or contracting the money supply is something the Fed (sort of) controls. It does not depend on lock boxes.

Returning to the check example, you better have a good job when you redeem those checks, but if you have a good job you may not need them. See the problem?

Re budgets - Dems now control the money. They can cut whatever they want. Go to it, boys and girls. See how easy it is.

Re ENRON and Ken lay, the problem of ENRON grew under the regulation of the Clinton Administration. It was finally caught and addressed early in the Bush time. ENRON is clearly NOT a Bush creation. I know you Dems have trouble with chronology, but you really cannot create a major firm, cook the books and run it into bankruptcy costing billions in six months.

Posted by: Jack at November 15, 2006 10:13 AM
Comment #195147

I can’t believe anyone would provide a link to YouTube to prove their argument. That is like arguing that Kryptonite really does exist and quoting a comic book to prove it!

Like LT, I cannot view because it’s blocked, but I’ll look into it when I get home.

Posted by: Rich at November 15, 2006 11:20 AM
Comment #195150

Sorry Jack, but I just don’t buy your quip about it not being possible for the government to set aside money. Ever heard of banks?

And if investment accounts are so great for the consumer, why not for the government? Let’s see them do it and not lose the money before you force it on others.

A simple savings account, surely the government could get the best interest rate?

Of course, we would have to get out of DEBT first.

Posted by: womanmarine at November 15, 2006 11:37 AM
Comment #195154

” Dems now control the money. They can cut whatever they want.”

Jack: How many times did Bush use his veto power to curb the reps. wasteful spending?

How many times do you suppose Bush will use his veto in the next two years?

If the Democrats send the President a social security fix that doesn’t include private accounts, do you think he will veto it?

The estimates are that it will take a trillion dollars (borrowed) to get the accounts started. If one trillion is suddenly invested in the stock market what kind of effect do you think that would have on your stock portfolio?

We The People have made it perfectly clear that they are not buying the republican propoganda. The main reason s.s. is in trouble is because our corporate owned and controlled government has neglected the growing problem for years. In every game that humans play, there are winners and there are loosers. I may be ignorant about much of the workings of the market, but I do know that it is another game that people play.

Posted by: jlw at November 15, 2006 12:00 PM
Comment #195157

jlw, Thanks for the link. I downloaded it.

As far as social security is concerned we had a solution for that. It was called “lockbox”, and involved investing the money we had already SAVED and not touching it.

Ya know, the federal government has pilfered $12.8 trillion from Social Security surpluses.

It’s a ponzi-scheme of massive proportions.

77 million baby boomers have paid into Social Security all their life. And, the tax for Social Security and Medicare is a hefty 15.3% !

Now, who thinks Social Security isn’t facing looming shortfalls ? Those that don’t think so often cite the $1.5 trillion surplus currently in Social Security. There’s just one little problem. That surplus is government bonds. It’s yet another circular, ponzi-scheme.

Well, 77 million baby boomers, many that haven’t saved and prepared well for retirement, are gonna be in a world of hurt. Not just because of looming shortfalls in Social Security, but shortfalls in Medicare, Medicaid, and welfare.

And, the tax payers ain’t gonna be too happy either when their taxes have to be raised to help fund Social Security (and that’s even after benefits are drastically slashed).

So, with the total current $22 trillion of federal debt, it’s not hard to see a problem brewing.

But, guess what part of the solution will be?
Give up?
ANSWER: print more money.

HHHMMmmmm … sounds like another ponzi-scheme.
The problem with printing money is that it increases inflation, and that erodes those 77 million baby boomers life savings even more!
And, it erodes the younger citizens’ savings too!
It erodes everyone’s money.
It only helps to destabilize things further.
The only one’s benefiting are those that get the money early in the cycle, and spend it quickly before its value falls.
Nice little scheme, eh?
Well, there’s really nothing little about it.
And, it also shrinks the Social Security funds.
So, that’s not such a good idea is it?
No matter where we squeeze the baloon, it swells up somewhere else. Duh !

So, we’re looking at:

  • (1) raising taxes

  • (2) cutting benefits

  • (3) printing more money

Now, you might say, well what about:

  • (1) cutting government spending

  • (2) which could reduce debt

  • (3) and how about stop spending the Social Security surpluses, NOW!

But, that would make too much sense.

Never happen. Not based on track-record.

Not until the whole thing has blown up in our stupid faces.

Then we can start over.

: )

Maybe we’ll do better the next time around ?
2.000 steps forward, and 1.999 steps backward.
Education is needed, and it is on the way, but most Americans ain’t gonna like it.

Posted by: d.a.n at November 15, 2006 12:34 PM
Comment #195171


If you put money in the bank, the Federal government is really your partner. They are creating the money you use. That dollar in your pocket is just an IOU from the Federal government. It says you have a dollar because the Federal Government says you do. If you want to trade it in, you can come to Washington and they will give you a different dollar. At one time you could trade for gold or silver. No more. You can trade your dollar for another dollar or you can trade it for goods in the private sector because the person you give it to thinks it is worth a dollar, because the Feds say so.

If the government puts money in the bank, what happens to that money? The government has taken one IOU it has written to itself and put it into the bank. It is still only a dollar because the Feds say so. It will simply change the money supply. The Federal Reserve then may or may not compensate, but creating more or fewer dollars, but that is an economic decision unrelated to the deposit.

Leave aside that banks do not have the capacity to absorb all the money the Federal government could invest, all the banks are supported by the Central Bank (the Federal Reserve) which controls the money supply and can expand or contract it. The government runs the Federal Reserve. It all comes in a big circle. What the government really has to spend depends on the income (tax revenue) of the Federal Government OR how much inflation they can get away with. The dollar you have is worth a dollar because the Feds say so. They can just print another one and claim that is just as good. Of course, people will catch on eventually and they will value dollars less. Then we have inflation. Some inflation is okay, even good. Too much is very bad. It is hard to balance.

If you deposit it in the first national bank, how do you guarantee that the bank will be able to give you the money back in 2015? Simple. The Federal Government Guarantees you deposits up to a certain level. We circled around again. You have your money because the Federal Government says so. The Federal government can spend as much as it can tax, inflate and borrow, but it is that tax revenue at the time that support this, not in the past or the future.

Also ask yourself what is happening to SS right now. Revenues are coming in. They will be more than they are paying out for about ten more years. The Federal government is the only organization big and stable enough to handle such a large infusion. The Federal government borrows money from SS and leaves an IOU. If they did not borrow from SS, they would have to borrow from somebody else or cut spending. We essentially have a higher tax rate than we think. You add your income taxes etc and the 15+% SS takes and you have your actual tax rate.

And we are back to the other end of the circle. The Dems are now in charge. Cut what spending you want. Newt Gingridge cut spending and even closed down the government. It can be done. But the U.S. Federal Government cannot save money to spend later. It can only spend less now.


You understand economics. The Feds did not pilfer SS. They simply have a higher tax rate than they admit. They are taking revenues from SS and using them for general revenues. The only way to stop that is to cut spending.


Okay, Bush did not veto wasteful spending. His bad. Now the Dems are in charge. They can not propose any wasteful spending AND they can not fund anything they think is wasteful that Bush proposes. They are in the driver’s seat. They have to authorize all spending. Bush cannot do it. All these things that they gnashed their teeth about are now within their power to cut.

Dems won the election. They control the checkbook. The President can veto whatever he wants, but he cannot spend a dime unless the Democratic Congress says he can. Over to you.

Posted by: Jack at November 15, 2006 1:31 PM
Comment #195176

Jack: You never gave an answer to the question that goes to intent.

Posted by: jlw at November 15, 2006 1:56 PM
Comment #195177


I will try to answer, if you tell me what you mean.

Posted by: Jack at November 15, 2006 1:59 PM
Comment #195182

Jack: I will change the question to make it less personal. What effect would a rapid investment of one trillion dollars in the market have on the price of stocks and who might see an immediate improvement in the worth of their investments?

Posted by: jlw at November 15, 2006 2:30 PM
Comment #195184

It would increase the value, I suppose. But you never know. Some firms have too much money now to properly invest. They might give it out in dividends. People would reinvest and you would just create a circle.

It is probably a bad idea to drop such big amounts into anything that quick.

If we are talking about personal accounts, I do not propose a big bang. People will invest over their working lives. I would expect that most old guys would just opt to stay in the old system.

If investments came at a steady rate to provide capital, it should make innovation and R&D more effective, increasing the wealth of our whole society.

On the personal level, I own some stocks, but not enough to want to make policy for the whole country based on that. My biggest investment is my woodlands. It would be in my personal best interest if they closed off all national forests to timber operations (then private wood, like mine would command a much higher price). But I do not advocate that because of the negative economic and ecological consequences.

I do not make my recommendations based on my own situation, except to the obvious extent that my experience colors my thinking.

Posted by: Jack at November 15, 2006 2:42 PM
Comment #195215
Jack wrote: d.a.n. … The Feds did not pilfer SS. They simply have a higher tax rate than they admit. They are taking revenues from SS and using them for general revenues. The only way to stop that is to cut spending.
OK, let’s call it misappropriated. What ever it is, it is dishonest and irresponsible. They have misappropriated $12.8 trillion. It’s a ponzi-scheme. And with $22 trillion of total federal debt, it’s going to get worse before it can get better. Just the $8.6 trillion of National Debt is costing over $1 billion per day in interest alone. The federal government isn’t only fiscally bankrupt, but morally too. Posted by: d.a.n at November 15, 2006 4:56 PM
Comment #195222


No it is not. The Feds tax us and spend. They can call the taxes what they want, but it is a lot like naming parts of the water that comes from your tap. What counts is how much goes out and that is spending. If they did not use the SS, they would have to cut spending. That is the pressure point. Cut spending, cut the problem (for now only since entitlements is a growing problem).

Here is a thought experiment. You go into a store to buy a magazine. The magazine costs a dollar. You “bribe” the OWNER of the store a quarter to sell it to you for 75 cents. Is it really a bribe or did you just pay the guy $1?

Posted by: Jack at November 15, 2006 5:38 PM
Comment #195224


Who feeds you this stuff? I notice that on days when things are not looking up in, say, Iraq, you focus on other things. When some glimmer of a good thing happens there, you jump on it. I’m curious what you think about Iraq right now. It is obviously sliding down the tubes more rapidly than ever and people like Perle, one of the architects of the occupation, have admitted it was a mistake, along with other leaders and opinion makers who formerly supported the effort. Yet, you are silent. Instead, you point to this side issue, without any real evidence that the brilliant Bush’s efforts have had an effect. I know it’s hard to confront failure on the part of your chosen leaders, but I am curious how you deal with it. All those lives lost…

Posted by: mental wimp at November 15, 2006 5:44 PM
Comment #195229


I have more hope than rational expectations for Iraq. It has been a mistake. I do not know what to do. I am hoping to see a way and waiting for the results of the Iraq study group. Right now it looks like a bunch of bad alternatives. Staying is bad; leaving is worse. If I had any good ideas, I would tell you. When I see reason for hope, yes I jump on it.

There have been hopeful signs. The elections were a high point. But right now it looks like the bad guys are doing well. It will be very bad for America and the world if they prevail. I hope we can find a way to prevent that.

What else can I tell you? I have nothing to write about Iraq at this time.

Posted by: Jack at November 15, 2006 6:09 PM
Comment #195237
Jack wrote: d.a.n. No it is not. The Feds tax us and spend. They can call the taxes what they want, but it is a lot like naming parts of the water that comes from your tap.

What’s that 12.4% Social Security and 2.9% Medicare tax deduction EVERYONE’s paycheck ? !?
You’re saying that is NOT dishonest?
You’re splittin’ hairs and dwelling on semantics.

It is fraudulent to tax people at 15.3% for Social Security and Medicare, and then spend it elsewhere.

That is exactly what they the federal government is doing.

So far, they have diverted $12.8 trillion from Social Security.
That isn’t just fiscally irresponsible, it is dishonest.
Imagine that ! ? !
Do-Nothing Congress is dishonest !

Yep, Congress isn’t just irresponsible, but morally bankrupt, has been for decades, and is fiscally bankrupting the nation, while they pad their own nests and golden parachutes.

When Social Security started, it WAS supposed to be a lock-box.
But, it didn’t take crooked politicians long at all to find a sleezy way around that obstacle.
Only a few years after it started, Congress passed a law to allow the federal government to borrow from Social Security. And, boy, did they.

The diversion of Social Security surpluses is defrauding all that paid into it all their life.

When tax payers pay that 15.3% tax to Social Security and Medicare, it should NOT be diverted (as it is, making it nothing more than a ponzi-scheme).

Posted by: d.a.n at November 15, 2006 6:42 PM
Comment #195238

That’s ok. Since the Dims have McGovern as an advisor on Iraq, there will be plenty of fodder for you to write about. That’s the best the Dims can do?

Posted by: tomh at November 15, 2006 6:43 PM
Comment #195253


If you can tell me HOW the Federal government can put that money in a lockbox and WHERE that money will be, I will think about whether or not it is a good idea. The Federal Government issues the money. AND the U.S. is the world’s reserve currency.

Posted by: Jack at November 15, 2006 8:10 PM
Comment #195270


So sounds to me that’s what needs to be fixed first.

Posted by: womanmarine at November 15, 2006 9:51 PM
Comment #195271


The money put into Social Security should NOT be spent on other things. It should be preserved.

Unfortunately, at rate that the Federal Reserve prints new money, that’s a problem too.

So, there is more than one major problem.

Still, what ever your point is, it does NOT justify the misappropriation of funds taxed at 15.3% for Social Security and Medicare. That is nothhing but right-out fraud and deception.

Posted by: d.a.n at November 15, 2006 9:53 PM
Comment #195274


You are absolutely right.
We have to address some fundamentals, first.
All other things are futile, without addressing some fundamentals first.

Education is the first step.
In a voting nation, education is paramount.

Posted by: d.a.n at November 15, 2006 10:01 PM
Comment #195286

d.a.n. & womanmarine

You see. We are talking about spending. That lockbox is just a diversion. It cannot be done. No such thing is POSSIBLE, no matter how much anybody wants to do it.

When Republicans controlled congress and a Dem was president, they cut spending. Now that Dems control congress and a Republican is president, see if they can do the same.

Remember the president cannot spend a dime unless the congress authorizes it. Newt refused to increase spendin, even shut down the government to make the point.

Posted by: Jack at November 15, 2006 11:16 PM
Comment #195346


Of course the government ALWAYS spends too much (and borrows too much and prints too much money).

But, government couldn’t spend it if it were made illegal to plunder the Social Security surpluses ($12.8 trillion thus far).

As far as I’m concerned, it is down-right fraud to tax people and withhold 15.3% from their pay-checks for Social Security and Medicare, and then spend it elsewhere. And, most people would agree. You want to say the root focus needs to be on spending. Maybe, but the real root focus needs to be on even more fundamental changes. Otherwise, it is all futile. Government will never voluntarily do anything responsible. Only the voters can make government responsible and accountable too, but NOT by continually re-electing, rewarding, and empowering them to keep being irresponsible.

The government wouldn’t be able to spend the Social Security surpluses if it was made illegal to do so.

Afterall, shouldn’t theft be illegal?

That’s why the call it legal plunder.

And, what has this Do-Nothing Congress accomplished lately?
There’s talk about raising the minumum wage.
What’s sad is that Congress gave themselves a raise 9 times (every year) since 1997.
Several studies have shown that raising the minimum wage has actually had little impact on the overall economy, but did help low-income earners. A minimum wage of $1.60 in 1968 would be $8.85 in (2005 dollars; if adjusted for inflation). A minimum wage of $5.15 in 1997 (the last time it was adjusted) would now be $6.07 in 2005. Why not simply split the difference, and make it $7.46 per hour, since there is no credible evidence that $1.60 in 1968 and $5.15 in 1997 devasted the economy. But, there’s no reason to be so afraid of a slightly higher minimum wage. I believe in a free market and the least government meddling, the better, but slightly raising the minimum wage is not going to be as devastating as some say.

Seems to me, the list of pressing problems are continuing to grow in number and severity.

It doesn’t have to be that way, but my suspicions are that the decline of this nation will continue. It may be slowly and gradually, or it may come suddenly. But, I’m increasingly of the opinion that we deserve what ever we get, since we keep re-electing, empowering, and rewarding the very same people that are ruining it. Some are giddy about this last 7-Nov-2006 election, but 90% of incumbent politicians still have the cu$hy, coveted seats. So, why should anyone think Do-Nothing Congress will suddenly start behaving anyway differently?
Voters missed another opportunity, and they’ll have to wait another two years. The anti-incumbency will grow. But, will they remained trapped in the circular pattern of behavior, and simply switch back to Republicans? Or, will they just become more apathetic and disgusted at their crummy choices, and choose to stay home?

In the mean time, the fiscal picture grows more dismal. $22 trillion of total federal debt is not a trivial matter, but most Americans don’t even know what it is, and the politicians and the main-stream media won’t discuss it. Does it not deserve as much attention as given to “illegal immigration” on CNN ? This nation seems to be a severe case of misplaced priorities, and the list of problems, growing in number and severity, is evidence of it. Perhaps we are doomed to fall due to our own decadence and loss of moral and fiscal responsibility?

Posted by: d.a.n at November 16, 2006 12:22 PM
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