Alexander's Column

Breaking the Back of Free Enterprise

The "Fundamental Transformation"

By Mark Alexander · Jul. 8, 2010
“An unlimited power to tax involves, necessarily, a power to destroy; because there is a limit beyond which no institution and no property can bear taxation.” –John Marshall

Folks with extensive training in strategic analysis tend to have a very different viewpoint of the macro-political machinations from that of folks in the trenches who have a more tactical perspective. As such, strategic viewpoints are many times received with great skepticism.

At ground level, for example, one might have a problem with the following strategic analytical conclusion: Barack Hussein Obama’s macro agenda to achieve his objective of “fundamentally transforming the United States of America,” depends on the success of his plan to break the back of capitalism under the weight of national debt accumulation associated with welfare spending, and in the ensuing crisis, implement “emergency” government intervention which will, ultimately, replace the last vestiges of free enterprise with a democratic socialist framework (centralized economic planning and regulation with full-spectrum income redistribution).

If that analysis makes you uncomfortable, prepare to become far more so if his agenda succeeds. To avoid a total economic collapse under the burden of trillions of dollars in debt resulting from Obama’s spending programs, the Left will implement dramatic tax increases and devalue the dollar (inflate the price of services and commodities).

As one with perhaps excessive formal training in the art of strategic analysis, I can assure you that Obama’s plan, as outlined above, is progressing on schedule. Of course, my perspective is influenced by the presupposition that liberty is “endowed by our creator,” but as Alexander Hamilton noted, “In disquisitions of every kind there are certain primary truths, or first principles, upon which all subsequent reasoning must depend.”

In regard to the failing economy, Obama recently said, “Make no mistake, we are headed in the right direction, but … we’re not headed there fast enough for a lot of Americans.”

Many people hear those words and interpret them to mean that we’re progressing toward economic recovery. However, the strategic analyst hears that the Left’s objective of a socialized economy is just upon the horizon, that Obama and company would like to bring it to dock at a much faster pace and with such forceful momentum to ensure that the “fundamental transformation of America” can’t be undone.

House Minority Leader John Boehner gets it. In regard to House Democrats' passage of Obama’s so called “economic reform plan,” Boehner responded, “The writing is on the wall for President Obama’s ‘stimulus’ policies and everyone – taxpayers, economists, and the rest of the world – sees it but him. How much longer are we going to continue with this disastrous spending spree that is scaring the hell out of the American people and piling debt on our kids and grandkids?”

Answer: As long as it takes to fulfill their Leftist agenda. Obama’s “stimulus plan” is closely modeled on the Cloward–Piven strategy – which he studied in depth as a student at Columbia University. This plan calls for overloading the government welfare system to the point of crisis, requiring the replacement of that system with a state-directed national system of “guaranteed annual income and thus an end to poverty.”

Some of the most experienced conservatives did not get it soon enough. In a recent interview, Newt Gingrich admitted, in a self effacing response to a question about Obama’s Leftist agenda, that he understood Obama was liberal but “laughed at friends” who suggested he was a Socialist. Now Gingrich says, it is abundantly clear Obama is a Socialist, but why did he, like so many astute political thinkers, miss it?

Perhaps too much Potomac kool-aid and Beltway fumes.

“We had to take some tough steps to pull the country out of the free fall we faced when I took office,” says the blame-shifting Obama.

For the record, the current economic debacle began when a group of Jihadi terrorists, who came to the United States on Bill Clinton’s watch, attacked our nation: 9/11. That attack crippled the U.S. economy, but the ultimate blow was a crisis of confidence in the U.S. housing and security markets – a crisis largely driven by Democrat policies and their refusal to rein in the government-sponsored mortgage enterprises known as Fannie Mae and Freddie Mac.

The ensuing financial market collapse in the weeks ahead of the 2008 presidential election resulted in the selection of a charismatic radical Leftist community organizer as president of the United States.

Commenting on the agenda of his newly elected boss, White House Chief of Staff Rahm Emanuel said infamously, “Never allow a crisis to go to waste.” And they haven’t.

It is no small irony that on the very day Obama asserted the economy is “headed in the right direction,” the non-partisan Congressional Budget Office reported, based on the implementation of Obama’s “economic recovery” agenda thus far, that the current accumulation of debt will exceed 100 percent of gross domestic production by 2025, and will total almost twice GDP by 2035. Of course, if one includes the Social Security “lockbox” IOU, the national debt is already 92 percent of GDP.

But not to worry, I suspect our economy will collapse long before our national debt reaches that level. The burden of debt accumulation at current levels makes the current economic problems of socialist European states seem like gnats on an elephant’s … uh, rear.

The CBO report concludes, “Large budget deficits would reduce national saving, leading to higher interest rates, more borrowing from abroad, and less domestic investment – which in turn would lower income growth in the United States. Growing debt would also reduce lawmakers' ability to respond to economic downturns and other challenges. Over time, higher debt would increase the probability of a fiscal crisis in which investors would lose confidence in the government's ability to manage its budget, and the government would be forced to pay much more to borrow money.”

In other words, unless Obama’s agenda is overturned, the U.S. will one day be a subsidiary of Red China.

On the principles of free enterprise, Obama proclaims, “We already tried the other side’s ideas. We already know where their theories led us. And now we have a choice as a nation. We can return to the failed economic policies of the past, or we can keep building a stronger future. We can go backward, or we can keep moving forward. I don’t know about you, but I want to move forward.”

Obama apparently hopes a majority of Americans have no idea where the Left’s theories led in places like the Soviet Union. Unfortunately, he’s probably right, given that many of his constituents are little more than sycophantic lemmings, having been sufficiently dumbed down in our government-run education institutions.

Obama’s primary co-conspirator in this extra-constitutional folly to undermine the economy is House Speaker Nancy Pelosi, she of the following ridiculous claim: “When I became Speaker of the House, the very first day we passed legislation that made Paygo the rule of the House. The federal government will pay as it goes.”

In other words, she promised that Congress would not pass unfunded spending bills. But that would mean either radically reining in spending, or implementing vast new tax initiatives on virtually all income earners, which she and Obama promised they would not do. Thus, Pelosi’s Congress has added more than $1 trillion to the national debt, taking the U.S. Debt Clock beyond the $13 trillion mark.

To put their plan into perspective, national debt was about 40 percent of GDP when Obama took office, but with the economic recession resulting in greatly reduced tax revenues, the national debt will be 62 percent of GDP by the end of this year. That would be an increase of more than 50 percent in just two years. (I recommend you read this paragraph at least twice!)

For a complete analysis of federal waste, see the Heritage Foundation’s study, “30,543 Reasons Spending Is Out of Control.”

To make matters worse, Obama continues to inflate the bloated central government beyond any recognition of its constitutional authority even as American families and businesses must cut back to make ends meet. Adding insult to injury, non-military federal employee salaries are now 40 percent higher than private sector salaries on average, and while private sector benefit packages average $9,882, government employee benefits average $32,115.

This week, Obama laughingly launched his annual “SAVE” Award dog and pony show, ostensibly encouraging federal employees to recommend how to save taxpayer dollars. He notes, “This contest is part of a larger effort to make sure that we invest taxpayer dollars in programs and initiatives that have proven records of success and fix or end programs that do not.” I have more than a few ideas, but Obama did not ask taxpayers how to save taxpayer dollars.

That old sage Will Rogers once quipped, “Be thankful we’re not getting all the government we’re paying for.” If he only knew…

Demonstrating the extent to which government has exceeded its constitutional mandate, my colleague Walter Williams wrote, “In 1794, when Congress appropriated $15,000 to assist some French refugees, James Madison, the acknowledged father of our Constitution, stood on the floor of the House to object, saying, ‘I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.’ He later added, ‘[T]he government of the United States is a definite government, confined to specified objects. It is not like the state governments, whose powers are more general. Charity is no part of the legislative duty of the government.’”

Professor Williams concludes, “Two hundred years later, at least two-thirds of a multi-trillion-dollar federal budget is spent on charity or ‘objects of benevolence.’”

Is there still time to restore the primacy of Free Enterprise over Socialism before Obama and his Leftist ilk have broken the back of Capitalism?

The short answer is, yes. Next week Part 2 of this essay, “Reversing Course and Restoring Liberty,” will clearly outline how to restore the constitutional role of government.

(Read Part 2 of this essay, Reversing Course and Restoring Liberty)

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77 Comments

Jack Kinch(1uncle) said:

In regard to the failing economy, Obama recently said, "Make no mistake, we are headed in the right direction, but ... we're not headed there fast enough for a lot of Americans." THOSE WITH THEIR HANDS OUT AND VOTES FOR SALE.

Thursday, July 8, 2010 at 3:35 PM

MAJ, USA Ret said:

1. Q: Source of stats on fed salaries and benefits higher than public sector. Would like to validate and verify stats and analytical methods. 2. Does anyone really want cheap Fed employees? Fed Gov competes with private sector for employees. Better and brighter deserve and usually get greater salaries and benefits. This alone does not explain disparity. Solution? Reduce compensation. But we get what we pay for. 3. Too many Fed employees work in highest cost areas, i.e. DC. The cost of living adjustment accounts for some disparity. Still, not enough. Solution? Move out of DC (ala "BRAC"). Dispersion would be tactically sound, could stimulate "fly-over-country".4. Concur: Gov expends money for services (esp unearned entitlements) that too few special interests enjoy, too many else do not want. But the assertion's failure to enumerate the unconstitutional expenditures promulgates public confusion, promotes public jealousy, and may provoke unwanted consequences. The military is not the only thing we should pay for, but all obligations should be constitutionally justified. Solution? Many, but first step may be: KILL, INCINERATE, CREMATE, CONFLAGRATE AND ATOMIZE INTO DEEP SPACE ALL UNEARNED ENTITLEMENTS; i.e.: unemployment, social security, medicare and medicaid. Charity is supposed to begin at home, not at the infernal revenue service.Journey of a thousand miles begins with first step.

Thursday, July 8, 2010 at 3:37 PM

Sam said:

I disagree on only one point: that John Boehner gets it. Unless he's being circumspect in his speech, he doesn't quite get it yet. Obama is doing his best to destroy this country economically, socially and judicially. Don't think for a minute that Obama doesn't know exactly what he's doing. He hates this country for its freedoms and he is out to destroy it and set up a socialist system in place of our democratic republic.

Thursday, July 8, 2010 at 3:45 PM

meachamd said:

I totally agree with "OregonBuzz", people behind the scene have been orchestrating this for along time. They finally have their puppet(s) they've been hoping for. FAST-HARDER more than ever. Good news "God is still in control"!!!

Thursday, July 8, 2010 at 3:54 PM

GARY METZINGER said:

It seems like a miracle that our anointed leader was able to convince BP to establish a $20 billion slush (oops, escrow) fund to compensate those hurt by the ongoing oil plume in the Gulf of Mexico.After all, he had no constitutional power to force them to do so;so had to resort to Chicago-style arm twisting.But, let us take a closer look at the effect on BP’s 2010 finances:1. BP will establish a $20 billion fund, but will pay only $7 billioninto it during 2010.2. BP is a British corporation, but has a very large operatingentity in the US.3. By Generally Accepted Accounting Principles (GAAP), BP must bookthe entire $20 billion expense in the year accrued, i.e., year theliability is incurred. Therefore, they will book a $20 billionexpense in 2010, reducing their US tax liability by $7billion.4. Our anointed leader also convinced this massive corporationto show their concern for the “small people” by withholding dividendsto their shareholders for the last 3 quarters of 2010. Thisreduces their outward cash flow by about $7.5 billion, including approximately40% of that amount to US citizens. Assuming that the Bush tax cutswill survive through the end of 2010, the US Treasury will lose another $450million in taxes on that amount. We won’t even discuss the effecton the US economy.Let us put the results into a table easily understood by the "small"people:BP Cash Flow:Escrow funding ($7 billion)Dividend saving $7.5 billionTax savings $7 billionNet favorable cash flow for 2010 to BP : $7.5 billionUS Treasury Tax Receipts/Reductions:BP Corporate income tax (-$7.5 billion)BP Shareholders (-$0.45 billion)Net unfavorable tax receipts ($7.95 billion)I guess we really should expect this. After all, our anointedleader is the most inexperienced man in any room he enters.Scorecard:BP Corporate Bean Counters - 1Washington Tax Smart Guys - 0American People - We Get BP (Bean Poop)This isn't so hard to understand - BP made their largest politicalcontributions to Obama's campaign. Obama plays politics acting toughon BP. We pay.Frankly, I admire BP for their deal making ability. They must have brought their accountants to the table. After all, BPis not a fly by night operation and Obama thought he and his minimalbusiness experience tax people and accountants could take on BP.WAKE UP AMERICA!!!!!

Thursday, July 8, 2010 at 4:20 PM

enemaofthestatistquo said:

BobW--when i can't get my FOX signal on local cable, my phones are jammed, I can't get Glenn or Rush on the radio, or the PatriotPost didn't come by e-mail as expected. I'll be turning out on the village green; Armed & Dangerous, & You All should join me. I am USAR E-5 (ret).

Thursday, July 8, 2010 at 4:32 PM

Don Havekost said:

The sole purpose of Obama's presidency is to completely destroy the USA in every way possible in order that islam may take over the entire world and establish Shari law every where and in every way possible. He should be impeached, tried,found guilty and executed as soon as possible.

Thursday, July 8, 2010 at 4:49 PM

Bob W said:

It is time for a "Woodstock" type gathering of Patriots from around the nation. Although, such a gathering should be scheduled for at least twice each year until 2012.Since Tennessee is the volunteer state, and nearer the center, seems a great place to do so. Any Patriots with 1,000 acres or more to hold such an essential, required gathering of Patriots? Citizen Sportsman, Tea Partiers, 9/12ers, general patriots, NRA members, and all concerned American citizens welcomed! Know anyone in your state that could provide refuge to millions of Woodstock analogous citizenry?

Thursday, July 8, 2010 at 5:57 PM

Robert G.S. Plant, USN, Ret said:

I shall find it difficult to wait---for Part 2! You are (again) absolutely correct, I agree, let us get to it! The US Navy just relieved the Commander of Norfolk Shipyard. "Failure to lead, and command." (One year in position!) Now, Barack Hussein Obama, in his second year, though successful in his objectives, is not in concert with the objectives of the majority of People of this Republic! Let the action begin! Firefight (not good), remove all Dems and RINO types, should happen! Best bet,(thoughtful), military coup, oust the triumvirate, new elections of civilian control in Novembe. Hmmm?

Thursday, July 8, 2010 at 6:10 PM

Robert G.S. Plant USN, Ret. said:

OREGONBUZZ. In my view you are absolutely correct! On all points. Martial law? That would be the appropriate time for a military coup, hmmmm?

Thursday, July 8, 2010 at 6:21 PM

jimzgotdemzunderhizskinz said:

For OregonbuzzYou don't even need to read the whole article. Just read the bullet points for the Soros agenda and match it to any policy agenda the white house admininstration is pursuing.http://www.discoverthenetworks.org/individualProfile.asp?indid=977Also bear in mind the gulf oil crisis and the billions loaned from US to Soros for his Brazil offshore drilling investments.

Thursday, July 8, 2010 at 6:46 PM

chuck borgneier said:

i wait patiently, yet anxiously, to find out your answers to solving this country's problems. i am reading on the rise of the 3rd Reich and i fear that we are closer to the abyss of socialism than we want to admit. this election is probably the most important since the founding of this nation, if we are to turn the tide back to that of a 'republic'; can we keep it?

Thursday, July 8, 2010 at 6:51 PM

Joe Ferrare said:

Strategic analyst, historian, political scientist, psychologist, writer, lay expert: truly you are a treasure for your readers. As you are an analyst of such standing, I'm sure you know that if all your analyses of the many issues you comment upon, from all these various vantage points consistently lead you to the exact same spot either the conclusion is exceptionally obvious -- which it does not seem to be -- or that no matter what your starting point, methodology or the facts you encounter along the way, you will end up where you wanted to go all along. Even a cursory look at it from a statistical viewpoint would seem to point to that very problem. Either that, or every person who evidences any behavior or thought you consider liberal is a complete amoral idiot and you are Wile E. Coyote, Super Genius. An analyst's healthy skepticism and an even superficial amount of humility would seem to argue against that conclusion.

Thursday, July 8, 2010 at 7:20 PM

The Editor replied:

Ah, your either/or assessment of my conclusions is both a reflection of your own worldview and a false dichotomy. I am not, nor do I profess to be a modern day academician, ostensibly skeptical in holding with pure objectivity. Unlike most academicians, I do not pretend to be objective. Like most analysts, I do have a framework, a context for interpreting the observed. That framework begins with an assumption of Liberty endowed by our Creator, and by extension, as enshrined in our Declaration of Independence and Constitution. That provides context for understanding the difference between right and wrong, Right and Left. As for "amoral idiots," Ronald Reagan said it best: "The trouble with our liberal friends is not that they're ignorant; it's just that they know so much that isn't so." As for "Super Genius," the genius is in the principles of liberty and the Rule of Law. I just subscribe to those fundamental truths. Libertas!

ILEANA said:

I believe Mr. Alexander used the Greek word, "kratos" (power) in this description, "Barackracy." Bank-ruptcy has a different root, it comes from the Latin "rapuere," to take by force, or steal.Whatever the intent, Mr. Alexander's essay is eloquent and accurate as always.

Thursday, July 8, 2010 at 9:30 PM

Mary M said:

Blah, Blah, Blah...It's the black man's fault again. Dude seriously that song and dance is way way old now.Reality check: the white men in office prior to the black man in office are to blame for the current state of the economy. Seriously dude? you think Obama won the presidency by election? Hahahahaha that's funny.Um, remember the back room dealings of the mortgage lenders? Come on dude,you know the dealings being made between Wall Street and buyers outside of America? Wall Street selling off America a little piece at a time, remember? Piece by piece, like a pimp in the city? Dude really. You talk a lot of smack but you don't really know the fact about jack.Hahaha, Obama elected, hahaha. That's funny.

Thursday, July 8, 2010 at 9:31 PM