Oh Goodie

First the cliff, and now the ceiling! Sounds like something Stan Freberg would write. What is next?  Rivers turning to blood, raining frogs, Lice, Flies, Livestock dropping in the fields, Boils, Hail, Locust, Darkness, and last but not least that all time favorite death of the first-born male (you and your cow), unless you had applied lambs bloods to your door post. (Wait has that been done before?)

So what will get us first the falling off the cliff or get crushed by the ceiling?

Don’t you just love it when a plan comes together?

We have historical evidence that it took 12 Plagues to force Pharaoh to relent.

How many will it take to get the House of Representatives to relent?

In the mean time, how about a round of drinks in celebration of the 7 years of lean that we are about to embark on, as if the past 4 were not enough.

What is a millionaire

But what is a millionaire?  What do the various groups that are using the term (Democrats, Republicans, Liberal, Conservatives, Libertarians, Independents or any other group that you can think of) mean when they use the word?  What is the term “millionaire” a code word for?  To tell the truth I have no earthly idea at this point in time?

It used to be that when a person was a millionaire he or she current net worth (Assets – Liabilities) was equal to or exceed $1,000,000.00 Dollars.  It was not used as a term to describe someone who income (gross or net) exceeded $1,000,000.00 Dollars per calendar year.  I have no idea what one would call this individual other than possibly blessed and or extremely lucky.

So is a person who has a net worth in excess of $1,000,000.00 Dollars rich?

So is a person who has a net income in excess of $1,000,000.00 Dollars rich?

Lets take the first question.  The answer depends.

I have a cousin who is mentally handicapped he has the ability to function as someone in the third grade.  Both of his parents are now deceased.  After all was said in done the proceeds from their estate was worth slightly more than a million dollars at the time of his fathers death.  Based on various sources his most likely projected lifetime would be on the order of 26 years (the average of various life expectation tables).   We then performed calculation assuming a 4.0 percent inflation rate (computed average 3.23) and 4.0 percent net rate of return (25 year annualized return for SP-500 was 9.28), this calculation indicated that he could expend at most 35K$ per year for his assisted living arrangement and not out live his trust.  Would you classify this individual as a millionaire?  (Net Worth now is in excess of 1M$, but annual income below US Average)

Lets take the second question.  Again the answer depends.

I have another cousin (other side of the family) who is also mentally challenged he has the ability to function as a college graduate he actually graduated from college.  He has a position that has provided him and his family a 7-figure income for many years (Medical Sales will do that).  So on the surface his salary and bonus is slightly over  $1,000,000.00 Dollars (he is a very good salesman, he has almost sold me once or twice).  He lives in a very nice Mac Mansion (Not paid for), he drives a very nice high end Japanese luxury sedan (Not paid for).  He has his hobbies (not paid for).  His American Express bill some months is equal to significant percentage of Americans annual salary.  He has loved often but typically not wisely which has resulted in a cash flow hole that will end some 6 years in the future.  But at the end of the day he has a negative net worth, even with his company life insurance his creditor will still lose.  Would you classify this individual as a millionaire? (Net Worth is less than 0$, but is annual income is way above US Average)

So today what do we really mean when we say millionaire?

I think that in reality our government and individuals in our government actually uses both definitions, it just depends who is talking and what they are talking about. (They never really tell you which definition that they are using after all “In confusion there is Profit” (“Operation Petty Coat” Universal International, 1959)

The first definition (Traditional/Historical) is used when the Government is in the business of collecting estate taxes.  1M$ is a great deal of wealth transfer not to tax, whether you are a Republican or a Democrats.

The second definition (Non Traditional) is used when the Government is in the business of collecting income taxes.  Applying the current low rate to such large amount of income appears to be pure folly especially given the current fiscal situation.  Granted that the number of individuals making these high incomes is a relative few it is being made and it is being made because of the features, benefits and or accommodations of our current system of government.  It is highly unlikely that these individual would be as fortunate operating somewhere else in the world.  It should also be remembered that individuals or relatively large groups of individuals making incomes in excess of 1M$ is historically a relatively recent phenomena.

I am starting to think that more and more individuals are also using the nontraditional definition that a millionaire is an individual whose income whether earned or unearned is in excess of 1M$, but I suspect that will change if and when a relative dies and that relative has an estate in excess of 1M$ that they might share in.

To set the record straight by the traditional definition my wife and I could be classified as millionaires, we have a net worth in excess of $1,000,000.00 Dollars but at no time in our life have we ever received income in excess of $1,000,000.00 Dollars in income.

We have never met the requirements of the second definition, and I suspect that we will never will we are too old, and too slow, and quite frankly do not really need or want the hassle.  They do not pay you that kind of money because you look and smell nice, ok for a few select individual they do, but for most of us they don’t.

We both have college degrees, and we have worked for all of adult lives.  We own a modest house that is paid for (It has been our only house).  We made a concerted effort to pay off the mortgage as soon as possible (did not really care about the mortgage deduction since at best we put a dollar out the door in interest and received a deduction of at best 39 cents.  At the end of the day we were out at least 61 cents.  Pay off the house, and invest that dollar, give 25 cents to the Government and keep 75 cents, a much better deal.  One I am out 61 cents and the other I am up 75 cents.  It is a game of inches).

We own two cars, one (mine) is over 11 years old hers is 5 years old both are paid for.  It is cheaper to fix then purchase a new one.  A vehicles only real purpose is to get you from point A to point B in a safe, comfortable and most cost effective manner, nothing more nothing less.

We strive to live below our means, and yet we live comfortably.

We set about from the beginning on living on one of our salaries and saving the others salary.  We chose to live on the lesser salary and save the greater salary.  We did not get here over night.

We invested in the herds (Indexes Stock, REITs, Bonds, Foreign Markets). Our investments were diversified.  We did not nor do we actively trade.  We invested in funds with low expenses and fees.  Our expectations for our investments are modest.  We did not seek to out perform nor did we want under perform the market.  We know that we cannot beat the market.

We do not invest in things we do not understand or do not make sense.  The majority of our investments are in companies that make things that people need versus making things that people want.  Our investments are not exciting or for that matter entertaining (you want exciting and or entertaining try the movies or the circus).

We tend to our investments like a garden.  Periodically we do pull the weeds (losers) and compost them (reinvest the proceeds).  We will sell when it makes sense (High) and buy when it makes sense (Low).  Investments are for the most part spreadsheet driven it removes the emotions of the moment.  We practice the three-day rule on large purchases or sales of any investment, in other words no quick snap decisions.

We have found that the hardest thing to do concerning investing is that sometimes you must do nothing.  Do not have a clear idea of where to invest your money then let it sit in cash.

We periodically review our contribution allocations and make adjustments if the situation requires, it is not set it and forget it.  We keep enough of our investments in cash to pay our modest expenses for 12 to 18 months.

A smaller government, why not smaller congressional support staff?

According to the CNBC post

 “The truth is that both the president and House Republicans have agreed to shrink a critical part of the government to its smallest in at least half a century.”

www.cnbc.com/id/100326700

Does it not stand to reason that the Senate and House member’s staff should also shrink?

Does it not stand to reason that the White House Staff should also shrink?

As of 6 January 2011 House Resolution 22, reduced each members authorized level for 2011 and 2012 by 5 percent of the 2010 level.  2011 allowances range from $1,356,975 Dollars to $1,671,596 Dollars with an average Member’s Representational Allowance of $1,446,009 Dollars.  This according to the Congressional Research Service document found at the following link

library.clerk.house.gov/reference-files/112_20120104_Salary.pdf

Well it time for another House Resolution to fund the Member’s Representational Allowance.  It was nice that they took a 5 percent hit off of the 2010 allowance levels.  The question now is what about 2013 and 2014 Members Representational Allowance?  Are we the people only going to get a token reduction, or will congress step up show some leadership reduce their spending on their own offices and staffs?

The distinguished members of the Congress of the United States should step up and take one for the team cut your staff positions, not one of the lower paid slots, no fish bone the salaries, and pick a salary that will make a statement, that you care.

I know it is hard to come to plate, and then crowd the plate, know that the pitcher is going to throw the heater at you, and you have to step into the pitch, it will hurt but you will get on base and after all you know you cannot score unless you are on base.

I am sure that like most business, your largest expense item in your Members Representational Allowance is personnel, people are not cheap, and good people are really not cheap.  At the present time you are limited in the number of individual you may hire full time and part time (There is just so much of God’s work that must be done, what was leadership thinking when they came up with this).  Additional limits have been placed on the maximum salary that you may pay individual staff members (Good people are really expensive). Finally your Official Office Expenses are capped (do these people not know how expensive office supplies and equipment are?).

It is tough being a member of the United States Congress, and it just keeps getting harder in that you must stand for re election every two years (What were the founding fathers thinking), especially now given that you must start your campaign for your next term no sooner than you were elected to the current term (24 hour news cycle is a bitch).  To make matter worse the voters actually expect you to do something legislatively (What were they thinking, or were they even thinking?)

I know reducing your Members Representational Allowance, by any significant percentage (25-45 percent) would not significantly change the current deficit picture, the few hundred Million dollars of savings would hardly change the current very deficit number.  But a mighty Oak grows from an acorn, and a start is a start.  One must begin the journey somewhere.

I know that a 25 to 45 percent reduction in the Members Representational Allowance would put a great many good people out of work, but good people typically do not have a problem finding a new job, or at least that is what you are told.  If these individual are not fortunate to find a new position, well there is always unemployment insurance (Or did we gut that fish), anyway if they are unemployment it is certainly cheaper for the United States, unemployment payment is considerable less then their current salaries, and after all it all comes out of the same pot, and you still have your position (That a good thing, right?) and you will have reduced United States government expenditures, and made government smaller (I am sure that these two items were central to re election campaign).

And You Wonder Why?

As the United States Operation in Iraq enter the next to last phase, extracting all of our operational personnel and equipment associated with “Operation Iraqi Freedom” out Iraq and gets them to Kuwait for preparation and transport back to CONUS, we the people of the United States do not know what this side trip down the rabbit hole has really cost the country.

Something we know with an exacting precision.  We know that at the end of Sept 2011, a total of 4,483 members of the United States Armed Forces were listed as Killed in Action.  We know that at the end of Sept 2011 a total of 32,200 members of the United States Armed Forces were listed as Wounded in Action.  Concerning these individual what we do not know and will never know is the associated misery and suffer that was a result of their loss.

That is not the only thing the United States Government cannot determine with any certainty.   The other is the  dollar cost of the trip down the rabbit hole.  The Bush Administrations initial published estimates was $60,000,000,000 (60 Billion Dollars).  The current administration has published estimates of the cost in the range of $845,000,000,000 (845 Billion Dollars).  We only missed the Bush/Rumsfeld estimated number by a factor of 14.  Although now it looks more like a WAG (Wild Ass Guess).   Some might argue that it should be a SWAG, but that for another rant.

If we could get an accounting of the cost to within normally accepted margins of error, 10%, 1%, or .01%, and the current number of 845 Billion Dollars is closed the “Actual Cost” we are looking at anywhere between 84.5 Billion Dollars to 84.5 Million Dollars of error in the number being provided.

And you thought that Accounting was precise, well as far as the Federal Government is concern you are very sadly mistaken.  Now as no other time in the history of the United States have the prophetic words of Everett Dirksen, Republican Senator Illinois, 1950-1969, have been more salient to the nation and our current circumstance.  Three come immediately to mind.

“We are becoming so accustomed to millions and billions of dollars that "thousands" has almost passed out of the dictionary.”

 “A billion here, a billion there, and pretty soon you're talking about real money”.

Probably his most prophetic statement is

“I have said, with respect to authorization bills, that I do not want the Congress or the country to commit fiscal suicide on the installment plan.”

Which is exactly what the Congress and the administration have done since 2003.

Off the book expenditure for the Wars on top of the existing DOD Budget are as follows:

Fiscal Year	Billion Dollars
2003	78.5
2004	107.5
2005	82.0
2006	72.4
2007	170.0
2008	190.0
2009	130.0
2011	159.3

For those of you that are counting via the installment plan for fiscal suicide the Congress and three Administrations (Bush Terms 1 and 2, Obama 1) have spent or authorized 994.7 Billion Dollars that we did not have, that we did not commit existing revenue streams to cover, that we did not commit additional revenue streams to cover.  And you wonder WHY.

For an individual who used Audacity in the Title of a Book

First a definition to refresh our memories.

Audacious: Intrepid Boldness, Bold or arrogant disregard of NORMAL restrains.

Synonyms: Brash, Brazen, Hutzpah.

With all due respect and admiration to William Shakespeare Act 3, Scene 2 of Julius Caesar, let me say that Barack Hussein Obama, is a very nice, and decent, honorable man.  I am sure that he is a pleasant conversationalist.  He is intelligent; He is caring; He has a sense of Justice; He is a man of Letters.  Not withstanding all of this his actions, or more precisely his lack of action to date concerning the United States Economic Crisis he should not be considered to be Audacious, or to have any audacity, by any rational individual.

It is said the Barack was impressed with “Team of Rivals”, and supposedly how Lincoln lead or managed from behind during the civil war.  That some how he made the group not only work together, but that every member of the group was an equal to the tasks, and all were contributors.  The book is a good read, but for many students of the civil war it did not fill in any missing blanks, and in some cases completely glossed over some of the real documented problem with cabinet.  The comment in John Hay diary in the summer of 1863 is one of the primary pieces indicating that all was not well in the team.  Hay relates that Lincoln had to resort to “tyrannous authority”, and that “most important things he decide & there is no cavil."  The two major reasons that Lincoln won the civil war were he had the logistics systems to support his troops in the field, and he finally found some General who could fight.   Jefferson Davis, never had the logistics system to support his troops, and he ran out unoccupied territory, and out of Generals who could fight.  The Civil War was a war of attrition.

If we are looking for an individual who will clearly defined Goals.  If we are looking for an individual who can clearly articulate these Goals.  If we require an individual who can formulate a strategy and effectively communicate the Strategy to achieve these stated Goals, then to date Barack Hussein Obama has not demonstrated that he is that person.

One can lead from the rear, and that is fine, but one must have a clearly defined goal, and then one must create and communicate to all what the strategy is for achieving these goals.  I have not heard Barack clearly define any goals on any subject, other than to keep on keeping on, or if we just hang on it will all get better some day.

It appears that Barack Hussein Obama has adopted a path to re-election, which will present to his opponents a record of actions that cannot be assaulted, since to date his record is quite absent of any real actions to assault.

The one true weapon in the arsenal of the President of the United States that Barrack Hussein Obama has fail to use is the “Bully Pulpit” as of 30 June 2011 the president has only had 3 News Conference, he has had numerous one on one interviews, but they are not quite the same as the man coming out and being pushed across the networks at the same time.

In 2010 in an interview with Diane Sawyer, Barack Hussein Obama made the following statement “I’d rather be a really good one-term president than a mediocre two-term president”.  It appears that the other possibility have never been articulated by the president, and they are a mediocre first term president, and good second term president, or mediocre first term president and no second presidential term to judge.

From my position up till now it really looks like he trying to make this last option into reality.  The economy is in bad shape, and other than some platitudes about feeling our pain, his lack of leadership on the issue almost borders on malfeasants.  We have a sucking chest wound and rather than plug the hole and keep the lung from collapsing he would rather collapse a lung and have a really compromised economy for an extended period of time, rather than do anything to remediate the situation.  To date these are not the actions of a man with audacity.  I do not hold out much hope that the term audacious will be even with the loosest of interpolations be applied to the job plan Barack Hussein Obama is to be announce in the coming weeks.

For an individual who used audacity in a book title Barack Obama appears to be the antsiest of one who is audacious.