“A joy it will be one day, perhaps, to remember even this.”

This beautiful passage taken from book I, line 203 of Vergil’s Aeneid has been running through my mind for the past several months.  We find Aeneas trying to console what’s left of his troops as they lay shipwrecked on the shores of Carthage.  I have seen a lot of translations of this line from many different scholars, but it is Robert Fagles’ most recent translation that truly captures the gravity of what Aeneas and Vergil are trying to say.  The word “perhaps” leaves the reader recognizing that it may not be pleasing to remember even this.

As a student of history, it is advisable to find certain lessons passed down from our ancestors and apply them today.  In thinking about Aeneas’s words in a modern sense, I find myself drawn into today’s economic turmoil.  When looking at the mess today, how can we set a policy that will be pleasing to reflect on moving into the future.

At no time in American history have we seen Government spending and action on such a broad, overarching scale.  It seems that with every passing day, the lawmakers of our nation present new measures of spending that will effectively enslave future generations.  If we look historically to the view of debts, we find in a letter dated September 6, 1789, Thomas Jefferson wrote to his friend James Madison the eloquent words: “…that the earth belongs in usufruct to the living.”  Jefferson explains that the actions of one generation, as determined by the laws of nature, cannot impose obstructions to the life of those in the future.  Jefferson is speaking directly to the issue of debt, and its effects on future generations.  This can be more simply understood through a case study:  if one generation were to pass, say, a $800 billion spending bill, money that the government does not have, future generations will be forced to repay the debt, though they had no say in the measure.  If we are to accept the case study, Jefferson would conclude that future generations will forfeit their natural rights of life, liberty and property through the actions of which they had no say.

Jefferson proceeds into several, more radical conclusions with his argument, which can be rejected due to practical issues, but a portion of Madison’s response should be viewed as explaining a fair extent of debt assumption by one generation: through the protection of natural rights with regards to war.  Madison’s summation is that if a nation is invaded, attacked, or even at war, it becomes suitable to incur debt to protect the natural rights of future generations. Madison effectively establishes a fair use of Government power in this passage.

Fast forward to the present day; several entities would attempt to persuade the American people that the current spending actions of the Federal Government are suitable in protecting the natural rights of future generations.  We are offered a Keynesian solution to our current fiscal dilemma, similar to what was used in the 1930’s and the 1970’s in order to “jumpstart” the American economy.  But is it not the case that the government actions of the 1970’s, for example, have caused the current fiscal issues of today?  If we look to Government programs from that time:  the Community Reinvestment Act,  further protection of labor unions, & etc… a direct correlation can be drawn to fiscal issues within today’s housing industry collapse, as well as the hijacking of the auto industry by labor unions.

Let us also consider the idea that the Federal Reserve can simply print more money to help curb economic constraints like unemployment.  The direct effect of such an action would be to create assured inflation within the system.  F. A. Hayek spoke in an interview with Meet the Press on June 6, 1975 regarding similar issues facing the global economy.  Bluntly stating: “All inflation is ultimately the problem of activities which Government determines and can control.”   Hayek debunks the notion that the Government simply spending more will fix all of our problems.  He continues “…and all inflations have been stopped in the past by the Government stopping creating money or preventing the Central Bank from creating money.”  When pushed further by Irving Levine, Hayek also states that it is the creation of aggregate demand to curb unemployment through Keynesian activities that also played a major role in creating the inflation of the 1970’s.

So what are the effective solutions?  History has taught our generation that government creating  and spending money does not serve as a solution moving into the future.  At its very minimum, it simply places the burden of debt on generations that had no say in the matter.  In 1975 Hayek warned that problems government was creating would become evident in roughly twenty years, it would appear he was correct.

We as a generation must take into consideration not only the results of our present actions, but also what effects will be imposed on future generations, our children’s generation.  A truly effective solution would be to have the kind of government action taken to reduce corporate tax rates to invite business solutions, a strict reduction of labor unions power so that they cannot simply strangle an entire states economy, and most certainly NOT sending the American economy further into debt, regardless of which party does it. We mustn’t allow our fear of a natural correction in an economic cycle cloud our judgment on what actions should be taken. We must, as Hayek said, remove the desire to spend more to help solve solutions, especially when the result effectively enslaves future generations to debt.

Forsan et haec olim meminisse juvabit.

Just yesterday I pointed out that all economic indications are that this is the worst economy since 1982, NOT the Great Depression (at least not yet.)  Well, that was BEFORE the stock market closed yesterday and we had the results of the market’s reaction to The Teleprompted One’s first full month in office.

So, how did February pan out for Obama on Wall Street following the unveiling of all his economic plans and policies throughout the month?

The Dow Jones Industrial Average dropped 119.15 points, or 1.7%, to end at 7062.93. The blue-chip benchmark ended down 937.93 points, or 11.72% on the month — the worst percentage drop for February since 1933, when it fell 15.62%.

Ouch!  As we’ve pointed out before, reaction on Wall Street is primarily driven by psychology and how people view the future, not by P/E ratios and other logical economic benchmarks.  (SIDENOTE: Do you homework, there are many stocks out there right now that are undervalued and good bargains to pick up at this point.)  Obviously, the market doesn’t have confidence in where Obama is leading the country economically.

If the nation slides into another Depression, it will have been on Obama’s watch and it will have been his wrong-headed policies that turned 2009 from 1982 into 1933.  We have two worn paths that we can follow — Reagan and FDR.  In each case we know how that all worked out and we should all be concerned that Obama is leading us down the wrong path.

The Teleprompted One’s first budget exhibits the economic naiveté that many of us feared it would, containing more well-intentioned liberalism that will only have the reverse impact and ultimately make things worse.

First up, this gem:

Still, the charitable giving deduction reduction, which would limit deductions for couples making $250,000 or individuals making $200,000, provoked the most heat Thursday. Mr. Obama is counting on that provision to raise $179.8 billion over 10 years.

“Some of the reforms and offsets contained or referenced in the budget, such as the limitation on itemized deductions, raise concerns and will require more study as we determine the best policies for getting America back on track,” said Finance Committee Chairman Max Baucus, Montana Democrat.

Roberton Williams, senior fellow at the Tax Policy Center, said it’s impossible to calculate the exact effects of all the tax changes, but said the overall result is clear - less philanthropic giving.

“This will lead people to give less to charities if they behave the way they’ve behaved in the past,” he said. “We’ve already seen a drop in giving as a result of the economic collapse. On top of that, this will just reduce the amount of giving.”

Asked about that, Office of Management and Budget Director Peter Orszag said Mr. Obama took care of that by giving charities government money to make up part of the difference.

“Contained in the recovery act, there’s $100 million to support nonprofits and charities as we get through this period of economic difficulty,” he said.

In other words, the Obama administration isn’t so hot on private charitable giving.  They’d rather have the federal government pick the winners and losers among charities.  (We all know how well that turned out in Illinois where former Democrat-ick Gov. Rod Blagojevich tried to shake down the head of a children’s hospital for campaign contributions in exchange for state aid to the hospital.)

Next up, affordable education:

Democrats cheered his plan to return the upper two tax brackets to the levels they were before Mr. Bush’s tax cuts and Mr. Obama’s plans to boost Pell Grants for low-income students to attend college. Republicans said the tax increases will hurt small businesses the most, killing job-creation, and protested making Pell Grants a new entitlement program, meaning Congress could no longer control yearly spending for it.

Here’s a dirty little secret.  Like anything else, colleges react to market forces.  If they can charge more for a product, they will.  If we haven’t already, we will soon see a “college tuition bubble” akin to the housing and dotcom bubbles.  Why has college tuition continued to skyrocket over the past 20 years or so?  Because college administrators figure that students can get Pell grants, student loans and other kinds of financial assistance to help pay the exhorbitant tuition they charge.  The more the government “helps” students, the more colleges can charge and then well-intentioned people turn right around and decide that students must have access to more money to pay for that higher tuition.  It is a vicious cycle that feeds upon itself creating runaway inflation in the education sector.

This is very similar to what happened in the housing market.  Home builders won’t price a home at a level that no one can afford.  After all, they need to sell the homes they build.  But once the decision was made for the government to adopt the policy that every American should have the opportunity to own a home, we saw the financial insanity that wrought.  People were approved for loans they could never afford to pay back.  With all that money floating around, builders could charge practically anything they wanted for a home and they did.  At least until the whole house of cards came crashing down.  But that is exactly what happens when the government interferes in the private sector.

Getting back to college tuition.  It is an outrage that people have to spend decades of their lives just paying off their student loans instead of saving to buy a first-home or a new car, putting money into a retirement account or even socking something away for their own children’s college education.  Government providing more funding for college aid doesn’t make it more affordable.  It only leads to higher tuition.  With talk now that just as in the Industrial Age a high school education was made universal we should move to making a college education universal for the Information Age, we should be wary of turning college financial aid into yet another entitlement program.

I am all for helping students out who truly need it.  It used to be the role of scholarships to help these students, either from the college they were attending or the private sector.  College endowments and work-study programs were also ways by which students could receive assistance to pay their tuition.  Other students got jobs and went to school at night (which is how my dad got his degree.)  Still others joined ROTC or the military in order to have their tuition paid for them.  And let’s not forget the roles played by state colleges and universities or even community colleges (my mom taught at one for nearly 40 years and saw many of her students go on to do great things) and vocational training schools.  To be blunt, not every person needs a college degree.  In fact, some of our nation’s most successful businessmen either dropped out of college or never went at all.  It truly is ironic to say that college must be made universal in the Information Age when two of its pioneers, Steve Jobs and Bill Gates, are college drop-outs.

I have no doubt that Obama and the people in his administration are well-intentioned when it comes to charities and affordable education.  They just don’t live in the real-world and understand the consequences of their actions when they try to “help” people out.  Often times, liberals helping has the same result as when Urkel would try to help.

“Oops!  Did I do that?”

This just in from PWC Chairman Corey Stewart:

The Prince William Board of County Supervisors will vote this Tuesday March 3 on advertising a property tax rate.   I am proposing a rate that will reduce tax bills for homeowners by an average of $548.00 (a 16 % reduction).   I want to thank Supervisors Maureen Caddigan (Dumfries), Wally Covington (Brentsville) and John Stirrup (Gainesville) for joining me in supporting this tax relief. 

This tax rate of $1.198 will support the County Executive’s proposed budget, which reduces government spending by $56 million compared to last fiscal year without cutting any of our uniformed police or fire and rescue personnel.  The County Executive’s budget is responsible and sustainable.  By focusing our resources, it allows us to protect vital county services while providing tax relief to you during these uncertain times. 

To pass this tax reduction, we need at least five supervisors to vote this Tuesday in support of the $1.198 tax rate.  Please email the Board at BOCS@pwcgov.org urging the whole Board to join Supervisors Stirrup, Covington, Caddigan and myself in supporting this rate and ensuring tax relief for you.   

Please be sure to tune into Comcast Channel 23 or Verizon FIOS Channel 37 to see how your supervisor votes.

Huh?

The faster downhill slide in the final quarter of last year came as the financial crisis — the worst since the 1930s — intensified.

. . .

But the new GDP figure — like the old one — marked the weakest quarterly showing since an annualized drop of 6.4 percent in the first quarter of 1982, when the country was suffering through an intense recession.

. . .

The nation’s unemployment rate is now at 7.6 percent, the highest in more than 16 years.

So, what are we to believe?  All these assertions without accompanying facts that this is the worst economic downturn since the Great Depression or the historical economic data saying this is the worst economic downturn since 1982?  Sure invoking the Great Depression makes for useful rhetoric, but the facts (at least not yet) don’t support that.  (Of course, decades from now economists may be picking over to determine exactly which parts of The Teleprompted One’s economic policies were the Smoot-Hawley of our time that led to the Second Great Depression.)