Why is
government spending out of control? Why does government own entire industries
that used to be part of the private sector?
How did education and healthcare costs become unsustainable? How did the US become a debtor country? What is the right balance between personal
responsibility and government welfare?
The answers are in our history
1789 to 1860
In 1789,
when George Washington became our first President, tariffs, land sales and
other fees were used to fund the government. The Revolutionary War debt was
financed by a private bank and paid off over time. Tariffs made foreign-made
goods more expensive, but it also allowed the US to establish its own
manufacturing industries.
Our
politicians have typically been business owners, whose businesses were running
well enough to give them time to become active in local politics. Our Founders
were plantation owners, business owners and professionals. Many were elected to
posts in State Colonial governments
Their
world-view was based on the writings of a select group of thinkers who believed
in personal sovereignty, free will and natural rights. They were the heirs of
the Magna Carta adopted in 1217 in England to begin to impose limits to the
King’s powers.
These
rights were enshrined in our founding documents, but they excluded slaves who
were regarded as property and American Indians who were in the way. In the
minds of our leaders, this oversight was not considered. Our expansion was the only consideration at the
time. We were not alone. In 1789, most other countries had no problem using
slaves or abusing indigenous people, or restricting voting to property owners.
There were 4 notable Presidents who get the credit for securing US expansion.
George
Washington is credited for winning the Revolutionary War in 1783, serving as
our first President from 1789 to 1797 and establishing the 2 term limit.
Thomas
Jefferson is credited with writing the Declaration of Independence in 1776,
securing the Louisiana Purchase in 1803 and serving as President from 1801 to
1809.
Andrew
Jackson is credited with winning the War of 1812, serving as President from
1829 to 1837 and pushing US expansion.
James
Polk is credited with completing our Western expansion by annexing Texas in
1846, winning the Mexican American War in 1848, being Andrew Jackson’s tag team
partner for expansion, serving as President from 1845 to 1849 and refusing to
serve a second term.
From 1789
– 1860, the US government operated according to the US Constitution (as
written). It adhered to the limits of the enumerated powers. During this period, the US government
conducted wars of expansion to secure the territory it now occupies in North
America and paid for these wars by selling the land it had won to its citizens.
In 1848, the Mexican American War ended with the Treaty of Guadalupe. That
allowed US citizens to complete the settlement of the West Coast. The wars of expansion were limited to Indian
Wars and those ended with the defeat of the Sioux in 1890 at the battle of
Wounded Knee in South Dakota.
From 1789
to 1860, our elected officials presided over a free market economy as guardians
and expanded across the continent to isolate us from foreign aggression, using
2 oceans and limiting conflict on the borders with Canada and Mexico. Government
remained small and revenue was preserved to secure what was necessary. Citizens
were responsible for themselves and free to be self-supporting. The free market
system controlled prices. In this
period, the US completed its expansion and began to participate in the
industrial revolution.
In 1795,
the first railroad track was built to haul dirt from a mound removal project.
In 1830, the first passenger railroad began operation using a coal fired steam
engine. Rail systems were created to haul coal, mineral rock, freight and
passengers throughout the US from 1830 to 1860.
In the
1800s, steam engines began to replace water wheels to run mills and were used
to power factory equipment.
In 1825
we completed the Erie Canal. It was built
to create a navigable water route from New
York City and the Atlantic
Ocean to the Great
Lakes.
Conclusions
The US
began with 13 colonies squeezed on the East Coast of the continent and expanded
to 3.5 million square miles to the West Coast. It took 72 years from 1776 to
1848 to accomplish this. We followed the US Constitution (as written) and we
prospered. The US population was 34.4 million in 1860. The industrial
revolution had begun and companies were hiring workers as increasing levels. We
had no unemployment, we had a labor shortage. From 1789 to 1860, the US
functioned with maximum reliance on individual citizens’ personal
responsibility and the US government honored the limits imposed in the US
Constitution (as written).
1860 to 1900
In 1860,
the US government was challenged with the secession of the Southern States and
the Civil War raged from 1960 to 1865. The Northern States won the Civil War in
1865.
From 1860
to 1913, we completed the Western settlement and focused on connecting the
country for commerce. The transcontinental railroad was built from 1863 to
1869. It connected Omaha Nebraska with San Francisco California and stretched
1,912 miles. We also worked on developing our manufacturing, transportation,
energy, sanitation and communication technologies.
In 1844
the first telegraph line was running. In 1870, electric power was introduced.
In 1893 the first US automobile manufacturing company was created.
In 1872,
Congress seized 3468.4 square miles of land from Montana, Wyoming and Idaho in
violation of the US Constitution without filing an Amendment for ratification
by the States.
In 1898, the US invented military foreign aid by entering
the Spanish American War to remove Spanish control of Cuba and the Philippines.
This was the first of what would be many foreign wars the US military would
fight to “protect US interests”.
In 1901, then Vice President Theodore Roosevelt became
President after the assassination of William McKinley. He served until 1909. He
stopped corporate mergers and proceeded to break up the large companies that
had enabled the US to succeed in the Industrial Revolution. He was a big
government, managed economy guy, who ignored the US Constitution. He coined the
term “Progressive”.
In 1906,
Theodore Roosevelt signed the American Antiquities Act allowing the federal
government to seize more land for national parks, nature preserves and national
monuments. There was no Amendment passed or ratified to allow this. The US government now owns 30% of the US land
mass they seized from the States.
Conclusions
We
survived the Civil War. The US population was 31.4 million in 1865. We were in
the middle of the industrial revolution and expanding railroads to the West.
The industrial revolution culminated with a flood of inventions that included
electric power. Our federal government failed to protect and defend the US
Constitution (aw written) in 1872 and there were no consequences.
1913 to 1940
Prior to the passage of the 16th Amendment in
1913, the United States government funded its operations mainly through excise
taxes, tariffs, customs duties and public land sales. The federal government
had relatively few expenses compared to today and did not have as much need to
raise large amounts of money.
In 1913,
Congress passed the Income Tax Act with a 1% income tax rate. The tax rate rose rapidly and the top rate
reached 90%.
They also
passed the Federal Reserve Act, delegating their responsibility to coin money
to a private bank and inflation rose 200%. A loaf of bread was 2 cents in 1913,
now it’s $4.
The
metaphor of boiling a frog is applicable here. In 1913, we quietly shifted from
a free market economy to a managed economy. The poor do better in a free market
economy with no government interference, because their earnings always lag
inflation.
Governments can pay their bills in three ways: taxes, debt,
and inflation. The public usually recognizes the first two, for they are
difficult to hide. But the third tends to go unnoticed by the public because it
involves a slow and subtle reduction in the value of money, a policy usually
unarticulated and complex in design.
In 1914,
World War I began in Europe between Austro-Hungary and Germany against Great
Britain, France and Russia. The US entered the war in 1917 and won, but Europe
never recovered and socialism took hold in the US and Europe.
In 1916,
Congress passed the Child Labor Act, but it failed. Most children were
homeschooled, had tutors and held jobs to help support the families. Congress continued to attempt to pass child
labor laws, but Amendments were rejected by the States. In 1938 Congress passed the Fair Labor
Standards Act with child labor provisions and ignored filing an Amendment.
In 1917,
Communists had infiltrated Russia and began a civil war to depose the Czar.
This resulted in the founding of the Soviet Union in 1922.
By the
1920s, all of the inventions were now available to consumers who could get
electricity, telephones, automobiles, indoor plumbing and home appliances. This
was the beginning of the middle class US consumer.
In 1929,
the US stock market bubble crashed and unemployment reached 25% in the cities
until 1940.
In 1930,
US crops suffered a drought that lasted until 1940 and farmers went bankrupt.
By 1930,
Communists had infiltrated the US government, media and universities and were
hoping to create a socialist republic by following their goals published in
1920.
In 1933,
we elected Franklin Roosevelt as President and he clearly didn’t follow the
Constitution. He instituted “public works” to build infrastructure, but it
didn’t prevent the wide-spread poverty. He did advance socialism in the US.
In 1935,
Roosevelt passed the Social Security Act as a compulsory national pension Ponzi
scheme that saddled the federal government with unfunded liabilities. This
should have created individual accounts participants would own and could invest
like a 401K.
In 1939,
World War II began with the invasion of Poland by Germany.
Conclusions
Our
federal government continued to ignore the limits imposed by the “enumerated
powers” and was allowed to expand beyond the limits imposed by the Founders and
there were no consequences. Nobody was interested in making the federal
government follow the Law. World War I was all about “military foreign aid”.
1940 to 1950
By 1940,
jobs were returning in cities to manufacture military equipment for sale to our
allies who were at war with Germany.
Also, the drought was lifting and the farming economy returned.
In 1941,
the US entered the war after the Japanese attack on Pearl Harbor and military
equipment manufacturing exploded. All able-bodied US men were entering the US
military and all able-bodied US women went to work in military manufacturing.
US Unemployment ended.
The
players in World War II were the “Axis” powers that included Germany, Italy and
Japan at war with the “Allied” powers that included the US, Great Britain and
the Soviet Union.
In 1940,
troops from France and Great Britain landed in North Africa to fight the
Germans.
In 1942,
US troops joined the war in Europe by joining the North Africa campaign. We won
in 1943 and moved on to Italy.
In 1943,
Italy surrendered and allied troops moved up to confront Germany. Also, Russian troops began to chase German
troops back.
In 1944,
allied forces landed in Normandy (France) we won the war in Europe with the
surrender of Germany
In 1945
we won the war in the Pacific with the surrender of Japan. The dropping of the atomic bomb on Nagasaki
and Hiroshima caused the Japanese to surrender.
In 1945,
US men began to return and the country began to reconvert back to consumer
manufacturing. Housing boomed as young couples married and moved to the
suburbs. All other consumer goods boomed. The US was the global manufacturing
center and remained so until war-torn countries could rebuild their economies.
During
World War II, the US had provided military equipment to England and the Soviet
Union and after the war the US gave aid to Europe and had US General Douglas
McArthur write a new constitution for Japan that enabled them to revive their
economy.
In 1945,
the Soviet Union refused to pull their troops back from Eastern Europe and the
US failed to prevent this land grab. This was a mistake that would result in
more cost to the US. If the US had
turned its armies on the Soviet Union to free Eastern Europe, our troops would
have had to fight for another 2 years. We had the atomic bomb and the Soviet
Union didn’t, so we would have won this additional war and contained the Soviet
Union. We could have prevented the costly Cold War that lasted until 1989.
In 1945,
the failed League of Nations was replaced with a more dangerous United Nations.
In 1947,
Communists had infiltrated China, created a revolution and established a
communist government in China. Also in
1947, “Progressive” Justice Hugo Black wrote the Supreme Court opinion on the
separation of church and state to begin the war on Christianity.
In 1947
the Cold War officially began and by 1949, the Soviet Union had the atomic
bomb. They had won the bluff and secured the Eastern European countries and
were ready for more expansion by installing communism in would-be satellite
countries.
1950 to 1960
In the
1950s, the US economy offered full employment and great opportunity. The cost of education, healthcare and
interest was low. The cost of living was
reasonable. Most US citizens had automobiles, appliances, telephones, etc. Many
bought homes in the suburbs. We began building the interstate highway system in
1956. It was a period of plenty even though the income tax had a top rate of
90%. The popular culture was still dominated by a strict moral code of behavior
instilled in the population during the war. It continued in the media until the
1960s.
In 1950,
Communists had infiltrated and secured North Korea and their troops invaded
South Korea. The US intervened and established separate countries in 1953.
In 1953,
Communists had infiltrated Cuba and created a rebellion to oppose their
government. The US gave aid to Castro. He
established Cuba as a Communist country in 1959.
In 1955,
Communists had infiltrated and secured North Vietnam and their troops invaded
South Vietnam. The US intervened and lost the war in 1975 and Vietnam became a
communist country.
1960 to 1980
By the
1960s, American Communists had achieved most of their goals to further advance
socialism in the US. Race riots erupted, teens discovered drugs and sex, the
birth control pill became available in 1964 and the media called it the “sexual
revolution”.
In 1962,
the Second Vatican Council ushered in the demise of church subsidies in
education and healthcare.
In 1964,
Lyndon Johnson passed Medicare, Medicaid and Welfare, greatly expanding the
federal government’s exposure to unfunded liabilities. He passed the Civil
Rights Act in 1964. In addition he expanded the Vietnam War to no avail and
resigned in 1968.
In 1968,
Richard Nixon won the Presidency as the “law and order” candidate. We were
tired of race riots. In 1969, we landed on the moon and nobody was there. In
1970, Nixon imposed wage and price controls to fight inflation. In 1972, Richard Nixon visited China to begin
trade relations.
In 1975,
Nixon ended the Vietnam War by giving South Vietnam to North Vietnam. The US
fought this war from 1955 to 1975 and we lost.
In 1978
US automobile costs doubled and home mortgages were about to double. The
federal government was monetizing the federal debt and inflation was cutting
household incomes in half.
The
Feminist Movement of the 1970s was the advanced public relations stunt to get
women to work, because they could no longer afford to live on one income.
1980 to 1990
The
Personal Computer was being developed in the 1970s and hobbyists had them.
Portable phones and modems allowed us to access computers, but microprocessors
were still to weak to allow internet access for home PCs. In the 1980s, I had a DEC Rainbow connected
to the internet at NJIT and could send and receive email with my group at WBSI
Strategic Studies.
In 1993 I
bought a Gateway PC and used it in my consulting practice. By 1996, microprocessors were large enough to
fully function and I was able to send files as email attachments. The PC
revolution had a big economic impact on the US.
In the
1980s, advances in electronics components prompted a retooling of all companies
and created economic prosperity that followed from the multiple design cycles
created in most industries. This increased productivity as companies could
automate functions, increase throughput and grow revenue.
This
prosperity lasted through the 1990s, but off-shoring manufacturing in the late
1990s took our jobs away. We had solved the quality problems through automation
and refined processes and these controls allowed companies to set up
manufacturing operations in other countries to reduce their costs. These
countries had lower labor costs, lower regulations and lower taxes.
By the 1980s,
Communists had infiltrated countries in South America and Africa. The US
intervened with aid to anti-communists, but failed in most cases.
In 1980,
Ronald Reagan won the Presidency as the “truth teller”. He admitted that our
inflation was caused by monetizing our debt. He cut income taxes, cut
regulations, rebuilt the US military, brought interest rates down and Reagan is
credited with ending the Cold War by 1988. The Soviet Union was broke and he
knew it. He called them the “evil empire” in 1983, but then befriended their
leader Mikhail Gorbachev and was supportive as he planned to dismantle the
Soviet Union and free the satellite countries.
In 1986,
Congress adopted a new Immigration Law that allowed unfettered immigration
based on family reunification rather that labor needs
In 1988,
George HW Bush was elected President and he served until 1992. In 1989, he
doubled immigration that led to the excessive immigration of 60 million. In
1992 Bush signed off on UN Agenda 21 based on the global warming hoax.
In 1989,
the Soviet Union was dissolved and the Russian Federation was created to
replace it in 1991.
1990 to 2018
In 1990,
George HW Bush conducted the Gulf War to free Kuwait from Iraq with coalition
forces and defeated Iraq in 7 months, but didn’t depose Saddam Hussein
Most of
the former Soviet Union satellite countries were successful in reestablishing
themselves after they were declared independent, but Yugoslavia suffered a series of ethnically-based wars and insurgencies fought
from 1991 to 2001.
The result was the creation of 6 separate countries.
A few of
the former Soviet Union satellite countries were able to adopt a free market
system and expand their private sector economies.
In 1992,
Bill Clinton became President and served until 2000. He balanced the federal
budget by cutting military spending and reformed welfare. He also ordered the implementation of UN
Agenda 21 in the US. In 1993, he joined
NAFTA to allow US companies to locate US jobs overseas, but didn’t cut the US
corporate tax rate. He also signed the Community Reinvestment Act of 1993 to
force lenders to give mortgage loans to unqualified buyers. The US National
Debt was $5 trillion in 2000.
In 2000,
George W Bush became President and served until 2008. The terror attack on the
Twin Towers in New York prompted him to send US military to Afghanistan and
then to Iraq to chase the terrorists and do “nation-building. He also presided
over the 2008 Meltdown caused by the Community Reinvestment Act. The US
National Debt was $10 trillion in 2008.
In 2008,
Barak Obama became President and served until 2016. He created Obamacare to destroy
the US healthcare system. He was hired by George Soros to maintain open
borders, increase immigration, eliminate fossil fuels to comply with US Agenda
21 and turn the US into a 3rd world country. He promoted Muslim
infiltration in the US and the Arab Spring in the Middle East. That allowed terror groups to grow. The US National Debt was $20 trillion in
2016.
In 2017
Donald Trump became President to restore the US economy and clean up Obama’s
mess. In his first year, he appointed a Constitutional Conservative to the
Supreme Court, cut taxes, removed the US from UN climate accords and TPP,
removed unnecessary regulations, removed Obamacare penalties and re-set foreign
relations with his “America First” program.
Democrats
have countered with “snowflake” riots, law suits, court challenges and
Bolshevik marches.
The
history of federal spending from 1790 to 2015 shows the jump from under 10% of
GDP in 1940 to 20% of GDP in 2015.
Conclusions:
We have
squandered our birthright on foreign wars and socialist programs for things
that would have been better handled by the free market and using the law of
supply and demand to allow the consumer to control prices. We should have stuck
with the US Constitution (as written).
Going
forward, we need to privatize most government functions and shrink the cost,
size and footprint of government at all levels. We need to begin planning to
pay off our National Debt back to the $5 trillion level.
We need
to guard against future inflation. In 1960, a good household income was $10,000
a year. In 1980 a good household income was $60,000 a year. By 1990 a good
household income was $100,000 a year.
If we
allow the federal government to continue to monetize our debt, a good household
income in 2050 will be $1 million a year.
Norb
Leahy, Dunwoody GA Tea Party Leader
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