CHAPTER SIX: THE WAR ON TERRORISM (part one of three)

“War is an ugly thing, but not the ugliest of things. The decayed and degraded state of moral and patriotic feeling which thinks that nothing is worth war is much worse. The person who has nothing for which he is willing to fight, nothing which is more important than his own personal safety, is a miserable creature and has no chance of being free unless made and kept so by the exertions of better men than himself”

— John Stuart Mill

Every American old enough at the time remembers where they were on 9/11!  Some remember it as distinctly as the day President Kennedy was assassinated or the Space Shuttle Challenger exploded after liftoff.  On that fateful September day, radical Islam declared a new religious crusade against Western Civilization.  In an act of war, terrorists sounded their call for the destruction of our very way of life.  Denouncing everything we say we stand for: truth, liberty and justice, they took aim at what they believe our nation is founded upon.  Money!   

As the World Trade Center’s Twin Towers buckled amidst plumes of smoke, hundreds of thousands, millions across the planet cheered for the destruction of America.   Our hearts sank at the tragedy – they praised Allah.  Over a decade later, and the nightmare has only deepened.  The war in Iraq and the ongoing war Afghanistan  collectively endured longer than both World Wars combined.  The death toll is only rising with militant fundamentalists in Pakistan and Iran fueling the chaos. 

Make no mistake about it.  As September 11, 2001 proved- the threat is real.  The wars in Afghanistan and Iraq, the bombings in Spain and England, the attacks on Mumbai, the genocide in Darfur, the fragile stability of Pakistan, and the belligerence of Iran’s president, Mahmoud Ahmadinejad – all of these are testaments to the absolute malevolence we are facing.   

Americans are constantly on terror alert, paranoid much the same as we were of Russian spies and nuclear holocaust during the Cold War.  And every day that we are called on to put our sons and daughters in the line of fire we question our purpose and our resolve is tested.  This dichotomy of good and evil in religion is not new to the history of man, but this time it is most insidious and horrifying. 

Before we can address how we should wage the war on terror, we must first understand the reality of what exact threat it is that we are facing.  What every American needs to understand with absolute clarity is just how severe and pervasive the threat really is, because it is clear that so many of us are unaware of the profundity of this ideological menace. 

Now, media pundits often make the case that our government is war mongering, striking fear into the hearts of American citizens for the tactical purpose of some ulterior motive.  They will argue that the threat is nowhere near as terrible as President Bush made it out to be.  I wish it were the case, but the unfortunate truth is that the media’s conspiratorial claims are misguided and they do the American citizens a horrible injustice by sugarcoating the severity of the clear and present danger posed by Islamic Fundamentalism. 

The jihad being waged by radical Islam is not being fought by a mere band of scattered guerilla warriors hiding in far off deserts or the remote caves of Tora Bora, Afghanistan.  Radical Islam does not consist only of Al Queda and the Taliban; it is a way of life, an extreme and fanatic mentality bread into the hearts and minds of millions across the globe.

We must remember that with the destruction of the World Trade Center, there was a general response within the Muslim world of jubilee.  Two days before the attacks of September 11, the Mufti of Palestine, the senior religious figure in the Palestinian authority, and with millions of followers, openly prayed on radio for Allah to destroy Great Britain, Israel and the United States.   After the Twin Towers buckled, almost immediately, Palestinian airwaves were flooded with propaganda, boasting that a divine blow in the name of Allah had been dealt against the enemy [the United States] and that Israel is to follow.

We must understand further that this propaganda machine is not confined to remote villages or forgotten corners of the world.  The machine is vast, spanning continents and infecting the minds of people in Africa, Asia, Europe, South and North America.  There are the Pakistan based Lashkar-e-Taiba and Jaish-e-Mohammed, who seek the Indian state of Jammu and Kashmir’s accession to Pakistan; the Bangledeshi Jamaat-ul-Mujahideen; the Chechnyan separatist “Special Purpose Islamic Regiment”; the Sunni Hezbollah of Turkey and the Shia Hezbollah of Lebanon.  In Iraq there’s the Abu Musab al-Zarqawi’s al-Qaeda affiliate, and Al-Faruq Brigades, a militant wing of the Islamic Movement in Iraq (Al-Harakah al-Islamiyyah fi al-arak) to name only a few.  There’s the Israeli and Palestinian Al-Aqsa Martyrs’ Brigades and Hamas, which calls for the destruction of Israel.  Armed terrorist organizations are growing in Algeria, Yemen, the Philippines, the Sudan, Russia, Georgia, Spain, France, England, Germany – the list goes on and on as the cancer spreads – even into the United States!

The dangerous ideology these extremists preach is in fact more than simple dogmatic propaganda.  It is a media of terrorism.  And it is so prevalent, literally as ubiquitous as CNN and Fox News are to us Americans, that the fanaticism it preaches has become part of the way the populations of these regions see the world.  The machine targets youth – often the most innocent, those that are lost, without shelter, food, medical care, a family.  It pontificates a culture of hatred, a demonization of western culture, appealing to those in extreme poverty, those with the least hope, by promising heaven in the afterlife if, and only if, an oath to wage jihad against America is taken.

The infiltration of radical Islam into our cultures is so deep and pervasive, it is shocking.   The frontlines aren’t just in Iraq and Afghanistan, or even Pakistan, Israel or India.  Their ideology is spreading like a malignant tumor, feeding on human desperation with frightening speed.  The front lines, my fellow Americans, are in Madrid, Paris, London, Berlin, Washington D.C., New York, right down to Fort Hood, Texas.  Their twisted worldview of unquestionable obedience to Allah and destruction of Judeo-Christian Civilization is in our very own backyards.  Their war, their ideology of hatred, has come ashore our land of liberty, and they have sworn to take us down by any means.

Yet, in America, we tend to think of this extreme fundamentalist sect as being in the decided minority in the nation of Islam, small and distant.  And while the terrorist acts on 911, in Madrid and London’s train stations, in Germany, in Mumbai, now make us turn our heads, we still generally think of Muslims as good, law abiding, faithful, loving people because we don’t see the fanaticism in the Muslims that live amongst us. 

In America, this belief in the goodness innate in Muslims as a religious people is accurate and right.  We know that not all Muslims are part of radical Islam, we have faith in the moral compass of our Islamic neighbors, and rightfully so.  But, the false logic is this.  Just because the majority of Muslim Americans are peaceful, virtuous, law abiding people, it does not mean that all are.  Not internationally and not domestically. 

The Qur’an is a beautiful religious text, and in its purpose to the nations of Islam as the verbal divine guidance and moral direction for mankind it stands as perhaps the finest piece of literature in the Arabic language.  Just as the Bible teaches morality, compassion towards others, and the rule of law, so does the Qur’an.  In fact, The Qur’an itself cites an intimate, reverential relationship with the earlier transcribed Torah and New Testament, attributing their similarities to their unique origin from having been revealed by the one God.

It is He Who sent down to thee in truth, the Book, confirming what went before it; and He sent down the Law (of Moses) and the Gospel (of Jesus) before this, as a guide to mankind, and He sent down the criterion (of judgment between right and wrong).

 -Qur’an 3:3

But our sense of security is false when we translate what we know of domestic Islam into a belief that extreme fundamentalist Islam is few in numbers and that, as “Muslims”, they actually follow the Qur’an.  Whereas our system or ordered liberty is founded upon the Judeo-Christian virtues that celebrate the sanctity of life and teach us the truth that love is the fulfillment of the law, radical Islam teaches their children to hate in life and die for the sake of Allah.

These radicals, we must understand, don’t follow the Qur’an.  They think they do, in fact they obstinately proselytize that they do.  But in fact, many of them have not even read the Qur’an.  Discounting the hundreds and thousands of these radicals that are illiterate, those that do read often don’t read the Qur’an.  While the Qur’an teaches compassion, love and equal justice, they instead follow the teachings and writings of men like Mohammad Ibn Abdul-Wahhab, an 18th century zealot desert preacher who preached that all forms of adornment and modernity are blasphemous and that all non-believers in his version of Islam must be converted or destroyed. 

Unlike traditional Islam, Wahhabism treats women as third class citizens, imposes the veil on them, and denies them basic human rights such as the freedom of traveling within the country or leaving it without permission or Mahram (a relative male chaperon).

In addition, Wahhabism outlaws the celebration of Almoulid, the Prophet Mohammad’s birthday, forbids religious freedom, outlaws political freedom and forces the public to observe strictly regimented prayers.  Wahhabist authorities intimidate the masses by publicly beheading convicted killers and hand-amputating alleged thieves.   Perhaps most telling of this “theology’s” absolute perversion is the fact that it considers itself to be the only correct way in all of Islam, and any Muslim who opposes it is a heretic who must be enslaved.

This is not Islam as learned from the Qur’an, rather a fundamentally savage, backward and perverted form of preaching that is contrary to the Qur’an and it is used to brainwash legions of extremist Muslims to become hell-bent on the destruction of America.  It is not the Qur’an that has taught them to wage jihad and convert by the sword or die in martyrdom with the promise of a thousand virgins.  Rather, it is an entirely different set of books, books of jihad written or orally passed down by Wahhabist-style preachers who follow and embellish upon Mohammad Ibn Abdul-Wahhab’s teachings and the like.

What we see all across the world is the utilization of these perverted teachings in order to preach Wahhabism through wrote memorization to an illiterate or otherwise impoverished, desperate and credulous set of Muslims.  In Afghanistan, the Taliban employ this technique with horrifying efficiency through a network of Saudi Arabian funded schools called Madrasahs.  In these Medrasahs no subjects are taught except for Wahhabism.  The hopeless are brought in, given food and shelter, with the requirement of submitting to the teachings therein.  

Medrasah, literally means school, and historically they have not been anti-American, anti-Western, pro-terrorist centers having less to do with teaching basic literacy and more to do with political and theological indoctrination.  And certainly not all are today.  But, these Medrasahs of which I speak are widespread and they are effectively brainwashing a generation of desperate Muslims to hateAmerica, to hate western civilization, and to covet the destruction of all that we stand for.

They brainwash their recruits and followers to believe that they’ve revived the Islamic jihad, dividing the world into two camps, the Muslim and the non-Muslim.  They sermonize that Allah is happy when non-Muslims die.  That the laws of Islam, the books of jihad, demand that non-Muslims are to be taken to the slaughter.  To these radicals, any non-Wahhabist Muslim, to include American Muslims, are called Kafirs (infidels), cows to be taken to market, sold, and butchered.  Quite literally, they are brainwashed to believe that no infidel is innocent, period.

Americans must understand that a countless horde has demonized us.  It seems so odd and inconceivable to us that so many people have been brainwashed to this end.  But, to fathom this mentality, again, we need only look to our own, relatively recent history.  Recall that Christians, out of the desperation caused in the aftermath of World War 1, fell for the extreme Nazi propaganda machine calling for the eradication of the Jews.  If we fell for it, why would the Muslims not when faced with similar extreme conditions?

A seed of anti-Semitism, just as it did in Nazi Germany, has burst, bringing Christianity, and all other faiths into the crosshairs.  Hitler committed a crime against the youth of Germany by stealing their innocence and brainwashing them with a message of hatred.  Radical Islam is committing the same crime against non-radical Islam, stealing their youth, capitalizing on desperation and ignorance to instill a fundamental hatred of any non-radical, Muslim, Christian, Jew and Hindi alike.  In many regions of the world, hundreds of thousands of these radicals comprise the majority and any non-radical Muslim living in the purview of these terrorist havens is treated like a cow, a target to be slaughtered on site.

One would think that drawing a similarity to Hitler’s Nazi regime would be the most horrifying analogy possible.  Yet, the circular dogma that lead to fascism under the Nazi regime was actually less dangerous and sinister than radical Islam.  In Hitler’s Germany, Nazi’s hated and killed in the name of the Fuhrer, while in radical Islam, jihadists terrorize in the name of God.   Their creed is the same; destroy all those that do not believe as they do.  With the Arian race, this hatred was primarily confined to the Jews, whereas radical Islam has widened its sights and taken aim at Christians, Budhists, Hindi, and even Muslims that do not believe as they do.

America must wake up to this unfortunate reality.  And we must be willing to appropriately and decidedly address any insight to violence against Western Civilization, regardless of whether the origin of the incantation is domestic or foreign.

A clear understanding of this threat, though, is only the first step to thwarting it. The next question is one that has to date eluded us on many fronts; how do we fight this terrorism?

As aforementioned, we must first look inward to see what we are made of.  To be clear, I’m not talking of our strength and resolve, as I believe our endurance through the Iraq and Afghanistan Wars is proof of America’s tenacity.  Further, a proper understanding of the threat’s pervasiveness should only fortify our steadfastness as a nation.  Rather, I am talking about our morality.  Perhaps more pointedly, I am talking about our priorities.

You see, these terrorists have made a calculated decision in the way they are waging their war.  Presented with the dilemma of taking down a giant, a world superpower with a vastly superior military, they have hedged their bet.  Strictly speaking, they have bet that we are consumed by money and that if they can take down our economy, they can win their war.  Why do you think Osama bin Laden chose the World Trade Center as his first target on 9/11?    

Radical Islam preys on the impoverished, brainwashing extremism into the minds of those living in extreme conditions.  They promise something as simple as food and shelter to the hopeless, the desperate, and the forgotten souls of society, and then bombard them with fanaticism.  It is a vicious cycle of impoverishment leading to fanaticism and extremism which inexorably results in violence.

Radical Islam is aiming to create the same impoverished and hopeless reality in western civilization.  It starts with one street in Detroit perhaps, where nobody has jobs, everyone has been evicted from their homes, crime and drugs are rampant.  Then they offer their poisoned apple in this extreme reality, promising the fruits of a happier, sanctified life.  Instead, they will give over strict fanaticism, breed extremism, and eventually demand violence.  We are already witness to this reality. 

They hope to do this, first, by bringing down our economies.  Their design is to turn our collective societal wealth and comfort on its head, lead us into bankruptcy and then allow what they perceive as our immorality to tear us apart from within.  Much like the Spanish Conquistadors divided and conquered Incan civilization when they came ashore in South America, they aim to factionalize us, get us to fight amongst ourselves over a dwindling supply of money, and then convert us by the sword when our defenses are down.

We must understand that, to the terrorists, we are not a nation of moral, benevolent people.  Instead, we are non-believers who are laden with greed.  They see us as power hungry demons thirsting for global dominance and filthy riches.  Their bet is that in bankruptcy we will turn our back on our own Constitution; that we will brush our Bill of Rights under the rug and denounce everything we say we believe in.   

Of course, each one of us will unwaveringly respond to this gross characterization adamant that we are not what they perceive us to be.  We believe it in our hearts – we know it!  And I absolutely believe it to be the truth that we are not these greedy, filthy demons; rather we are a force for justice, for liberty, for morality and peace. 

That being said, and it utterly pains me to say, our greed and increasingly sedentary ways are of grave concern.  Our economic crisis is beginning to shed light on some of our true, less flattering colors.  And it is incumbent upon us, individually and as a nation, to take a long hard look at ourselves in the mirror.  We must recognize our flaws, embrace the fact that we have a lot of work to do, understand that we are far from perfect, and move forward with our core ideals reaffirmed.  If we can do that and only if we can do that – the war on terror is already won and America will come back stronger than ever.

To start then, let us look in the mirror. 

The economic collapse, exacerbated by the war on terror, is testing the moral fabric of our society.   Capitalism, our fundamental system of free commerce, is being impeached, our banks and industries are collapsing, and our infrastructure is corroding in disrepair.  Our homes, nearly ten million of our American Dreams, now stand vacant, devoid of families.   Unemployment has reached 10% nationwide, crimes of extreme moral turpitude, divorce and domestic violence are rising sharply and our boarders are being invaded by illegal aliens without respect for the law. 

Unfortunately, while these trials and tribulations befall us, our government is failing us.  As we look to our elected officials, too often, the mirror they reflect of us is one in accord with radical Islam’s disgusting critique of our society.  I say this because Washington’s answer to all our troubles seems to be one dimensional: throw money at the problem and demonize the opposition.  Mark my words – if this continues, we fail.

The question that presents itself in this pivotal moment in history is whether, in the face of deepening financial turmoil, we will continue with the materialistic, over-indulgent, sedentary mindset that set us up for our current economic collapse, or whether we will reaffirm our moral grounding as a nation and fight for all that is good in America by standing, rolling up our sleeves, and doing what is right, regardless of the difficulty.

Regrettably, our government is acting only to reinforce our materialism, exactly as they have for decades.  Government policy has encouraged us to spend on credit and take on mounting debt to where by the end of 2009, total U.S. consumer debt reached an astronomical $2.45 trillion, with total individual household debt, including credit cards, mortgage, home equity, and student loans, skyrocketing to nearly $17,000 per household.  The mean average unpaid credit card balance jumped to $3,389 per person in America. 

Believe it or not, this spelled disaster for the Federal Government, but not because the amount was too high, rather because the total U.S. Consumer debt had dropped sharply from $2.56 trillion at the end of 2008.  The recession meant that people weren’t spending.  Something had to be done!

So, in short-sited reaction to this fiscal meltdown, our government has responded with an economic stimulus plan centered on encouraging us to spend.  First, we were given a measly $200 tax refund and encouraged to quickly go and spend it – God forbid save it.  And, we spent it, plus some, just as the government wanted us to.  Why?  Because, we’ve been told that our economy is based upon consumer spending and that if we stop spending, the engines of our economy will grind to a halt.  If Washington can just keep us spending our hard earned money, they believe the economy will continue to grow at a healthy rate.   Unfortunately, they are wrong!  And they are wrong because our spending is no longer rationally linked to our production.  Because income is being eclipsed by our expenses we have for decades now been forced to live on credit.  What happens when that credit runs out?

Washington governs itself with this same spendthrift state of mind that we have individually adopted, and as a result the United States public debt (the “Federal Debt”), which consists of two calculations: “Debt Held by the Public”, defined as U.S. Treasury securities held by institutions outside the United States Government, and the “Gross Debt,” which includes intra-government obligations such as securities held by the Social Security Trust fund or the Federal Reserve, is absolutely staggering. 

Note that the costs incurred in World War II, in addition to President Roosevelt’s New Deal, and the social programs of the Truman presidency caused a sixteenfold increase in the Federal Debt from approximately $16 billion in 1930 to $260 billion in 1950.  As a Republican, it pains me to say that this debt more than quintupled during the Reagan and Bush presidencies from 1980 to 1992. Then came the war on terror and during the administration of President George W. Bush, the debt increased from $5.6 trillion in January 2001 to $10.7 trillion by December 2008, rising from 58% of GDP to 70.2% of GDP.   But now, under the Obama administration, the situation has deteriorated at a far more alarming rate.

As of September, 2010, the Federal Debt of $13.56 trillion was approximately 94% of U.S. annual GDP – now, in January, 2012, our debt of $15+ trillion is more than 100% of our annual GDP.  In simple terms, we are drowning.  And this is what radical Islam wants.  Because, with such unconscionable debt, more and more of our money must go to the purchase of government debt, rather than into investments in productive capital goods such as factories and computers, leading to lower output and incomes than would otherwise occur, further exacerbating the situation.  A downward spiral is begun much the same as an individual with too many credit cards fighting to pay even the minimum monthly balance, drowning in interest, and never saving for the future. 

The Federal Debt is a phenomenal threat to our national security.  Why?  Because if higher marginal tax rates are used to pay the rising interest costs of this debt, individual and corporate savings will be reduced and work, industry, and innovation will be depressed.  How then will we pay for the renovation, much less the re-engineering of our decaying infrastructure?  We won’t!  We will continue to import 9,013,000 barrels of oil per day at a staggering cost of $297 billion per year.  Over $50 billion of which goes to countries that harbor and arm terrorists bent on our absolute destruction.    

In fact, the interest costs on our debts are already forcing reductions in government programs that the government actually ought to be administering.  And, it’s not just the federal government – nearly every state in the Union is facing a massive budget crisis.  As a result, more and more Americans are out on the street with nobody to turn to.   No help, no food, no hope.  This growing crowd of people has already become malcontent and in many cases outright enraged at the government.  Occupy Wall Street is just the beginning.  How much worse will it need to get before there are armed riots in the streets?

It is upon the most impoverished, uneducated, enraged and hopeless of this crowd that radical Islam will focus upon to recruit domestic terrorists.  It is upon these people they are already successfully preying upon in Europe.

Unfortunately, the situation is only primed to worsen.  As a result of our over-consumption, individual, corporate, and government alike, and the tremendous amounts of money we have spent bailing out Wall Street, we will eventually have to pay a price in terms of higher taxes to meet the interest on that debt.  Higher taxes will unfortunately become requisite to meet the claims of our foreign creditors.

Yet, our government, on both sides of the isle it now seems, is increasingly adept at hearing one message sounding from us: no more taxes.  How then can the government deal with this debt?  First off, to date, they have not.  For thirty plus years our government has kicked the can down the road for future generations to deal with the problem.  That generation is us, now!

Historically, in an attempt to forego raising taxes, such debts have been met with the temptation to default by stealth.   In other words, allowing the dollar’s value to deflate. 

But, the dollar’s deflation means something equally as grave for Americans – inflation.  Soon, we likely could see the cost of a gallon of milk rise to $15, an ear of corn to $5, cereal, butter, sugar, meats, our entire grocery bill could go up in cost by 20-30%.  This inflation, coupled with an unemployment rate that continues to climb, and where salaries are frozen or slashed for those still employed, spells even further economic disaster.  It is a recipe for civil unrest! 

More and more people will fall into impoverishment.  The middle class will become the poor and the poor will become the destitute.  It is in this economic climate that radical Islam wants us to fester.  We must wake up from this nightmare immediately because commodities have already skyrocketed in cost and that expense is already being passed on to the American consumer.  Across the board, everything from groceries to clothes, plastics, etc. have already increased in cost by 5-15% in the last few years.  Inflation has already begun!

The first and most important thing we must do in order to intelligently combat terrorism, then, is to revamp our economy.  I’m not speaking of turning our back on capitalism in favor of socialism as many of the disillusioned have proffered out of fear.  Not at all.  In fact, I believe passionately that the key to our economic salvation is capitalism, in its true, pure form.

We must unleash the power of American ingenuity; promote and foster intellectual investment in American business so that we may once again produce for export as well as domestic consumption.  For Washington’s belief that consumer spending is essential to keep the engines of our economy running is true, but it is only half of the equation. 

Production is the necessary second half of the economic equation, for when a company produces something that people want to consume, the basic and elementary economic law of supply and demand is fulfilled.  Yet, for decades, America has failed to produce at a level necessary to meet the demands of our own consumption and the result is nearly a trillion dollar a year trading deficit.

The U.S. has held a trade deficit since late in the 1960s, but since 1997, our trade deficit has been increasing at a rapid rate.  Between 2005 and 2006 for example, the U.S. trade deficit increased by $49.8 billion to a worldwide record high of $817.3 billion.   It is now over a trillilon dollars per year.

 “We must always take heed that we buy no more from strangers than we sell them, for so should we impoverish ourselves and enrich them.”

–Fernand Braudel, The Wheels of Commerce

To be clear, the concern here is not necessarily with the size of the trade deficit.  This is because the trade deficit can be affected by myriad factors such as the cost of production (land, labor, taxes) in the exporting economy vis-à-vis the importing, the cost and availability of raw materials, exchange rates, trade restrictions, and the price of goods manufactured.  In fact, as Milton Friedman, the Nobel Prize-winning economist and father of Monetarism contended, trade deficits are not necessarily, in and of themselves, omens of economic failure, because high export levels increase the value of the exporting currency, eventually reducing aforementioned exports, and vice versa for imports, thus naturally removing trade deficits not due to investment. 

By reductio ad absurdum, 19th century economist and philosopher Frédéric Bastiat, even argued that the national trade deficit was an indicator of a successful economy, rather than a failing one. Bastiat predicted that a successful, growing economy would result in greater trade deficits, and an unsuccessful, shrinking economy would result in lower trade deficits.  And it seems these theories are being proven fundamentally sound given that since the Great Recession began the annual U.S. trade deficit has fallen by over $3 billion.

The real concern here is the fact that the Federal Deficit is mounting along side a trade deficit – compounding the issue.  Essentially, we are borrowing money to trade in the red.  Or to play off of a syllogism:  We are borrowing from China so we can rob Peter to pay Paul.

The reason for this phenomenon stems from America’s continuing failure to produce goods for the marketplace, both domestic and international.  The free system of enterprise, the liberties afforded us as a people, long left people like Andrew Carnegie to modernize the production of steel.  Yet, for a number of reasons, America is no longer producing goods for sale.  Instead, we consume and put the cost on our credit cards, individually, and as a nation.

Post-World War II, America was primed as the world’s industrial superpower.  The factories previously manned by “Rosie the Riveter” women in order to crank out the war machines were primed to build modern America.  And when the greatest generation returned from saving the world from fascism they were ready to go to work in the only true remaining industrialized nation on the planet.  All other industrialized nations sizeable enough to compete, after all, had been leveled in the war.

What came next were America’s economic golden years.   Through grit and hard work, we built the wealthiest, most industrialized, modern nation on the planet.  The United States GDP grew to a record $482.7 billion by the end of the 1950s. In the 1960s our nation enjoyed the most sustained period of economic expansion we’d ever known, accompanied by rising productivity and low unemployment. With real income rising 50% during the decade we were sitting pretty with more Americans enjoying the luxuries of the middle class lifestyle than ever before.

But, then came the advent of deindustrialization in the late 1960s and early 1970s. Among other factors, increased free trade, globalization and high corporate taxes resulted in U.S. companies shifting their manufacturing and heavy industrial operations to second- and third-world countries with lower labor costs.  It literally became more attractive to the American corporation’s bottom lines to dismantle their industrial infrastructures in favor of producing elsewhere.  While this meant a flood of cheaper imported goods into our economy for us to purchase, these policies resulted in a massive reduction in the percent of the U.S. labor force engaged in industry (from over 35% in the late 1960s to under 20% today).

Detroit and the auto-industry are an unfortunate example of de-industrialization and the effect it has had on our nation.  Once the world’s largest center of automobile production and associated with a high standard of living, Detroit today is associated with a high concentration of poverty, unemployment and manifest racial isolation. The vast urban production complexes that once built the automobiles driving on our highways stand abandoned and over one third of Detroit’s residents now live below the poverty line.  Similar fates have befallen the steel industry of Pittsburgh, the manufacturing and shipping industries of Baltimore, and so the list goes on. 

The simple fact stands that the American economy has undergone a fundamental shift from a manufacturing and industrial based economy to a service based economy. 

After World War II service industries accounted for less than10% of non-farming employment, compared with 38% for manufacturing. But, since the late 1960s the American economy has moved away from producing goods to providing services at a disquieting rate.  

In 1970, there were approximately 50 million service-providing workers in the United States and 23 million employed in the goods-producing sector, representing a service-to-goods ratio of about two-to-one. According to the Bureau of Labor Statistics, the ratio of service-to-goods workers soared to five-to-one with over a third of the U.S. population employed in the service industry by 2005.  The face of our economy has completely changed – and it is destroying us.

American consumption currently accounts for over 70% of our GDP.  Of this 70%, half is spent on services, such as hair cuts, car washes and restaurants.  The problem, then, is this: if we’re just going out to restaurants, what are we selling to the rest of the world?  With all that China is selling to us, what are we selling to them and the remainder of the world?  Very little!  And hence our enormous trade deficits. 

Analogy time:  Think of Jamaica, or almost any destination in the Caribbean archipelago.  What is the common thread between the economies of these beautiful islands?  All of their economies are primarily dependent on the tourism industry.  They do not produce much of anything, rather, they provide services, and as a result their economies are weak, unemployment is high, and those that do work earn low wages.  Well, in America, the problem is much worse to scale. 

While we provide services to ourselves, all we are doing is redistributing wealth amongst ourselves.  But, in order to provide those services we are consuming products from overseas.  The result: we are redistributing wealth amongst ourselves from a dwindling pot.   

There has been a forty-year mass exodus in America from our time-honored tradition of rolling up our sleeves, working hard, and making products for sale in the marketplace.  Instead of reversing this trend, however, the drift has been worsening in recent years.  Post 9/11, the United States has shut down nearly 45,000 factories, equating to a loss of one-third of our manufacturing jobs in that timeframe.  At the end of 2009, 12 million jobs in the U.S. were geared toward the manufacture of goods.  The last time so few jobs in the United States comprised the manufacturing sector was prior to World War 2, before we climbed out of the Great Depression, and when our population was far fewer in numbers.

The result is a reality in America where overall capitalization in the stock market exceeds 100% of U.S. GDP.  Historically, the stock market’s value has been approximately 58% of GDP with lows hovering at 37% in the early 1950s and 25% during the Great Depression. Highs in this measurement were around 75% of GDP, each occurring at all the significant market downturns in the last eighty years, including the 1929 and 1966 crashes. 

As recently as 1991, the market was at the historic 58% level of GDP. Since then, however, we’ve completely lost site of this economic indicator.  By the 4th quarter of 1999 stock market capitalization increased to a confounding 185% of total GDP!  

We’ve all seen this at play.  Each day when we watch the news or check our phone apps, we see that the stock market is soaring or strong.  But how can it be that the Dow Jones Industrial Average is doing so well when America is drowning in unemployment and debt?  The answer, unfortunately, is that two economies have burgeoned.  One for the rich, and one for the poor, with the middle class being torn in either direction, more often than not toward the poor.

America’s economy now primarily consists of one’s and o’s – digital currency for the rich to play with and the poor to sit out.  When we aren’t producing anything the only way to make money is to invest in others that do and maneuver around the marketplace with snakelike craft.  Wall Street is first-rate at this, but the result is the constant ebb and flow of boom and bust in the marketplace.  The dot.com and sub-prime lending bursts are just the most recent, and with each bubble, the rich are getting richer; with each burst, the poor are getting poorer. 

This last crash has been the most telling of this wealth disparity.  Since the dawn of the Great Recession, Americans have lost an estimated average of more than a quarter of their collective net worth; housing prices, historically our largest nest egg, have dropped over 30% from their 2006 peak; total retirement assets, Americans’ second-largest household asset, dropped by 22%; savings and investment assets lost $1.2 trillion and pension assets lost $1.3 trillion across the board. Taken together, these losses approximately total an unimaginable loss of $10 trillion from the pockets of hard working Americans.

Meanwhile, the number of millionaires living in the U.S. has spiked.  In 1928, one year before the Great Depression began, the wealthiest .001% of the U.S. population owned about 892 times more than 90% of the nation’s citizens. Today, the top .001% of the U.S. population owns over 976 times more than the entire bottom 90%. 

Then there’s this fact which has Americans enraged: according to a study by the Institute for Policy Studies, in 2008, top executives in the United States took home salaries that were 319 times greater than the average worker (about $10 million per CEO).  We see reports of massive profits and obscene bonuses at the very firms who owe their continued existence to $700 billion in TARP funds – our tax dollars.  No wonder we are exercising our First Amendment right to assemble in the streets and protest corporate greed.

Here is where we must be very careful however.  Many have begun to argue that the financial crisis is merely a subset of a systemic crisis – capitalism itself.  According to Samir Amin, an Egyptian Marxist economist, for example, the constant decrease in GDP growth rates in Western Civilizations since the early 1970s created a growing surplus of capital which did not have sufficient profitable investment outlets in the real economy.  The alternative was to place this surplus into the financial market, which became more profitable than capital investment, especially with subsequent deregulation.  The result being the financial bubbles that keep on bursting.  This, by the way, is exactly what radical Islam wants us to do – impeach our own economy.

But, capitalism is not to blame.  I do agree that the decrease in GDP growth rates have lead to insufficient profitable investment outlets in our real economy, leading to engorgement in the financial market.  The problem, however, is failure to produce, not capitalism.  Our economic policies must again be geared toward the promotion of capital investment, because socialism, history has shown us, will do just the opposite.  Capitalism, then, is the answer!

Instead, our government is itching to intervene in corporate operations in order to cut CEO pay.  But this is America. We don’t disparage wealth. In fact, we always have and must continue to encourage it.  This is precisely why President Obama’s $500,000 cap on executive pay sets a bad precedent.  Cutting executive pay simply is not the answer.

Instead, regulating corporate expenditures is a disincentive to innovate and produce.  Government intervention in the free market, we must continue to recognize, is a very dangerous thing.  Now, Obama’s decision actually was palatable in that it applied only to executives of firms that we, as taxpayers, bailed out to the tune of $700 billion- but it must stop there. 

CEO’s making as much money as they do, we must understand, is a natural function of the free market.  Understandably upset at our losses, we often forget that these people lead major multinational corporations with scores of employees and $50 billion in annual revenue. Performing properly, they create thousands of jobs, deliver a lifetime of wealth for innumerable investors, and drive life-changing innovation.  While most chief executives are in fact compensated at a far lower rate than our NBA superstars and Hollywood celebrities, the criticisms thrown at them are far more relentless.  Moreover, in the economics of large multinational corporations, $10 million is no more than a line item budget amount for office supplies such as pens and paper.  

We are understandably upset at the chasm growing between the rich and the poor, and as such, it is only natural for the middle class to look up at the rich with disdain as they fall toward the lower class.  However, it is my opinion that the only real problem with CEO compensation is the fact that we, the government and the media are demonizing the wrong people.  Out of anger, we are looking for a scapegoat, the rich.  We’ve grown to hate those that are succeeding in their industries because our livelihoods are vanishing. 

We must pause, take a step back and realize just how un-American the abhorrence of the rich is and turn our attention back to the real problem facing our nation’s economy. 

America is the land where enterprise and the chance at becoming rich has always been encouraged.  We must never discourage people from getting rich, lest we discourage innovation and progress.  It is wrong of us to detest those that have gotten rich in their industries.  What is proper is for every American worker to be upset at the fact that there are fewer and fewer opportunities for them to get rich or even sustain middle class status.  We should also be mad that many of the rich are ostensibly hijacking Congress to ensure they remain rich despite the hurtful consequences to the remainder of the constituency.

The real problem in America, what is causing the growing rift between the rich and the poor in our nation is not capitalism, it is how we are wielding the power of the free market.  We built our nation through hard work and determination, but for decades now we have been content to sit idle instead of continuing as the pioneers of industry.  

Why?  To an extent it is because of human nature.  As I said before, man is much like water, instinctually inclined to take the path of least resistance.   So, again, let us take a long hard look in the mirror.  Individually, most of us would rather work in the services sector as white collar workers rather than in a theoretically more difficult blue collar vocation.  It certainly is physically less demanding.  As a nation, we worked so hard building modern America, generating massive amounts of wealth, and sometimes we feel entitled to kick back and relax.  This is only human nature, and the wealth accumulated in our golden years afforded us the ability to utilize our mental talents toward innovation and pay others to do the back breaking labor for us.  Why fix your sink when you can pay a plumber to do it, right? 

But we must awake from this apathy because, as a nation, we no longer have the money to pay the plumber.  Unfortunately, though, we’ve been very slow to wake from our lethargy in part because our economic and tax policies have compounded the issue by encouraging our instinctual indolence and masking its effects. 

Now, you are probably wondering why I am talking so much about the economy in a chapter purportedly aimed at the issue of international terrorism.  The reason is simple.  Our economic security is intrinsically linked to our national security, especially when it comes to the war on terror.  The insolvency of our nation will bankrupt our ability to fight terrorism abroad and lead to civil unrest within our boarders.   This must not happen because we absolutely must win this war.  What we face in radical Islam is a clash of civilizations and they have made it very clear that it is either us or them.  Failure, then, is not an option. 

Here is what radical Islam thinks of us: we are succumbing to sloth.  We are greedy, we want to consume everything, and we don’t want to have to work for it.  Radical Islam is betting that we are the next Rome and that we will implode, falling upon the sword of our own opulence.  They forecast that globalization and the additional financial pressures their mounting campaigns of terror have on our bottom line will result in us becoming slaves to the third world.  They believe that the third world upon which we prey for all that we consume will surpass us; that the balance of power will shift in their favor and we will grow weaker and weaker.  Their hope is that our current economic crisis will snowball into a downward spiral, leaving us broken and powerless to stop the spread of their twisted creed.

But they are dead wrong!  Americans work harder than the citizens of any other nation on this planet.  We are the most innovative workforce on the globe and our collective talent eclipses all others.  Laziness, while an exacerbating factor, is not to blame.  Resting on our laurels is.  This crisis is borne out of our societal ignorance and collective indifference to the direction we have allowed our government to steer the economy for the last forty years.  We’ve all been playing ignorant to the effects of our service based economy; our natural human instinct to take the easy road has blinded us as to the inevitable rise of Asia as an economic powerhouse with whom we must compete.  But now, after decades of craftily avoiding the unavoidable through the stock market, we are finally learning the truth.  The truth of the matter is this: we must get back to work producing for ourselves and the rest of the world.  For the rest of the world also wants and is willing to compete for the standard of living we’ve shown them is possible.

This is precisely why educating America about the true threat facing us, the true crisis facing our economy, and how to transcend these challenges is of paramount importance.  The silver lining in the Great Recession is the fact that it is opening our eyes.  The extremes we are facing, massive unemployment, for instance, are shaking us from our apathy, forcing us to ask the tough questions.  The key is to answer those questions intelligently and educate America as to just how far down the wrong path we have gone so that we may redirect.

I believe that in America, our privileges, the opportunities we have, our wealth, our power – this has not made us weak and lazy anymore than it did the greatest generation before they left for World War II.  We’ve had more opportunity than any civilization before us to venture down that road of lethargy, and in many respects we have, but hopefully to realize the evils of excess.  In fact, the liberties afforded us in our Constitution have afforded Americans the ability to witness first hand the pitfalls of materialism run amuck.  This experience, and the freedoms still afforded us, give us a unique perspective from which to correct our course, as well as the power.  Perhaps the greatest majesty of our American tradition of ordered liberty is that we are all free, individually and institutionally, to look into the mirror and make the changes necessary.  It is this power, properly wielded, that will win the war against terrorism as well as bring back our economy.

Having gained so much, we have so much to lose and American’s will not let go easily.    It is the same determination which lead us to erect the Hoover Damn, the Empire State Building and the interstate highway system, that will empower us to overcome the current economic crisis, avoid future recessions and win the war on terror.

But first- back to the mirror.  We are currently making a lot of mistakes, and unfortunately money seems to be the governing factor in our rash decisions.  For starters, we are cutting education – an extremely short-sited, reckless and irresponsible response to our financial crisis.  I will delve into that in a later chapter.  

Here’s an interesting example of money overriding our logic: California passed SB 1449 on October 1, 2010, reducing the possession of less than an ounce of marijuana to a civil infraction where the person in possession is slapped with the equivalent of a mere parking ticket.  The reasons sited by Governor Schwarzenneger were the cost to police the illegal drug and the possibility of raising tax revue if it were to be fully legalized and regulated.  Both of these are valid considerations, no question.  However, the problem is this:  the decision to ostensibly legalize the drug was made solely on fiscal grounds without proper consideration of the effects of the drug or why it was made illegal in the first place.  Now, to be fair, marijuana is not cocaine or meth, and its effects arguably are not even as bad as alcohol.  A valid argument for marijuana’s legalization on the basis of its effects versus alcohol can certainly be made, but the decision to legalize it in California was based solely on monetary concerns.  This is wrong!  If money is the only consideration, the same argument can be made for the legalization of all narcotics.  The same reasoning has been utilized in California to justify the release of criminals convicted of assault with a deadly weapon, battery, domestic violence, and attacks on children. 

It is unforuntaely quite clear that the tactic being employed by radical Islam, namely to destroy our economy, is effective.  In many respects, it is forcing us to turn on our own moral compass.  Why, because it is hard to stay moral when it comes down to dog eat dog.  They know this to be human nature.  We must not let this happen, because the more we allow this to occur, the more we are at risk of civil unrest, revolution, loss of freedom, and a continuous wave of crisis that will lead to us turning on ourselves and our institutions.  Divide and conquer!

Radical Islam abhors our freedom above all else.  It therefore aims to force us to erode the freedoms protected in our Constitution for the sake of our security, because it is in a tyrannical system where freedoms are forgotten and the individual is nothing that their fanatical worldview can take root.  

Unfortunately, they have already begun to succeed.  In reaction to their terror, our freedoms have been truncated under the Patriot Act and our personal boundaries are being invaded by humiliating pat downs.  The government has created a vast domestic spying network to collect information about Americans in the wake of 9/11 and subsequent terror plots.  An immense network of over four thousand counter-terrorism organizations utilizing state and local law enforcement agencies to collect information about thousands of US residents has been created to feed information to Washington for analysis.  Big Brother is upon us!  Is it necessary?  Yes, unfortunately.  But we must not allow it to go too far – if we haven’t already.

Daily they are forcing us to decide what freedoms we are willing to forego and where to draw the line.  While many of us will say we don’t mind giving up a little bit of our freedoms for the sake of security, the issue arises when we find ourselves on the slippery slope to foregoing too many of those freedoms to a government that becomes immune to habeas corpus.  It is on this slippery slope that we already find ourselves, and we must be careful not to allow the protections our forefathers fought for to be swept away out of fear.   That is what the terrorists want.

Our history from 9/11 on shows us that the longer the war on terror continues, the more pervasive we allow it to become, the greater number of rights and personal freedoms the government will find it necessary to overwrite for the sake of our own security.  This, in and of itself, makes the war on terror one where time is very much of the essence.  We must therefore act decisively and expeditiously to push radical Islam back and eradicate this threat. 

Stage one to winning the war on terror, as I have mentioned, is to revamp and revitalize our economy.

If you look at Lehman Brothers, Goldman Sachs, the sub-prime lending crisis, the collapse of the Celtic Tiger, Greek debt, all the way back to our very own dot.com burst, and even the savings and loan crisis, we must realize that what we are dealing with is far bigger than these individual crisis themselves.  We are dealing with a fundamental shift in the way the world economy operates.  While for two hundred years America and Europe dominated world production, investment, manufacturing, and exports, Asia is now out-producing us.  Instinctively, many have called for protectionist policies in reaction to this truth, but this is unwise.  

As a result of production, Asia’s economy, most notably China’s economy, is growing leaps and bounds just as ours did post-World War II.  Consequently, Asia’s consumer market is estimated to be twice that of ours by 2020, and therein lies our opportunity. 

The first step to dealing with the current financial crisis was to stop it from becoming another Great Depression.  To that end, TARP, and all the subsequent bailouts have been aimed at stopping the bleeding.  Arguably, they have succeeded, for now- but they are mere band-aids covering a massive laceration because they are propping up arcane business models and industries that now serve only as relics of America’s past industrial strength.   The proof in this assertion is the fact that despite all the government “stimulus” unemployment continues to rise. 

Stage two to dealing with the current financial crisis is to get the global financial systems working properly, and in tandem with reality, a task that hinges on stage three – reducing unemployment, and fostering growth through economic policy geared toward encouraging capital investment and production. 

I have absolute faith that we can meet this challenge.  We already have the brand names and the custom built products recognized around the world, and when you combine that with the advantage of having the most innovative and technologically advanced economy in the world along with the most creative talent in the world, we absolutely have it within our power to rise to the occasion.  The re-birth of the American Dream in this generation is possible and the way we do it is by tapping into our native genius and creative talent to produce high technology goods for the remainder of the world.  We must ride out to meet the challenges presented by the growth of a middle class in India and Asia and capitalize on their consumer needs.  Our salvation is in producing these high technology goods to satiate our own domestic consumption as well as for export to the remainder of the world, for doing so will satisfy the basic economic law of supply and demand. 

PLEASE STAY TUNED FOR PART TWO OF CHAPTER SIX: THE WAR ON TERRORISM!

 

CHAPTER FOUR:

RELIGION IN GOVERNMENT

Whereas Almighty God hath created the mind free; that all attempts to influence it by temporal punishment or burthens, or by civil incapacitations, tend only to beget habits of hypocrisy and meanness, and are a departure from the plan of the Holy author of our religion, who being Lord both of body and mind, yet chose not to propagate it by coercions on either, as was his Almighty power to do . .
Be it enacted by the General Assembly, that no man shall be compelled to frequent or support any religious worship, place, or ministry whatsoever, nor shall be enforced, restrained, molested, or burthened in his body or goods, nor shall otherwise suffer on account of his religious opinions or belief; but that all men shall be free to profess, and by argument to maintain, their opinion in matters of religion, and that the same shall in no wise diminish, enlarge, or affect their civil capacities . .
And though we well know that this assembly elected by the people for the ordinary purposes of legislation only, have no power to restrain the act of succeeding assemblies, constituted with powers equal to our own, and that therefore to declare this act to be irrevocable would be of no effect in law; yet we are free to declare, and do declare, that the rights hereby asserted are of the natural rights of mankind, and that if any act shall be hereafter passed to repeal the present, or to narrow its operation, such as would be an infringement of natural right.

— “THE VIRGINIA STATUTE OF RELIGIOUS FREEDOM”, drafted by Thomas Jefferson in 1777 and enacted by the Virginia General Assembly in 1786.

Thomas Jefferson’s greatest known work is the Declaration of Independence, which he penned in 1776. However, his subsequent drafting of the Virginia Statute of Religious Freedom in 1779 arguably rivals his earlier work through its clarity of faithful thought and intellectual acuity. In fact, our third president was thought to have been most proud of the statute.

A precursor to the First Amendment, the Virginia Statute of Religious Freedom is a statement concerning freedom of conscience and the principle of partition between church and state. In it Jefferson begins with a statement of natural right, a decree of his Deism – that is, the belief that God created the world and along with it, man’s capacity to govern himself. Jefferson believed that God, as creator, granted us freedom of choice, including liberty of conscience in religious matters and that any attempt to restrict it is misguided. Building from that foundation, the act itself states that no person can be compelled to attend any church or support it with his taxes, and that all shall be free to worship or not worship as he pleases with no discrimination at law.

We are to do as governors of men, as God does: allow freedom to reign supreme, regardless of whether we have the power to force others to believe as we do. Freedom of thought, freedom of religion, freedom to fail – Freedom!

Whereas Almighty God hath created the mind free; that all attempts to influence it by temporal punishment or burthens, or by civil incapacitations, tend only to beget habits of hypocrisy and meanness, and are a departure from the plan of the Holy author of our religion, who being Lord both of body and mind, yet chose not to propagate it by coercions on either, as was his Almighty power to do . . .

Thomas Jefferson – “Virginia Statute of Religious Freedom” — 1777

Jefferson could have stopped there, but his genius propelled him to address the dangers that could arise as a result of the people’s proper right to change the law through their elected assemblies. Jefferson realized that the statute is not irrevocable because no law is, or ought to be. Because future assemblies are free to repeal or circumscribe the statute, Jefferson warned, appropriately, that any such circumscribing assembly would do so at their own peril, as to do so would be, “an infringement of natural right.

Today in America, we unfortunately find that Jefferson’s concern is coming to fruition. Americans of all religions suddenly now find themselves well down that slippery slope to no longer being religiously free, and by dint thereof, free at all!

The infringement upon each American’s natural right to be free in his religious practice is not being caused by the outright repeal of the First Amendment, but rather a circumscription of that freedom is rising from a chronic misapplication and material misunderstanding of the amendment’s true edict. As a result, we are witnessing a nationwide deterioration of the morality that served as the guiding principles in the formulation of our Constitution.

Family values, self worth and motivation, even the very lines between right and wrong are blurring, drowned out by the hustle and bustle of an increasingly frantic society too strained to stop and realize what they are losing, a government injudicious as to its purpose, and to a large extent – it all comes at the misguided behest of our nation’s “over-political correctness.”

More so now than ever, we are faced with a new type of religious America. “We the people,” has an entirely different scope than it did when our founding fathers wrote the Constitution. Spurred by the Immigration and Nationality Act of 1965, people from all over the world, not just Europe, have come to our shores, bringing with them their traditions and faiths. The religious creeds of the world – Islam, Hindu, Buddhist, Jain, Sikh, etc., all now call America home and the United States now exists as the most religiously diverse society since the dawn of civilization. The percentage of foreign born Americans has doubled from the 1970’s to over 10.5% of the population, with the Hispanic and Asian populations growing the fastest. It is truly a modern miracle.

It is our system of ordered liberty, commanding protection of the inalienable rights of those immigrants through ten fundamental rights, that has made this miracle possible on Earth. Men, women and children of all faiths live in the same neighborhoods, attend the same schools – but in America, unlike all civilizations before us, we do so in relative peace.

The Bill of Rights begins with the First Amendment, a decree that man shall not be converted by the sword. And it is through an innate, if not subconscious understanding of the Amendment’s true meaning, that Americans eagerly greet morally grounded faiths with open arms.

However, our selfless attempts to embrace these faiths and traditions with open arms have transformed into an over-zealous, and often imprudent passion to always be “politically correct”. It is going too far, and as a result we are quickly losing what it means to be an American.

The idea of religious freedom is central to the very idea of America. Religious freedom has always given rise to religious diversity, and never, in any nation on this planet, has there been such religious diversity as there currently is in the United States. We lead the rest of the world by this example, as a living, breathing testament to the power of ordered liberty. We should see that we are therefore in a unique position to create a truly pluralist society in which this grand diversity is not merely tolerated but embraced as the very source of our strength.

In order to do so – in order to avoid a collapse from within, though, we must understand the deepest meaning of our founding principles, with full acknowledgment that our system of ordered liberty is steeply grounded in faith, particularly Judeo-Christian morality. Instead, an errant, liberal ideology has permeated academia and deceived our judicial system. We are erroneously being taught that the First Amendment’s establishment clause means that the United States must purge all signs of religion from the public square.

Lawsuits to enjoin the local public library from displaying the Ten Commandments bombard the airwaves. In 2002 the 9th United States Circuit Court of Appeals declared the phrase “under God” in the Pledge of Allegiance, to be unconstitutional. An agenda that includes tearing down crosses, prohibiting crèches and menorahs on public property, indeed the absolute removal of God and faith from the public square is sweeping our land.

Many argue that it is a secular socialist machine that’s waging this war on religion because they see any religious worldview as the single greatest threat to their realization of a utopia where government is all powerful. Certainly some may fit that mold, but I believe the problem has a less insidious root.

A very real affront to religion, particularly the practice of Christianity in the public square, is growing out of most people’s desire to be politically correct, and despite the fact that they themselves are often religious. Why the particular assault on Christianity? Because Christianity was here first – it is the “establishment.” Those desirous of being politically correct tend to admonish the majority representing the establishment. Unfortunately, this lends to reverse-political incorrectness, where the majority is discriminated against and, ironically, they fail to speak up for fear of being seen as politically incorrect themselves. This “catch-22” phenomenon is similar to Caucasians, representing the majority and “establishment”, enduring reverse racism as a natural reaction to generations of long overdue political correctness.

All generations, regardless of race, wealth, or religion, inherit the consequences of their parents’ deeds.

We can all relate to this situation: invariably a person at the table says they aren’t religious, and you shouldn’t impose your beliefs on him. Unfortunately, so many of us simply shy away from the subject, knowing there is no way to convince this man that there is a God, much less that our God is the correct one to worship. But what happens when that man’s gripe begins to have the force of law, affirmatively denying us the right to respond? Must we not then stand up?

The problem is that this political correctness gone awry is creating a court enforced wall of separation between the true historical spirit of America and a radically different, secular America without God, traditional values, or an understanding of its own history. In an attempt not to discriminate, or show favoritism toward one religion, we find ourselves removing all faiths from the public sphere. This none or all approach, where no religion is allowed for fear of retribution from others, is catastrophic to the future of America and her system of ordered liberty.

We must take a stand, and do so with an understanding of our history and the importance of maintaining religion in the public sphere!

Therefore, let me begin with a rhetorical quiz:

Question: Why is it difficult to draft regulation that envisions every possible scenario and clearly addresses them in black and white?
A. Because someone always finds or creates a loophole, effectively skirting the law by hiding in creative gray areas; or
B. Because humans are stupid.

The answer, unfortunately is A.

The truth results from the ironic paradox created by man’s natural drive to aspire for a better future. It is our basic instinct to out-maneuver each other and gain the tactical advantage in our struggles for survival. These desires, combined with phenomenal intellect, form the backbone of innovation, indeed American capitalism. A desire to build a better home and future for our family drives us, and the freedom to do so is protected by our Constitution. The result is the most industrious nation on the planet.

Unfortunately, those same animalistic instincts can, and too often are, utilized to subvert the law. Hypothetically, let’s say that in response to the outcries for campaign finance reform, a regulation passes through Congress mandating that no single candidate can receive more than 2% of their campaign spending money from any single donor or corporation. The regulation is even concise as to the definition of “corporation”, setting out subsets to include LLC’s, S-Corps, charitable organizations, subsidiaries, affiliates, etc.

It is only a matter of time before some of those organizations, desirous for whatever reason to circumvent that law, team up with others to form a faction designed to exert more influence than their competitor. They will form the next version of a political action committee if necessary, binding together to further their special interests. At first, they will weasel into gray areas. Eventually, they will break the law outright and have either convinced Congress to rescind or simply not enforce the law. This necessitates more regulation, further restriction of freedom, and so goes the vicious downward cycle.

The point I am making is this:

“We have no government armed with power capable of contending with human passions unbridled by morality and religion . . . Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”

–John Adams, 2nd President, Signor of the Declaration of Independence and Bill of Rights.

As a consequence of liberty, man must be responsible to govern himself. An immoral man will not abide by any regulation no matter how brilliantly crafted, for he is motivated by his very nature to circumvent that law’s application. A moral man, however, will stop at the temptation to evade the legislation if it means infringing upon the rights of others or unjustly taking advantage.

Today, we have lost sight of the need for morality in our people as a whole. We’ve all noticed it, and it is frightening. It’s not just that people are too busy or rude to acknowledge you as they pass on the street anymore; it’s that they are isolated and afraid. And in this isolation, immorality finds its breading ground.

Honorable people ask what they can do for their country, not what their country can do for them. Ethical people work hard for what they have, and do not expect or feel entitled to receive welfare. And while it is a just and altruistic goal to provide welfare for those in need, it is an immoral, unmotivated person that will game those programs to take advantage. Multiply this dishonest individual into millions, and they will bankrupt the system. This is what we face today in America, and the dearth in morality is cracking the foundation upon which the pillars of our civilization are built.

The cultural history of Western Civilization enlightens us as to the true meaning of what it is to be an American and what America must remember to stand for as the last best hope for humanity. This historical journey illuminates the legislative intent behind the First Amendment and equips us with the knowledge and power to forge a more perfect union for us all – a safer, cleaner, more affluent and more virtuous America.

The First Amendment to the United States Constitution reads as follows:

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

By the black letter of this law, it is facially clear that nothing has been laid down in our Constitution to prohibit the free exercise of speech in regards to religion in the public sector. So then, what does it mean?

The Virginia Statute of Religious Freedom demonstrates our founding fathers’ very clear understanding that government must not have the power over the conscience of the governed to force them to worship God. However, the founding fathers also believed that government and its institutions derive their power to command from God and do so under God in that, through his own free will, he has chosen to allow us the freedom to govern ourselves without his interference.

It is this second tenement as to the role of God in our government that is too often swept under the rug by those that do not consider themselves religious. The exact freedom that protects the non-religious from legal injustices is the same freedom that protects the religious right to proclaim and celebrate faith in public without persecution.

Predominantly, if not entirely Christian, our founding fathers formed their view of God’s role in government, in part, from the Bible. Romans 13:1-6 state as follows:

“Let everyone be subject to the governing authorities, for there is no authority except that which God has established. The authorities that exist have been established by God. Consequently, whoever rebels against the authority is rebelling against what God has instituted, and those who do so will bring judgment on themselves. For rulers hold no terror for those who do right, but for those who do wrong. Do you want to be free from fear of the one in authority? Then do what is right and you will be commended. For the one in authority is God’s servant for your good. But if you do wrong, be afraid, for rulers do not bear the sword for no reason. They are God’s servants, agents of wrath to bring punishment on the wrongdoer. Therefore, it is necessary to submit to the authorities, not only because of possible punishment but also as a matter of conscience. This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing.”

The Bible enlightened our founding fathers to the truth that government and its institutions derive their power to command from God and do so under God. Inspired by their creed’s very cannon, they declared the self-evident truth that all men are created equal, that they are endowed by their Creator with certain unalienable rights, and that among these are life, liberty and the pursuit of happiness. It is by this faith that our dollar bill states “In God we trust.”

Our founding fathers also realized that liberty was the true purpose of man’s government over man, but that maintenance of liberty and justice over a free people requires virtue:

 “It is impossible to rightly govern the world without God and the Bible” –George Washington.
 “So great is my veneration for the Bible that the earlier my children begin to read it the more confident will be my hope that they will prove useful citizens of their country and respectable members of society…” –John Quincy Adams.
 “That book, sir, is the rock on which our republic rests” –Andrew Jackson.
 “We have staked the whole future of American civilization not on the power of government… not in the Constitution… (but) upon the capacity of each and every one of us to govern ourselves according to the Ten Commandments” –James Madison.

Our American way of thinking, though born of faith, evolved out of Western Civilization. Studying the cultures, their politics and struggles, helps us understand the majesty of Judeo-Christian morality and what it must mean for us today.

The original settlers came to America to practice their religious beliefs free from the dogma of the established churches. The Puritans came to create a “city on the hill” to shine as a beacon of religious piety. The Pilgrims and Quakers too came to found new religious communities.

The Europe they fled, and from which they gleaned centuries of unique insight, had a long tradition of religious persecution. The ebb and flow of Western Civilization from the Dark Ages of religious absolutism to the humanism and self-awareness of the Renaissance, for example, steeped our American settlers in a rich and tumultuous history out of which our founding fathers were enlightened. Their forefathers had lived through the Crusades, the Papal Schism, the Protestant Reformation and the ecclesiastical and structural reconfigurations of the Catholic Church in the Counter-Reformation that culminated in the Thirty Years War. They’d endured the combination of higher taxes, unsuccessful wars and conflicts with the Pope that lead to the Barons forcing King John of England to agree to the Magna Carta.

Braving the icy clutches of the Atlantic, our forefathers left Europe with a very clear understanding that the Ten Commandments, moral mandates they so fervently believed in, were paramount and critical not only to self-governance, but to the operation of a just government. Europe’s war torn history also taught them that religious intolerance, blind dogma and conversion by the sword are the greatest enemies of liberty.

The unique condition of Western Civilization, properly studied, enlightened our forefathers as to the greatest dichotomy of all. Religion, faith, morality and virtues are indespensible to the operaiton of government over a free people, while governments must not establish any law to require the practice of or abolishion of any religion- for to do so risks sectarian violence and the very destruciton of liberty.

This mindset is wholy in accord with the Bible. Romans 13:8, which immediately precedes the declaration that governments derive their right to command men through God, states as follows:

“Let no debt remain outstanding, except the continuing debt to love one another, for whoever loves others has fulfilled the law. The commandments, “You shall not commit adultery,” “You shall not murder,” “You shall not steal,” “You shall not covet,” and whatever other command there may be, are summed up in this one command: “Love your neighbor as yourself.” Love does no harm to a neighbor. Therefore love is the fulfillment of the law.”

Being that love is the fulfillment of the law because it does no harm to your neighbor, it follows logically that one man must not take up the sword to convert his fellow man in the name of the Lord and certainly not in the name of the law. Truly, as Thomas Helwys wrote in A Short Declaration of the Mystery of Iniquity: “For men’s religion to God is between God and themselves. The king shall not answer for it. Let them be heretics, Turks, Jews, or whatsoever, it appertains not to the earthly power to punish them in the least measure.”

The principles learned from the Ten Commandments and studied by our forefathers – those virtues are the foundation of Judeo-Christian morality. This religious background, a centering of the Lord’s teaching that one is not to convert by the sword, that one is to respect the law, against the historical backdrop of Western Civilization, from the Middle Ages to our Revolutionary War, educated our founding fathers as to the need for the First Amendment. Learning from history, they did not, and would not have written God from the public sector. To do so would run contrary to the lessons of history from which they gleaned, and run afoul of their true belief that liberty must be ordered and that order hinges upon virtue.

It was a religious revival in the 1730s known as the Great Awakening that stirred our founding fathers to fight for their God given inalienable rights. It was also a spiritual resurgence in the nineteenth century that inspired the abolitionists’ drive to end slavery.

Remember that the marching song of the Union Army during the Civil War, The Battle Hymn of the Republic, included the line “as Christ died to make men holy, let us die to make men free.”

It was also a religious revival that led to a seventy year women’s suffrage struggle culminating in the ratification of the 19th Amendment to our Constitution, prohibiting state and federal agencies from adopting gender-based restrictions on voting. And it was a Baptist minister, Dr. Martin Luther King, Jr. who led the 1955 Montgomery Bus Boycott, founded the Southern Christian Leadership Conference, and delivered his, I Have a Dream, speech that lead to civil rights being extended to African Americans.

The impetus behind these virtuous movements throughout the history of America are all found in an underlying Judeo-Christian morality. It is from the Ten Commandments that our system of ordered liberty pulls most strongly, and to turn our backs on that is tantamount to denouncing who we are as a nation.

Now, I am not saying that one must be Christian or Jewish to be an American. Not at all. And I’m also not arguing that there is no morality aside from religious derivation. Rather, I am pointing out the importance of these faiths as they were of paramount inspiration to the declaration of our independence and the penning of our Constitution. In our history lies the answers as to addressing our present and future obstacles as a free and ordered people – as moral Americans.

It is clear that morality has very strong roots in religion: Islam, Christianity, Judaism, etc. These faiths are centered on virtues; teach morality and compassion, the rule of law, and deference to a benevolent, higher power. But the growing intolerance toward the free expression of religious beliefs in the public square, in order to protect the sensibilities of the non-religious, presents a very clear and present danger to the continuation of our society’s moral compass.

Freedom of religion does not mean freedom from religion. “Political correctness,” has run afoul of this understanding, and it has reached a boiling point where attempts to appease those with different or no religious beliefs are now met with an intolerance at law toward the practice of Christianity and Judaism, the religions that serve as the cornerstone of traditional American liberty. That same intolerance is now turned to Islam in the aftermath of 9/11.

We must understand, and understand clearly, that this nation of ours, our system of ordered liberty, the right of every American to live free to pursue happiness, would not have been possible without the lessons of Western Civilization’s history. Their faith in the Ten Commandments and their enduring through religious crusades and tyranny, resulting in a patent understanding of the Lord’s word, form the Judeo-Christian morality out of which our Constitution was written. The United States of America is a nation able to host all the world’s religions, peacefully, where each is free to practice their creed without interference at law or bloodshed, because of the founding father’s historical, cultural, and religious wisdom – that, my fellow Americans, is God’s Manifest Destiny!

And so, while it is not necessary that you be Christian or Jewish to be an American, to be an American, you and your neighbors must be morally grounded. Therefore, it is requisite for our generation to stand up and fight for the true protections our First Amendment was drafted to afford each and every one of us. We must fight to win back our God given right to practice our religion and pronounce our faith in the public square, pushing back every judicial decision and public outcry to circumscribe that most American and first of our affirmed liberties. Christianity, Judaism, Islam, Buddhism – all morally grounded faiths are rightfully declared in the public square. The future of our nation depends on it!

The above described understanding as to the role of Judeo-Christian morality as it pertains to our American sense of freedom, and the extent to which we as Americans stay true to those ideals, will be critical in determining the outcome of a number of contemporary political issues facing our nation. This is because the key to prevailing in each issue exists in our American virtues. While this could be said of almost any topic, I am in particular talking about abortion and the war on terrorism.

I will discuss abortion and the war on terrorism in the following two chapters.

Merry Christmas!

CHAPTER THREE: (part Three of Four)

CAMPAIGN FINANCE REFORM

As stated in the previous section of this chapter – I believe there are three distinct avenues through which the corrupting weight of corporate money on the federal legislative process can be pacified:

  1. Lobbying Reform;
  2. Campaign Finance Reform; and
  3. Term Limits

I will tackle each proposed course in order, analyzing the need for each, the debates surrounding them, and then make specific proposals respectively.  I continue today with:

Campaign Finance Reform:

“The polluting effect of money in election campaigns…[c]oncentrated wealth . . . threaten to distort political campaigns and referenda…[t]he voices of individual citizens are being drowned out [by the] unholy alliance of big spending, special interests, and election victory.”

 — Skelly Wright, “Money and the Pollution of Politics: Is the First Amendment an Obstacle to Political Equality?” Columbia Law Review 82 (1982): 614, 622.

The deluge of corporate and union money into federal, state and local campaigns is a very real impediment to the individual’s ability to voice his or her concerns within America’s existing political construct.  An ordinary individual – not rich beyond description or backed by corporate treasury, simply cannot voice their outlook on any given issue via the endorsement of an elected official when their meager contributions are stacked against the piles of capital contributed by corporations and unions.  Yet, while this inequity seems so clear prima facie, it actually proves nauseatingly difficult to regulate for the same reason it is difficult to curtail the influence of lobbies.

Let me first begin by discussing two of the oft proposed legislative reforms aimed at reforming campaign finance: (1) Political Action Committee (PAC) expenditure bans; and (2) Soft Money limits.

Unfortunately, these, and many other proposed reforms, tend to run afoul of the protections afforded individuals and corporations/unions (groups of individuals) by the First Amendment. 

A Political Action Committee (PAC) is an organization formed by business, labor, or other special-interest groups to raise money and make contributions to the campaigns of political candidates or parties whom they support.

The reforms pertaining to PAC expenditure bans typically center around banning all expenditures by and contributions to PACs for the specific purpose of influencing elections for federal office.

Remember that in Buckley, though, the Supreme Court held that the only legitimate and compelling government interest in restricting campaign contributions and expenditures sufficient to satisfy the test of strict scrutiny is the government’s concern in preventing corruption or the appearance of corruption.  The Court further defined corruption narrowly as entailing a financial quid pro quo (dollars for political favors).

Despite their laudable goals, advocates for PAC expenditure bans can really only offer vague justifications for the proposed reforms.   Understandably, they complain of an unresponsive government, a political process that has grown increasingly mean-spirited, and decry elected officials who listen more to lobbyists than to their own constituents. While this criticized “influence” is conspicuous, constitutionally speaking, it does not pass as a justification for the proposed reform in that it falls short of the Supreme Court’s test of strict scrutiny in that it fails to allege the existence or appearance of any specific corruption. 

Knowing deep down in the pit of my stomach the corrupting influence the infusion of money has on our body politic, I wish it were not the case that the list of grievances cited by the advocates of PAC expenditure bans simply do not amount to corruption as the Supreme Court has defined it.  Yet, we must always be deliberative in our process and step back in this instance to realize that we cannot advocate the infringement of one group’s right to speech by dint of a perceived or vague inequity any more than we would desire our own freedoms curtailed without concrete justification.  

What of reducing the PAC contribution limit to $1,000 as some advocate should the outright PAC ban be invalidated as above anticipated?  First off, I doubt that any politician would be corrupted by a single contribution of $5,000 (current maximum).  As such, the interest that the contribution reduction would serve is merely curtailing the perceived dominance and influence of PACs in the political process.  Once again, then, the First Amendment will not allow for such a restriction as it serves a government interest that has never been adjudicated as either legitimate or compelling.

Second, I would also add that a similar unintended consequence would arise if PAC contributions were limited just as did arise as a result of the Federal Election Campaign Act’s ceilings on individual contributions to specific candidates.  What interest would be served by rendering it that much more difficult than it presently is for candidates to raise money? In this age where candidates are forced to raise funds day in and day out, candidates would hardly be less distracted by fundraising if they had to raise money from an even greater array of people as a result of the smaller amounts that any one PAC may contribute.

What of soft money reform? 

Hard money is contributed directly to a candidate and is therefore regulated by law in both source and amount, and monitored by the Federal Election Commission.  Soft money, on the other hand, is contributed to the political party as a whole, supposedly for the purposes of party building and other grass roots activities not directly related to the election of specific candidates.  As soft money is not supposed to be used for specific candidate advocacy, it is not regulated by FECA.  However, the Bipartisan Campaign Reform Act of 2002 (also known as the McCain-Feingold Act) prohibited unregulated contributions to national party committees.

Advocates of campaign finance reform often assert that soft money is the most corrosive in American politics today and typically push for barring federal officeholders, candidates, and national political parties from accepting unregulated soft contributions.  They also advocate subjecting all election-year expenditures and disbursements by political parties, including state and local parties that could affect the outcome of a federal election and also including expenditures for voter registration, get-out-the-vote drives, and any communication that identifies a federal candidate, to the full range of federal regulations.

Reformers want to ban soft money because it undeniably invites the wholesale evasion of the contribution limits now in place by allowing corporations that would not otherwise be permitted to contribute to candidates’ campaigns to make large soft-money donations to political parties.  Yet, given that soft money cannot be used to advocate the election or removal of any particular candidate from office, it is again difficult to establish a link between soft-money contributions and the appearance or reality of quid pro quo candidate corruption that alone provides a constitutional predicate for regulation.

 Again, this issue comes back to Buckely.  Regulating speech other than express advocacy of the election of particular candidates, the Supreme Court said, “would create intractable vagueness problems and cause unacceptable chilling of protected, issue-oriented political speech.”  In other words, such an overreaching ban on soft money contributions would stifle speech regarding controversial political issues and the qualities of government policies, resulting in an abridging of the exact type of speech the First Amendment is meant to protect.

Enter the Supreme Court’s 1996 decision in Colorado Republican Federal Campaign Committee v. FEC, which held limits on independent expenditures by political parties (expenditures not coordinated with any candidate) to be unconstitutional.  Well, if individuals are not capped in their expenditures, it follows logically that the Court will eventually determinate that party spending on political activity cannot be limited, whether or not coordinated with any particular candidate, and also that contributions to the party by PACs or otherwise, will also be immune from regulation.

And then came the starkest example of the Supreme Court’s determination to defend the principles of the First Amendment as it pertains to campaign finance reform.  In its January, 2010 decision in Citizens United v. FEC, the Supreme Court struck down sections of the McCain-Feingold Act and overturned a 20-year-old ruling that had previously prohibited corporations and unions from using money from their general treasuries to produce and run their own campaign ads.

The Bipartisan Campaign Reform Act of 2002, (BCRA/McCain-Feingold Act), amended FECA to ban national political party committees from accepting or spending soft money contributions. While the legislation was challenged in McConnell v. Federal Election Commission (2003), and again in Federal Election Commission v. Wisconsin Right to Life, Inc. (2007), most of the act remained unscathed with only parts being effectively, though not formally, invalidated.  The particular provision at issue in Citizens United, however, was Section 203 of the BCRA, which prohibited corporations and unions from using their general treasury funds to make independent expenditures for speech that is an “electioneering communication” or for speech that expressly advocates the election or defeat of a candidate.  

By the terms of the Act, an electioneering communication was defined as “any broadcast, cable, or satellite communication” that “refers to a clearly identified candidate for Federal office” and is made within 30 days of a primary election, and that is “publicly distributed,” which in “the case of a candidate for nomination for President . . . means” that the communication “[c]an be received by 50,000 or more persons in a State where a primary election . . . is being held within 30 days.”

The facts in Citizens United were as follows:  Citizens United, a nonprofit corporation, released a documentary critical of then-Senator Hillary Clinton, as she sought Presidential nomination as candidate for the Democratic National Party. Anticipating that it would make the documentary available on cable television through video-on-demand within 30 days of primary elections, Citizens United produced television ads but was concerned about possible civil and criminal penalties for violating the BCRA should they air them.  As such, Citizens United sought declaratory and injunctive relief, which they appealed all the way to the Supreme Court, arguing that that the BCRA was unconstitutional as applied to the documentary. 

In its decision the Court pointed out that it had previously recognized that the First Amendment applies to corporations, (First Nat. Bank of Boston v. Bellotti, 435 U.S. 765), and extended the protection to the context of political speech, (NAACP v. Button, 371 U.S. 415).  The Court remembered that it had invalidated FECA’s expenditure ban, which applied to individuals, corporations, and unions, because it failed to serve any substantial governmental interest in stemming the reality or appearance of corruption in the electoral process.  However, the Court also had to contend with its 1990 decision in Austin v. Michigan Chamber of Commerce, 494 U.S. 652, where it upheld a corporate independent expenditure restriction, bypassing Buckley by recognizing a new government interest in preventing “the corrosive and distorting effects of immense aggregations of [corporate] wealth . . . that have little or no correlation to the public’s support for the corporation’s political ideas.”

The court overruled its previous decision in Austin, stating as follows: “The First Amendment prohibits Congress from fining or jailing citizens, or associations of citizens, for engaging in political speech, but Austin’s antidistortion rationale would permit the Government to ban political speech because the speaker is an association with a corporate form…Political speech is indispensable to decision-making in a democracy, and this is no less true because the speech comes from a corporation…This protection is inconsistent with Austin’s rationale…First Amendment protections do not depend on the speaker’s financial ability to engage in public discussion…Distinguishing wealthy individuals from corporations based on the latter’s special advantages of, e.g., limited liability, does not suffice to allow laws prohibiting speech…Under the antidistortion rationale, Congress could also ban political speech of media corporations.”

As result of this constitutional rubric, it is quite clear that any restriction aimed at limiting  access to politicians, such as by way of enacting ceilings on the amount of money the national parties, PACs or even corporations can spend on a campaign add, for instance, would likely be considered by the court as a direct and substantial restriction on the ability of candidates and citizens (or a group of citizens represented by that PAC or corporation) to engage in protected political expression.  As such, no law abridging such rights will likely stand. 

With this matrix in mind, some have proffered the following as a means to accomplish campaign finance reform at the federal level without running afoul of the First Amendment:

 All elections at the federal level shall be publicly funded by taxpayer’s dollars.  Each candidate will be entitled to a pre-determined level of capital with which to run their campaign.  Each candidate shall be required to, among other things, obtain a target number of signatures to qualify for the funds.

Admittedly, this general construct is intriguing.  Unfortunately, it won’t work.  To start, it is worth pointing out that any such system of campaign finance would have to be crafted with extreme care to guard against unintended consequences.  For instance, we could easily create a slippery slope in the process of determining who is and is not eligible for the public funds.   By making it too hard to qualify for the funds, we likely would disenfranchise some and by making it too easy to qualify for the funds, we could bankrupt the system.

 Such a publicly funded system would arguably address the directly corrosive effect lobbying and campaign fundraising is allowed to have on the political process. 

Nevertheless, I posit that such a system is constitutionally obtrusive and would, in reality, do little to remedy the iniquity.

While public funding of campaigns would not place any restriction on individual and corporate expenditures in violation of constitutional precedent, it would place that very same restriction on the candidate.  This already runs afoul of case law.

More importantly, establishing public funding of campaigns in an effort to skirt the rigors of strict scrutiny would do absolutely nothing to stop individuals, corporations, PACs, etc., from spending as they desire, in any amount, advocating issues and party platforms.  The result would be one where a candidate is allotted a pittance via public funding of his or her campaign and then would be at the mercy of their party to back them.  Why?  Because if the party did not back them, they’d back another candidate and flood the airwaves with millions of dollars worth of “propaganda” carefully designed to walk that fuzzy line between issue and candidate advocacy.  The natural result: every candidate will pine for the backing of their political party, Democrat or Republican alike. 

All such a system will do is make the national parties that much more powerful by making them the bankrollers of campaigns and putting candidates squarely in their pockets.  Whatever deals the party has made with the lobbies, corporations or PACs would have to be abided by the candidate if he or she were to have any hope of obtaining the candidacy, much less win re-election.   

So, where do we go from here? 

It is important to note that in the wake of the Buckley decision, where campaign contributions have ceilings, candidates can no longer raise money in the traditional, relatively efficient way of attracting large donations from a small number of donors.  As an unforeseen consequence, candidates are now forced to campaign day in and day out, year after year, in order to amass disorienting numbers of small contributions.  It’s no wonder nothing gets done in government!

Campaign spending must then be regulated with the aim of reducing candidate fundraising chores in lieu of the goal of restricting political expression.  Regulation with fundraising control as a rationale for spending limits is constitutionally defendable because the harm remedied by curtailment is not the speech itself, but the effect the necessitated campaigning has on the candidate and the candidate’s ability to perform his or her elected duties.

With this reasoning in mind, and remaining fully aware of the corrupting influence money is having on our body politic, I proffer the following as a means to accomplish campaign finance reform at the federal level without running afoul of the First Amendment:

By doing two things: 1) placing a relatively high cap, but a cap nonetheless, on the amount candidates can raise and spend per election; and 2) requiring full disclosure of the source of those funds, we can force candidates to choose wisely amongst their donors and the “strings” attached to those dollars. 

Admittedly, this restriction on the amount of money a candidate can spend on a political communication during a campaign would reduce the quantity of any particular candidate’s expression.  However, such a spending cap would entail only a marginal restriction upon the candidate’s ability to engage in free communication for it would permit them to raise and spend a relatively large amount and would not regulate the content of the candidate’s speech. 

This form of regulation, then, would be content-neutral and, as such, only intermediate scrutiny would be necessary in the review of its constitutionality.  Applying the O’Brien test: the law would serve the substantial government interest of preserving the integrity of the democratic process.  Though intermediate scrutiny does not require the law to be the least restrictive means of curtailing the content-neutral speech, this law would be narrowly tailored to govern the actions of a finite group – candidates. 

Candidates, I would argue, are vying for the opportunity to serve the republic, and as incumbent or hopeful public officials, such a spending cap restriction is no less reasonable than the fiduciary duties imposed on professionals in the prosecution of their vocation.  Lastly, the law would leave open alternative means of communication in that the candidates would in no way be forbidden to attend any further galas or fundraisers where they may be given an opportunity to speak to the public at large once their “cap” is met, so long as it is not for the narrow purpose of raising money for their campaign.  The law also would not curtail the public’s (individuals, corporations, PACs) ability to expend moneys and invite the candidate as, perhaps, an honorary keynote speaker.

Because campaign finance reform and lobbying reform, as above described, are so fundamentally complex and constitutionally problematic, I believe only small and incremental reforms are possible with respect to either one – that is, barring an amendment to the Constitution.  Given the dire need for reform, I wish this were not the case, but even facing the corrosive effects money is having on our body politic, I can see no legitimate government interest sufficient enough to amend the First Amendment.  Therefore, each reform must be carefully drafted to anticipate strict scrutiny under the law with case precedent always in mind.

CHAPTER THREE (Part Two of Four)

As stated in the previous section of this chapter – I believe there are three distinct avenues through which the corrupting weight of corporate money on the federal legislative process can be pacified:

  1. Lobbying Reform;
  2. Campaign Finance Reform; and
  3. Term Limits

I will tackle each proposed course in order, analyzing the need for each, the debates surrounding them, and then make specific proposals respectively.  I begin today with:

 Lobbying Reform

While I have heretofore been critical of the effect lobbying has had on the decisions made by our elected officials, let me be clear in stating that I believe lobbying, per se, is not the underlying problem in Washington.  Rather, the EFFECT lobbying is allowed to have on our elected officials as a result of our political system is to blame.

To clarify, the root of the problem is not born of the fact that any particular lobby has the ability over their competitor to shovel millions of dollars into the pockets of our politicians, for this is a natural and positive byproduct of capitalism and true to democratic ideals, rather the problem is that our politicians need that money to survive.  Our elected official’s need for money to survive in the political forum renders them voiceless without the say of their “financiers,” resulting in the average constituent, you and I, being disenfranchised.

I believe that lobbying is essential to our republic as the informed discussion of public issues and debate are integral to the operation of our democracy.  Lobbyists are often experts in a given subject capable of examining various economic, commercial and other functional interests and often advise congress on how to formulate legislation.  To that end, lobbying in America serves a very useful purpose.  However, when lobbying, as it has become in not all but many respects, turns merely into above-board bribery, it undermines the legislative process and is ultimately destructive of our democracy.

Lobbying, which by definition is the act of soliciting or trying to influence the votes of members of a legislative body, is a powerful form of speech and petition, and therefore the act, in and of itself, is protected by the First Amendment. 

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

                                         –First Amendment to U.S. Constitution 

Because the discussion of public issues and debate are so integral to the operation of the system of government established by our Constitution, any prohibition of speech, including the petition of government itself (aka lobbying), must serve a legitimate, narowly tailored purpose.   Though I would have it no other way, this serves as a very large hurdle for lobbying reform to overcome. 

In order to analyze the impediment to lobbying reform presented by the First Amendment, we must start with case law.  An expanding line of Supreme Court cases has ruled the following as it pertains to the curtailing of speech: 

To begin, there is the doctrine of no prior restraint.  Essentially, government cannot punish someone before they have spoken or try to prevent them from speaking as to do so would constitute censorship and would result in society always being deaf to a particular message.   However, the government can, in varying degrees, promulgate laws regulating the content of speech and content-neutral speech.  

Content-based regulation centers around the limitation or punishment of speech because of the content of the message or the stance of the speaker.  In order for any such curtailment to be constitutional, the regulation must pass the test of strict scrutiny.  Strictly speaking, the law must serve a compelling government interest and must be narrowly tailored as the least restrictive means of curtailing the specific speech.  Per the Overbreadth Doctrine- if the law punishes protected speech, it is void, and if it the law is too vague it shall also be invalidated because people of common intelligence would be unsure what speech is actually prohibited, theoretically resulting in all speech being chilled.

Content-neutral laws, on the other hand, are unrelated to the content of the speech and do not favor one viewpoint over another.  This type of regulation is notably subject to the O’Brien test from Chief Justice Warren’s opinion in United States v. O’Brien (391 U.S. 367 (1968).  Under the O’Brien test, content-neutral laws are subject to intermediate scrutiny rather than strict scrutiny.  The law must serve a substantial government interest, the law must be unrelated to the content of the speech, and the law must be narrowly tailored but not necessarily as the least restrictive means of curtailing the speech.  Lastly, the law must leave alternative channels for communication.

In which category would you place lobbying?  The question, of course, is a red herring of sorts because it is important to note that the level of scrutiny required in judicial review of lobbying depends not on the act of lobbying itself, but rather upon the language of the law and how that statute aims to restrain lobbying. 

In Buckley v. Valeo (424 U.S. 1 (1976)) the Supreme Court laid down precedent that continues to resonate in the halls of justice and the chambers of Congress today.  “Some forms of communication made possible by the giving and spending of money involve speech alone, some involve conduct primarily, and some involve a combination of the two,” the court wrote, “Yet this Court has never suggested that the dependence of a communication on the expenditure of money operates itself to introduce a non-speech element or to reduce the exacting scrutiny required of the First Amendment.”

The court in Buckley went on to distinguish O’Brien from the case before it as it considered the appeal to key provisions of the Federal Election Campaign Act of 1971 (FECA).  Where O’Brien dealt with clearly content-neutral regulation (administrative interest in the preservation of draft cards) the court argued that it was “beyond dispute that the interest in regulating the alleged “conduct” of giving or spending money arises in some measure because the communication allegedly integral to the conduct itself is thought to be harmful.”

The court distinguished limitations on expenditures from limitations on the amount any one person or group may contribute to a candidate or political committee, upholding the latter and invalidating the former.  

The argument was this:  “A restriction on the amount of money a person or group can spend on a political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached.”  Whereas, a limitation on political contributions, “entails only a marginal restriction upon the contributor’s ability to engage in free communication, for it permits the symbolic expression of support evidenced by a contribution but does not in any way infringe the contributor’s freedom to discuss candidates and issues.” 

The court found that FECA’s limitations on contributions were constitutionally valid because they served a legitimate administrative interest in preserving the integrity of the democratic process without directly infringing upon the candidate’s or individual’s rights to engage in political discussion.  In contrast, the court invalidated the Act’s expenditure ceilings because they felt that the provisions placed direct restrictions on the ability of candidates, citizens and associations to engage in political expression, altogether in violation of the First Amendment.  

Pop Quiz:

Which do you believe is the proper role of government in relation to the First Amendment?

        1.  The government should remain neutral as people in the private sector compete in the political marketplace.  If some people have more money than others, and if their greater resources permit greater access to the public officials, the result is not something the government should or can remedy consistent with the First Amendment.

        2.  A system of free expression is one in which there is fair deliberation on what the public good requires, and inequality of resources can seriously distort that deliberation by heightening the level of one voice and diminishing another.  The government should enact legislation to promote a more equal and fair public debate.

Answer:  Both!  Allow me to explain.

Consider James Skelly Wright’s argument in his 1976 Yale Law Journal Article, Politics and the Constitution:  Is Money Speech.  In it, the Chief Judge of the United States Court of Appeals for the District of Columbia started with the “pluralist” belief that the First Amendment’s highest function is to let group pressure run its course unimpeded, for to interfere would skew the process that determines the public interest.  I happen to agree with this philosophy, however, I also agree with Judge Wright’s assertion that the pluralist model, “gives undeserved weight to highly organized and wealthy groups and drains politics of its moral and intellectual content.”  He went on further to argue, “what the pluralist rhetoric obscures is that ideas, and not intensities, form the heart of the expression which the First Amendment is designed to protect.”  

The simple fact remains that lobbying in the United States has spiraled out of control.  John Smith who owns a small business on Main Street simply cannot compete with the money Wall Street firms or energy conglomerates can throw at lobbyists to wine and dine our elected officials.  The result is not, as many politicians and even our Supreme Court Justices have oft argued, “theoretical,” and it certainly is more than an unsubstantiated undue influence to the detriment of the common constituent.  The result is the sub-prime lending scandal, forty years of inaction as it relates to our energy independence, immigration, education reform, and the list of inaction/biased exploits goes on and on.  The impact is real, it is significant, and it is destroying our republic! 

But, given the constitutional constraints of the First Amendment protection of free speech and petition, how do we reform lobbying in America without trampling on the rights of the lobbies in favor of the common man? 

I would argue that any restriction aimed at limiting a lobby’s access to politicians, such as by way of enacting ceilings on the amount of money the lobby can spend on a dinner party for a congressmen, would be a direct and substantial restriction on the ability of candidates and citizens (or a group of citizens represented by that lobby) to engage in protected political expression.  As such, no law abridging such rights should stand.  

Therefore, the only way to properly regulate lobbying, as I see it, without running afoul of the First Amendment, is to require more transparency than is currently mandated in the system.  Each dollar spent by a lobbyist to reach the ear of a congressman or candidate, to include dinners, fundraisers, galas, gifts, trips and excursions – the entire gamut of lobbying tactics commonly employed, from $1 and above, absolutely must be accounted for and reported by the lobbyist and his firm to a Commissioner of Accounts in the JUDICIAL BRANCH.   When a lobbyist advises congressmen or their staffers on proposed legislation, their hourly rate must be accounted for, the bill they were advising on and any specific language proffered must be catalogued, and the judiciary shall have jurisdiction of review and penalization for abuses and undue influence.  

It seems clear to me that the judicial branch should have the authority to oversee the proprieties of lobbying and congressional action as such an oversight power would constitute a check and balance in conformity with constitutional spirit. 

This burden of full disclosure and transparency must be placed on the lobbying firm and it must also be placed on the individual congressmen to report exactly what fundraisers, galas, etc., they attend and who hosted/financed the event. 

Because no speech or petition is restricted (albeit hopefully discouraged) by such regulation, the judicial mandate of strict scrutiny need not apply in review of its legality.  That having been said, such regulation, clearly, would serve the legitimate government purpose of avoiding corruption or the appearance of corruption by affording everyone clear, digestible access to information linking the efforts of lobbies to the actions of Congress.  This would be accomplished by placing a relatively minute, ministerial task on Congress and lobbies – hardly too burdensome considering the magnitude of the corruption it stands to bring to light.  Finally, the task to the judiciary would be similar to that of a Commissioner of Accounts’ responsibility to audit accounts for decedent’s estates – a function they already perform.

Please see my next post: Chapter Three (part three of four) in reference to Campaign Finance Reform.

CHAPTER THREE (Part One of Four):

LOBBYING, CAMPAIGN FINANCE REFORM, OR TERM LIMITS:  HOW TO STOP GRIDLOCK IN THE UNITED STATES CONGRESS

 “For of those to whom much is given, much is required. And when at some future date the high court of history sits in judgment on each one of us—recording whether in our brief span of service we fulfilled our responsibilities to the state—our success or failure, in whatever office we may hold, will be measured by the answers to four questions:

First, were we truly men of courage—with the courage to stand up to one’s enemies—and the courage to stand up, when necessary, to one’s associates—the courage to resist public pressure, as well as private greed?

Secondly, were we truly men of judgment—with perceptive judgment of the future as well as the past—of our own mistakes as well as the mistakes of others—with enough wisdom to know that we did not know, and enough candor to admit it?

Third, were we truly men of integrity—men who never ran out on either the principles in which they believed or the people who believed in them—men who believed in us—men whom neither financial gain nor political ambition could ever divert from the fulfillment of our sacred trust?

Finally, were we truly men of dedication—with an honor mortgaged to no single individual or group, and compromised by no private obligation or aim, but devoted solely to serving the public good and the national interest?”

–John F. Kennedy in a speech delivered to a Joint Convention of the General Court of the Commonwealth of Massachusetts on January 9, 1961.

After graduating from the University of George Mason School of Law, I sat for the Virginia State Bar in 2006 and was sworn in at the Supreme Court of Virginia as a licensed attorney.  Listening to the commencement speech of the Honorable Chief Justice Leroy Rountree Hassell, Sr., the first African American appointed to the court, a tremendous sense of honor came over me.  I distinctly remember looking around at my fellow Juris Doctors readying to be sworn in to the sacred practice of law in the Commonwealth, thinking, “hear we are, the next agents of justice.”

However, I’d already been steeped in the practice of law since January of 2005, having petitioned the Supreme Court for permission to practice in my third year of law school under the guidance of an attorney already admitted to the bar.  Petitioning the court was unfortunately necessitated by the unexpected near death of my father that winter. 

In a matter of weeks, my father had gained somewhere near fifteen pounds of water weight.  We later learned that this was a result of extreme heart failure brought on by the idiopathic triggering of a superfluous electrical pathway in his heart.  As a result, his resting heart rate would spike upward of two-hundred, instead of the normal sixtyish beats per minute.  His heart literally turned to mush, losing its elasticity and ability to pump oxygen and blood to his vital organs.  His ejection fraction, the measure of how much blood the heart pumps out with each pump versus the amount it withholds, plummeted, his organs shut down and on Christmas Eve, 2004, he literally died.

My father was revived and immediately airlifted to Fairfax Hospital, renowned as having one of the best cardiology departments in the world.  He underwent emergency heart surgery for the insertion of a balloon pump.  The next morning, Christmas day, the on-call pulmonary specialist told me, point blank – my father would not last an hour.

Well, he did.  And after nearly a month of induced coma, he came home on February 7th, my birthday, and we opened our Christmas presents with family on Easter.  To this day his doctors are in awe at his recovery…he is, quite literally, a walking miracle.  So let me pause to say, to all, no matter how dire a situation seems, remember, there is always hope!  I digress, except to say that the exact same is true of the present and future of our great nation.

My father was the senior partner, manager and owner of my law firm, Kidwell, Kent & Curran.  It’s a small, general practice firm, consisting of only three attorneys, myself, my father, and J. Charles Curran, a dear friend and mentor.  As such, upon the event of my father’s sudden sickness, it fell upon me to take up the mantle by tackling his caseload and managing the firm.

When I took over, approximately eighty-five percent of the firm’s income was derived from real estate oriented revenue.  In 2004, the height of the real estate boom, we were conducting an average of four residential or commercial real estate settlements a day.  But, as luck would have it, in 2006, the exact summer I was sworn in to the practice of law, the real estate market collapsed in the wake of what is now commonly referred to as the sub-prime lending scandal.

Almost overnight, my firm went from conducting four settlements a day to conducting as little as four in a month.  The bubble had burst and what ensued was the precipitous decline of our economy into the “Great Recession.” And now the feared – “Double Dip Recession”. 

The economic fallout across our nation has been unprecedented – somewhere between seven to ten million homes now sit vacant in a rising tsunami of foreclosures as unemployment lines rap around city blocks in haunting similarity to the soup lines of the Great Depression.

Suddenly, there I was, a young, ideological attorney fresh out of law school, beyond green behind the ears and faced with the task of reviving a law firm staring down the throat of looming bankruptcy.  The livelihood of my entire family hinged on the income generated by Kidwell, Kent & Curran – my sister was our Senior Real Estate Processor, my father the owner, and now my economic fortunes were equally as entwined with the success or failure of our small family business.  Failure was simply not an option.

What was I to do?  I decided immediately that the best thing to do was diversify.  Just like any savings plan, stock portfolio or otherwise, the answer, I thought, lied in delving head first into new areas of law not previously or long since practiced at our firm. 

I found myself practicing domestic relations, handling divorces, child custody and spousal abuse cases.  I defended alleged drug dealers, some innocent, some not, prosecuted squatting tenants, and even “chased ambulances”, to use the term loosely, to land  personal injury cases.  But all of it left somewhat of a sour taste in my mouth.  So, I moved on to different pastures where I hoped that my legal expertise could better serve justice.

Through friends in worship, I was invited to local churches and assisted living facilities to conduct seminars on estate planning and charitable giving, and I traveled to regional real estate brokerages to coach agents on the legal minefields of the increasingly litigious market.     

Being that the firm’s primary focus has for decades been on real estate law, I suppose it was natural for me to find expertise in one of the fastest expanding phenomena of the emerging real estate market:  the Short Sale.

A short sale, simply put, is when a lender that has a mortgage, or Deed of Trust, secured as a lien against a particular parcel of real estate, allows the owner of that property to sell the property short of what they owe on their mortgage.  The owner’s real estate agent will list the property as contingent upon third party approval, that is, the lender’s approval, of any ratified contract of purchase and sale.  Once a contract is in hand, a package containing the owner’s W-2s, tax returns, pay-stubs, account statements and a letter explaining why they are in economic hardship is sent to the lender for consideration.

The short sale has become one of the largest market shares of all homes sold in the wake of the sub-prime lending scandal and is utilized as an alternative to foreclosure.  The lender, in essence, reviews the hardship package and if it determines that it will yield more income on its investment by allowing the short sale than by instituting foreclosure, the lender approves the sale, often with stipulations requiring the borrower to execute a new Note promising to pay back the deficiency over time.

In one form or another, the thought had long been swelling in my head, but I will never forget the day I was driving back to the office after having conducted a seminar on the short sale process at a local Long and Foster Realty brokerage.  My head was racing with recent memories of the clients crying in my conference room, pleading for me to save them from being ousted from their American Dream.  The mounting pressures of scraping to cover payroll, pouring what little savings I’d accumulated into the firm to keep it afloat – it all just hit me.  I pulled off the road, ironically into the parking lot of a Bank of America, and looked into the rearview mirror- 

“How did this happen,” I asked myself aloud, staring at the too tired reflection of a man in his twenties.  And there it is… how did this happen?  How did America, what I’d grown up to know is indisputably the greatest nation on this planet, the sole remaining superpower and the epicenter of economic opulence, come to this?  How were so many people out of work?  And personally, how the hell was I going to survive the worst economy since the Great Depression and do so in a firm dependent on real estate, the very market that has been enduring through the Great Recession two years longer than every other industry and in many respects caused the recession?

How did this happen?  The answer, of course, is multi-pronged and complex.  That being said, there is one major cause of the Great Recession that speaks volumes of the rampant corruption and back-door dealing that has permeated the body politic of the United States Congress. 

The corruption of which I speak is not necessarily born of malevolent intent or even self-dealing, though this certainly exists and is an issue.  Unfortunately, it is a corruption that is systemic, proliferated as an inbuilt feature of our political system, and it is debilitating to the proper purpose and function of our government.

Sadly, the political underpinnings of the Great Recession, just the same as those of the Great Depression, are cases in point of this ingrained corruption of which I speak, and that is precisely why it is so absolutely imperative that we come to recognize the severity of the issue and address it with first priority! 

It is against this corruption that the protestors comprising the ubiquitous and spreading Occupy Wall Street movement, should be protesting – and I hope that they read my message to assist in their finding a more enlightened voice to their cause.  I understand their anger because I myself am the prototype Small Business, literally off Main Street, being stomped out in this economy.  However, I do not agree with many of their destructive rioting as it is misplaced and dangerous.  Most comprising the movement, and therefore the movement itself,  need to better understand what they are truly fighting for – and more importantly, why it is so imperative that all of us fight for it. 

The world, the economy, government and politics – they are all intertwined in a highly volatile, complex system, where one directly affects all others.  Therefore, to understand the critical status of our debt ridden economy, the Walk on Wall Street members, Republicans, Democrats – every American, needs to first understand, on a deeper level,  exactly how we got into this mess.  While some blames and complaints are definitely well placed, it is premature to scapegoat corporations as the sole culprit.  To a large extent, in fact, the Walk on Wall Street should be a Walk on Congress.

In the years leading up to the Great Recession, extensive deregulation of the financial industry opened the door for the short-term, profit motivated masterminds of Wall Street to conjure and implement exotic schemes that literally mortgaged the very security of the United States, and by extension thereof, the world economy.  It was a gamble which fueled the boom of the real estate market as well as an explosion of personal credit debt, and it was every tax paying American that eventually paid the pot when the wager was lost.

How was this allowed to occur?  As the Leaders of the Group of 20 cited in their “Declaration of the Summit on Financial Markets and the World Economy,” in November, 2008:

During a period of strong global growth, growing capital flows, and prolonged stability earlier this decade, market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence. At the same time, weak underwriting standards, unsound risk management practices, increasingly complex and opaque financial products, and consequent excessive leverage combined to create vulnerabilities in the system. Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions. 

Quite literally, the watchdogs on Capital Hill were asleep at the wheel and in many cases they found it in their best interests to simply look the other way.  Senators were relentlessly and effectively lobbied to pull the teeth from statutes aimed at quelling the foaming mouth of the profit at all cost machine that is Wall Street.  The Securities and Exchange Acts of 1933 and 1934 (enacted in response to 1929 Stock Market Crash), as well as subsequent financial reforms, were simply not enforced, and a host of new legislation opened the door for moral hazard and unregulated risk.  Why?

As a result of a $70 trillion “stash” of worldwide fixed income investments seeking higher yields than those offered by U.S. Treasury bonds, Wall Street rose to the occasion, bringing forth financial innovation in a move to link this glut of money to the real estate market.  This represented a seemingly endless tide of gold to line the pockets of everyone in the mortgage supply chain from the mortgage broker selling the loans, the banks funding the brokers, to the goliath investment banks backing them, and as a result the behavior of lenders changed swiftly and dramatically. Lenders offered unprecedented loans, both in type and volume, even to undocumented immigrants, and the government did absolutely nothing to stop it!

As a result, the sub-prime lending scandal ensued.  The unbridled deregulation and outright failure to enforce the laws already on the books allowed lenders to loan money to individuals or companies looking to invest in residential or commercial properties with “teaser” interest rates below prime (the prime interest rate as reported by the Wall Street Journal bank survey).  Commercials blitzed our televisions and soon millions of Americans were looking to take out a second or third line of credit on their home or to purchase as many properties as they could with hopes of flipping them for a profit.   We were enticed with interest only loans or adjustable rate mortgages, (ARMs), with beginning teaser rates so amazing, how could we not jump into the pot? 

Even more, when we clicked on the site of the newest internet brokerage ready to lend us money, we found we weren’t even required to prove our financial solvency.  Traditionally, borrowers taking out conventional loans would be required to put somewhere around 20% of the value of the property down, but, by 2005 the median down payment for first-time homebuyers was around 2%, with nearly 50% of loans made with no down payment at all.  We were almost being provoked to mortgage our futures.

But, the enticement didn’t stop there!  We flocked to the brokers when they first offered stated income, verified assets (SIVA) loans, requiring only that we state our income without providing any proof other than having some money in the bank.

Then, the no income, verified assets (NIVA) loans came out. Unbelievably, lenders no longer even required proof of employment. Borrowers just needed to show proof of money in their bank accounts. Finally came NINA, or No Income No Assets loans.  These NINA loans, often referred to as “Ninja” loans, allowed us to borrow money without having to prove or even state any owned assets. All that was required for a mortgage was a credit score, and not even a good one!

Another industry was primed to capitalize on the seemingly endless flow of financing to the common consumer, the residential home builder.   Demand exploded into full out frenzy and builders began throwing up houses at record pace.  Better yet, with demand soaring, housing prices were skyrocketing for the already invested, and homeownership reached an all-time high.  All seemed beautiful in the boom world of supply and demand.

But, as we all now know… it was all horribly wrong!

I distinctly recall one particular mortgage offered from a fly-by night brokerage to first-time clients of my law firm.  It took me literally an hour to decipher the convoluted terms of the Note being offered to my clients and what I read was beyond alarming.  So, when my clients came to the settlement table, I asked them what they thought the terms of their loan were.  As you might have guessed, what they thought they were signing up for was completely different from what they were actually being asked to sign. 

My clients explained that they were purchasing their first home, recently married and willing to extend themselves a little as she was expecting and they needed the extra room.  They were under the impression they were getting a thirty year loan with a fixed interest rate at 2.75% per annum with interest only payments required for the first three years.  Not even close! 

In reality, the circuitous Note they were presented with was interest only for the first thirty days, fixed at 2.75% interest for the first year, and adjustable every six months thereafter, at prime plus 5% and with a cap at 18% interest per annum. 

This Note was alarming on multiple levels.  To start, the margin, being the lender’s scope of profit on the loan, at the time, was usually set at prime plus 2.5% to 2.75%, this was prime plus 5%.  Second, and more alarming, the loan was amortized over thirty years at the greater of the margin plus 5% or 9.25%, and was due, in full, in fifteen years.  This meant that while the interest rate was kept artificially low, as a teaser, for thirty days of only interest and then principal and interest at 2.75% for a year, the principal balance would actually increase at a startling rate.  After paying on their loan for two years they would have owed tens of thousands more than the amount of their original loan and greater the value of their house. 

Why not just refinance immediately?  They could, but, by the very terms of the Note’s prepayment penalty clause, they would have been required to pay a hefty fine if they did so within two years and especially if they did so with another lender.   

And third, as the stack of forms for them to sign ambiguously indicated, the loan had already been sold, twice, to two different loan servicing providers, prior to their signing.  This Note was a product of predatory lending to say the least.

The worst part about this scenario was the fact that my clients had absolutely no idea what they were about to sign and would not have had any idea unless I had taken the time, in my capacity as an attorney at law, to explain the terms of the Note at settlement.  These were well educated individuals, both with masters degrees, and settled in well respected professions.  I advised them not to sign the documents and, to date, they remain as clients.

But, imagine if these two individuals were a young, entrepreneurial minority couple tantalized at the prospect of finally being able to attain the very icon of the American Dream – their first home.  Imagine further that they were told that their mortgage payment for a $600,000 residence, a home large enough for themselves, their children and their parents, would only run them $1,200 a month.  Even better, if they went with the settlement company that the builder of their brand new American Dream recommended, the builder would contribute $5,000 to their closing costs.  A sweet deal, right?  No!

First, the settlement company recommended by the builder would most certainly be a subsidiary or otherwise be affiliated with the parent, builder company, and the settlement company would “kick back” a majority of the title insurance earned at closing.  To make a personal gripe, this is allowed only through a loophole in the Real Estate Settlement Procedures Act that the Housing of Urban Development (HUD) continually fails and refuses to properly police!  

Because of the affiliation between the builder and settlement company, the settlement company had no care for the interests of the borrower/purchaser.  Not representing the borrower, the settlement agent, even if asked about the terms of a Note or Deed of Trust at settlement, would not be bound by any fiduciary duty to accurately explain the documents to the borrower.  In fact, they are barred in doing so because doing so constitutes the unauthorized practice of law.  And, as for the $5,000 in settlement costs, well, the builders simply upped the price of their new homes to cover this amount, charging a little more here and there for extras or even deliberately excluding a necessity from the initial offer to entice the buyer to upgrade from the base model.  Brilliant capitalism in grand excess!

The result:  borrowers signed documents they simply did not understand, and in three months, a year, maybe two or even three, suddenly they were not required to pay the promised $1,200 a month for their mortgage, but rather, $4,200 a month.  When the clock tolled and their mortgages shot up, millions of borrowers across the country were suddenly unable to pay, and this dawned the crash of the real estate market.

Between 1997 and 2006, the average value of real estate in the United States increased by an astonishing near 125%. The mentality, then, was that houses would increase in value not primarily on par with inflation as they had historically, but rather, as super-investments promising the highest rates of return around.  You could refinance your house, take out a second or third line of credit, with no proof of income, buy a car with the change in your pocket, put your kid through college, and in six months your house would be worth another sixty thousand.  For a period of years, in fact, this was the reality, but it was nothing more than a thin and beautiful veil masking the inexorable and ugly truth.

While the price of real estate skyrocketed, the average income of an individual in that same timeframe did not.  In fact, it stayed absolutely flat!  From 1980-2000 the national median home price range averaged approximately three times median household income. This ratio accelerated to over four and a half times median household income by 2006. 

It was not long before the builders that were throwing up homes at record pace on the naïve speculation that demand for homes would continue to climb without an attendant rise in income, simply outpaced demand.  Suddenly, there were too many homes and too few people willing or able to make the investment.  Supply and demand had finally broken through the frenzy to unveil the dreadful truth. 

The coalescence of these factors resulted in a sudden downward pressure on the value of real estate across the United States.  The nail in the coffin, so to speak, would come when the first wave of adjustable rate mortgages (ARMs) re-set.  Countless homeowners found themselves suddenly unable to pay their mortgage and when they turned to their lenders to refinance to a lower, more manageable rate, they were now being told that the principal balance on their outstanding loans were in excess of the plummeting value of their home.  Since the lender could not sufficiently secure the loan necessary to refinance the outstanding adjustable rate mortgage, they would not extend the necessary financing.  The housing bubble had officially burst!

A positive feedback loop began whereby those unable to refinance defaulted on their loans and foreclosures spread like wildfires, further driving down the value of forest after forest of homes.  Second, third, fourth and continuing waves of adjustable rate mortgages re-set, and those homeowners were also unable to refinance.  They defaulted and the foreclosure of their homes fed right back into the downward spiraling market, further pulling the value of real estate into the tank. 

By fourth-quarter 2007, over 15% of sub-prime ARMs were in foreclosure or over ninety days delinquent.  By second-quarter 2008,  a staggering 25% were delinquent.  In 2007, lenders instituted foreclosure proceedings on over 1.2 million properties, a dramatic 79% increase over the year prior.  In 2008, lenders instituted 2.3 million foreclosures and 2.8 million in 2009.

The saga, as we all know, does not end there.  We’ve unfortunately become all too familiar with the terminology that has been thrown around in the wake of the sub-prime lending scandal.  Toxic loans, mortgage-backed securities, and credit default swaps, to name a few.  This is because an additional and major catalyst of the sub-prime crisis, beyond the abovementioned predatory and deregulated lending practices, was the advent of banks entering into the mortgage bond market. 

The traditional mortgage model involved a bank originating a loan to the borrower and retaining the entirety of the default risk.  The significant risk of losing their investment in the secured real estate understandably forced banks to lend cautiously.  But, this traditional model crumbled under a new “originate to distribute” model as a result of banks entering the mortgage bond market. 

Banks were now able to sell the mortgages and distribute credit risk to investors through what we all now know as the mortgage-backed security (MBS). Suddenly the lenders issuing mortgages no longer retained any risk and by selling the mortgages to investors, they could immediately replenish their funds, enabling them to issue more loans and generate mountains of transaction fees.  This unfortunately created a moral hazard in the industry as loan originators were now only concerned with generating money for their pockets via origination charges without parallel regard for the quality of the underlying credit.

But, even with the advent of the MBS, the regulated banking industry had only so much money to go around.  As such, the security market from 1992 to 2004 expanded at a steady but marginal rate.  But now, in order to satiate the demand of foreign and domestic investors Wall Street was going to have to come up with something genius.  Millions of lobbying dollars spent and in comes the 2004 United States Securities and Exchange Commission (SEC) decision on the Net Capital Rule allowing United States investment banks to issue substantially more debt.  It was this exact debt that was utilized by the investment banking industry to purchase volumes of mortgage-backed securities. 

The share of sub-prime mortgages passed to third-party investors via mortgage-backed securities increased to approximately 75% in 2006.  American homeowners, consumers, and corporations owed nearly $25 trillion in debt with traditional depository banks retaining only $8 trillion of that total and an astonishing $10 trillion came from the securities markets.

Now, my aim is not to delve into the pros and cons of allowing investment banks to issue debt and purchase mortgage-backed securities.  In fact, aside from the debt element, I am not so sure that I do have any theoretical problem with it if properly regulated.  But, what is extremely important to understand is why the securities bazaar comprising the lion’s share of the market was and remains such a crisis from a policy standpoint, especially insofar as it contributed to the Great Recession.

Politically speaking, the problem is a complete and utter lack of regulation of what is commonly referred to as the shadow banking system. The shadow banking system is a network of lenders, brokers and opaque financing vehicles such as hedge funds and investment banks which by definition do not accept deposits like the common depository bank and are therefore not subject to the same regulations. 

In allowing investment banks to underwrite massive amounts of debt they were in reality given cart blanche permission to procure mortgage-backed securities and essentially intertwine themselves into the same pool as depository banks without the requirement of adhering to nearly as stringent of regulations.  And they capitalized on this opening!

In the years leading up to the crisis, the top four U.S. depository banks moved over $5 trillion in assets and liabilities “off-balance sheet” into the shadow banking system, enabling them to bypass scores of regulations.  Why would they do this?  Money!

The ability to issue large amounts of debt opened the door, but the investment banks were investing in mortgage-backed securities based upon a false assumption that housing prices would continue to rise in the foreseeable future, and that borrowers would also continue to make their mortgage payments.  In doing so, the investment banks were engaging in financial leverage: borrowing at a lower interest rate and investing the proceeds at a higher interest rate.  This strategy proved profitable during the housing boom.  In fact, the New York State Comptroller’s Office reported that Wall Street executives took home bonuses totaling $23.9 billion in 2006 alone.

Now, hindsight is 20/20, sure, but given the stagnation of individual income as compared to the staggering escalation in housing affordability, it should have been clear to the investment banks that their bet was, in the very least, a short lived risk.  In reality, though, lenders certainly didn’t care because they were raking in processing fees.  And the investment banks, they were concerned only with short-term profit and the executives, it seems, concerned more with their year-end bonus rather than the long term financial viability of their firms, let alone the consequences of a predictable real estate meltdown.

The entire financial system, from mortgage brokers to investment bank executives and Wall Street risk managers, was undeniably tilted toward short-term risks for the sake of the almighty buck while ignoring long-term obligations and underlying risks to main street America.  They were playing with trillions of dollars, all held as debt over each American’s head, and our government failed completely to regulate their actions – actions which evidently were governed by greed and reeked of moral hazard.  This is what the Walk on Wall Street movement is protesting – even if they don’t realize it.

Then, it hit the fan!  The investment banks’ brilliant financial leverage strategy, as we now know, resulted in almost incalculable losses when real estate values plummeted and mortgages began to default.  Unregulated, these shadow banking entities were unconscionably vulnerable because they borrowed short-term in liquid markets to purchase long-term, illiquid and risky mortgage-backed securities. The downturn in housing and rising foreclosure rates resulted in investment banks being subject to rapid deleveraging, requiring them to sell their long-term assets at depressed prices.

The extent of the vulnerability the investment banks were allowed to risk is astonishing.  The top five investment banks in the United States reported over $4.1 trillion in debt for fiscal year 2007 alone, nearly a third of total U.S. gross domestic product!  And as a result, the top three U.S. investment banks, institutions “too big to fail”, faced financial meltdown in the wake of the sub-prime lending scandal.  Lehman Brothers went bankrupt, sending the stock market into a downward spiral and Bear Sterns and Merrill Lynch were sold at fire sale prices. 

What was the result for the average American?  In the first three quarters of 2008 alone, owners of stocks in U.S. corporations suffered nearly $8 trillion in losses.

Unfortunately, the rabbit hole spirals deeper.  As I said before, Wall Street was literally betting on our economy, and doing so with our money.  More concisely, while underwriting trillions in bad debt to purchase mortgage-backed securities, they were hedging their bets by simultaneously wagering with the other hand that the very mortgages leveraged as a carrot to the masses as a means to buy into the American Dream would fall into default and a “credit event” would occur.  These loans, doomed for default, were understood by this other hand to be “toxic” and they were betting that we’d fail to make our mortgage payments! 

Quite literally, this other “hand” of Wall Street wanted us to fail to meet our mortgage obligations and fall into default.  They didn’t care if this meant foreclosure for countless hard working families, that wasn’t their problem, because the pushers of the Credit Default Swaps (CDS) made their money at sale of the product and investors raked in the doe the instant default became reality.

Now, when I said that deregulation of the financial industry resulted in exotic products, perhaps the starkest example would be the credit default swap.  The credit default swap is an extremely complicated product, one that requires a mathematical formula spanning the length of numerous blackboards to set out.  But, boiled down to its roots, a credit default swap is a bilateral contract between the buyer of the contract and the seller of the contract, for protection.  The protection buyer, purchases the contract from the seller of the CDS and is required to pay a quarterly spread or fee to the seller.  The CDS contract then references a third-party, or “reference obligor”, such as a borrower on any mortgage loan, and if that third party, which, by the way, is in no way shape or form a party to the CDS contract, defaults on their mortgage payment, the seller of the CDS pays the buyer par value for return of the subject CDS bond, an amount that usually reaches into the many millions.  In short, we fail to pay our mortgage, and some investor gets filthy rich!

According to a 2010 International Swaps and Derivative Association (ISDA) Market Survey, over $62 Trillion of outstanding credit default swaps have flooded the financial industry, but this approximation is likely low as not all of them are documented using the ISDA standard promulgated forms – not to mention the additional proliferation of Basket Default Swaps, Credit Linked Notes and Loan Only Credit Default Swaps.  All of these exotic products are not traded on the open exchange and are therefore not reported to any government agency tasked to regulate them.

So, while wildly unregulated in the sale of the CDS, the same Wall Street companies were simultaneously selling the mortgage-backed securities to other investors – perhaps one of the most sickening displays of moral turpitude imaginable!  Not even the best of magicians could pull off this slight of hand!  With one hand Wall Street was convincing investors that the underlying credit comprising trillions of dollars worth of mortgage-backed securities were sound, and with the other hand they were convincing their other clients to invest in a CDS, a product with its value fundamentally linked to mortgage default. 

Was everyone asleep at the wheel, or were heads just turning in the other direction?  Why would any congressman allow this to happen?  Unfortunately, the answer, plainly and simply, is systemic corruption!

Allow me to once again indulge in an analogy with the predicate of an axiom that we all know, “history repeats itself”. 

The 1929 stock market crash which signaled the beginning of the Great Depression was in large part caused by problematic stock trading practices permitted under a laissez faire regulatory scheme.  Perhaps the most notorious of these practices was the unchecked convention of buying stocks on the margin. 

Buying on the margin consists of purchasing stocks or other securities with capital borrowed from a broker and utilizing other securities as collateral. The aim, of course, is to amplify profit on the positive equity potentially earned on any particular holding.  To begin, the net value, or the difference between the value of the security and the broker’s loan, is equivalent to the amount of one’s own cash used. This disparity is required to stay above a minimum margin requirement designed to protect the broker against a fall in the value of the security.

Here is an example: 

James purchases stock in a corporation for $1,000, using $200 of his own savings, and $800 borrowed from his broker. Here, the net value (share minus loan) is $200. As a requirement of the loan, the broker demands a minimum margin requirement, or leverage rate, of $100.

Suppose the stock, for whatever reason, drops to $850. The net value is suddenly only $50 (net value ($200) – stock value loss of ($150)).  James is forced by the terms of the broker’s loan to either sell the stock or pay out of his pocket to bring the investment back to the minimum margin requirement.

As a byproduct of laissez faire regulation, margin requirements were extremely loose in the 1920s. Brokers required investors to put down only 5-10% of their own money, whereas today, in response to the Great Depression, the Federal Reserve’s margin requirement limits debt to 50%.   So, when the stock market began to contract at the tail of the roaring twenties, many investors received margin calls. If these investors could not deliver their own money to their brokers within a certain timeframe their shares would be sold.  Unfortunately, the market was quickly saturated with market call after market call and as many individuals did not have the equity to cover their margin positions, their shares were sold at rapidly declining prices.  A positive feedback loop ensued, causing further market declines and additional margin calls.

Sound familiar?  The fall of the real estate market which pulled us into the Great Recession is analogous to the crash of the stock market which lead to the Great Depression in that the sub-prime lending scandal ostensibly was all about buying stock, investment in real estate, on the margin, with money that was not truly in existence but speculated to eventually, if not soon, arrive.  Both the boom of the roaring twenties and the boom of the early 2000s were built upon speculative equity. 

Sure, the details are quite different, and unquestionably contemporary financial markets are vastly more complex, but the root cause for the meltdowns, in both the Great Depression and Great Recession, remain strikingly similar.

The Securities and Exchange Acts of 1933 and 1934 were promulgated in order to guard against exactly the economic fallout that has occurred in the Great Recession.  Yet, despite being privy to the lessons of history’s past, statute after statute was pushed through Congress to give entire swathes of the financial industry exemptions from regulation, and almost unfettered freedom to conjure and implement exotic products as well as expand into supplementary markets without regard for the intrinsic conflicts of interest therein created or the long-term risks to the stability of the financial market as a whole.  

It is critical to the analysis of the current economic crisis, however, to note that the government’s release of their necessary regulatory grip on the financial industry did not happen merely over night.  Instead the deregulation and adoption of ill-advised legislation has been a steady process lead by a gloriously mounted lobbying effort of major Wall Street firms and a concomitant and growing lack of political will to enforce or enact legislation to guard against market excess and conflicts of interest.

For example, Jimmy Carter’s Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) phased out a number of banking restrictions, expanded their lending powers, and raised the deposit insurance limit from $40,000 to $100,000, thereby reducing the lender’s risk per loan.  In 1982, Congress passed the Alternative Mortgage Transactions Parity Act (AMTPA), which allowed non-federally chartered housing creditors to write adjustable-rate mortgages. The Act was the subject of major criticisms surrounding banking industry deregulation argued to have contributed to the savings and loans crisis, yet it remains in full force and effect.  By 2006, approximately 80% of all sub-prime mortgages were adjustable-rate mortgages.

The 106th Congress, under Bill Clinton, passed the Gramm-Leach-Bliley Act in 1999, effectively repealing major portions of the Glass-Steagall Act of 1933. The Glass-Steagall Act was enacted after the Great Depression with the purpose of separating commercial banks and investment banks in order to avoid latent conflicts of interest amid the lending activities of the former and rating activities of the latter. Economist Joseph Stiglitz criticized the repeal of the Act, blasting its repeal as the “culmination of a $300 million lobbying effort by the banking and financial services industries…”  (Stiglitz – Vanity Fair – Capitalist Fools).  The Act’s repeal has been central to the proliferation of complex and opaque financial instruments such as the credit default swap. 

Deregulation (which, I will hereinafter use when referring both to the failure of our government to enforce existing laws and the enactment of ill-advised legislation) of the financial industry has been steady and deliberate at the lobby of major market players.  Finance, insurance and real estate sectors spent over $2.5 billion lobbying congress between 1998 and 2006, leading all other sectors, including the health sector.  Is it any wonder why Wall Street got its way, despite the glaring signs of impending doom?

It depends only upon the lobby, the National Rifle Association or any one union for example, and in whose “pocket” they lie, whether the Democrats or Republicans will vote in favor of any particular lobby and their special interests.  So, while it is convenient to point across the isle at the other side, the reality is that the problem permeates both political parties.  At the push of lobbies, our elected officials, more and more, are persuaded to deregulate in the name of free market capitalism, and further seem to believe that deregulation is necessary.

As a registered Republican, though, and it pains me to say – many of Congress’ misguided behests are personifications of an absolutely precarious philosophy that exists as a staple within the contemporary Republican platform.  It exists on both platforms, as I just mentioned, but I speak here of the mentality within the party of which I am a devout member.

I’ve volunteered in a number of Republican campaigns in the Northern Virginia region; from local Board of County Supervisor, School Board, Delegate and State Senate races to campaigns for election to the United States Congress.  At every committee meeting, fundraiser or local rally I hear one version or another of the same pronouncement.  An absolute decree that government, as a whole, both at the state and federal level, should not in any way shape or form regulate the free market.  This, obviously, is a subset of the cry for smaller government, both of which I happen to agree with… to a degree. 

A very real problem within the Republican Party exists in the fact that many seem to blindly believe that ANY regulation is tantamount to socialism.  There is absolutely no question that the ever expansion of government is entirely corrosive of the economy.  However, there is a fine line between over-regulation and under-regulation.  To espouse the removal of all regulatory “schemes” as a platform, is ill-informed, short-sited, and simply dangerous.  To do so is to espouse anarchy.

As a lawyer, I am perhaps uniquely aware of the need for “regulation”.  Regulation is simply another word for law, which I have already said is created to protect persons, liberties, and properties; to maintain the right of each, and to cause justice to reign over us all.  With the exception of the Almighty in the afterlife, there can be no justice if not by way of man enforcing the laws of man. 

Practicing in criminal law highlights it most perhaps, but a truism of man’s nature is equally as apparent in varying degrees when I sit as a mediator between a husband and wife beyond reconciliation and well down the unfortunate road to divorce:  Homo Homini Lupus – Man to man is wolf!  It is unfortunate that this platitude necessitates regulation, but it is naïve to promote resultant anarchy through the espousal of the absolute removal of government regulation of the free market.  Unfortunately, so many of us are doing this in order to win a vote.

Reducing the size of government is a big ticket item today, and it ought to be.  I believe in it so ardently that I tackled the issue first and foremost in this thesis.  But, reduction in government does not necessarily mean or require the eradication of regulation.  To argue as such is simply illogical and presents a false choice.  Nevertheless, let me clarify.

There are basically two types of regulation:  1) regulation to protect; and 2) regulation requiring action or inaction.  The former is within the true and proper purpose of government.  The latter is beyond the scope of government function and in all cases ought to be abolished*.  Taxes, I suppose, would fit into the second category, and so I asterisk my statement to note that there are certain limited, and I do mean absolutely limited, exceptions to that rule which must be strictly defined and instituted to perform a clearly identifiable and narrow purpose.

The Great Recession was caused by a deregulation of the first type of abovementioned regulation – regulation to protect.  What ensued? 

By November 2008, individual Americans lost more than 25% of their net worth, the S&P 500 was down 45% from its 2007 high, and housing prices had dropped 20% from their peak two years earlier, shedding nearly $5 trillion in speculated value. Total retirement assets dropped by 22%, from approximately $10 trillion in 2006 to $8 trillion in 2008.  In short, just as in the wake of the 1929 stock market crash, we were left out to dry.

In response, the Federal Government announced a $600 billion program in November 2008, to purchase the mortgage-backed securities financed by Fannie Mae and Freddie Mac in the hopes of lowering mortgage rates.  By March 2009, the Federal Reserve’s balance sheet was expanded to further purchase agency (GSE) mortgage-backed securities, bringing its total purchase of toxic securities up to $1.25 trillion and counting.  OnFebruary 17, 2009, the American Recovery and Reinvestment Act was signed into law by President Obama, with $787 billion earmarked for spending.  All of this is at the enormous expense of the individual American taxpayer.  We have been caught paying the wager lost by corporate America! 

Now, let me pause.  Reading to this point, you may think that I am 100% against free market capitalism and that you may as well stop reading this and turn to Karl Marx’s Communist Manifesto.  Quite to the contrary!  I belive that in order for liberty to prevail, all men and women must be free to attain to the fullest stature of which they are innately capable and that in order to do so free market capitalism must rein supreme.  The most essential pillar to build upon liberty’s foundation is that of free market capitalism!

As I said before, America is built upon the idea that if one works hard enough, if he or she is willing to roll up their sleeves, society should leave the individual free to reach his or her full potential.  This philosophy, this potent and powerful mind-set, undeniably, is the backbone of America’s success, for it is the blood, sweat and tears of the individual that has engineered our nation’s prosperity.  I am absolutely, 100% against the abolition of free market capitalism, in any way, shape or form!

Can you tell I’m a lawyer?  Now that I’m through with my disclaimer…

Above, I’ve used terms to describe Wall Street as the profit-at-all-cost machine and thrown executives under the bus by highlighting their exorbitant bonuses and terming their lemming’s as the short-term, profit motivated masterminds of Wall Street who conjured and implemented the exotic schemes that literally mortgaged the very security of the United States, and by extension thereof, the world economy.  Do I question their motives?  Do I question their moral compass?  Do I question their risk assessments?  Yes!  But, to be frank, as a business man myself, I not only understand, but appreciate their position.

You see, Wall Street, when you boil it down to its most fundamental roots, is not so different from Main Street, despite what CNN would like us to believe.  Just like my small, family-run, general practice law firm, Wall Street goliaths are motivated by one overriding concern – money!  Quality of product and customer loyalty aside (which is of utmost importance at Kidwell, Kent & Curran = shameless plug), Wall Street is, by the very nature of free market capitalism, married to the profit margin.  Who will buy stocks if their futures are forecast to deteriorate?  Nobody!  (Except for the ridiculous practice of shorting stocks which, as a side note, is in itself a moral dilemma).

Corporations trading on the open market, and the board members sworn to uphold the salient interests of their firm, then, are beholden to the stockholder.  Stop, then, and put yourself in the shoes of a stockholder.  Many of us, in fact, should find this easy, as we do, in one form or another, own stocks.  They might be in mutual funds, held in a brokerage account, or casually traded on our iPhone apps.  What do we all wish for, and ultimately demand?  We demand that the stock turn us a profit or we dump it, period, no ifs ands of buts! 

Multiply our individual want of short-term profit on any particular stock by $70 trillion worldwide.  This is what Wall Street was looking at.  And some of the smartest people in our nation, graduated from the likes of Yale and Harvard, conjured schemes to make you and I money as we demanded.  Fortuitously, of course, they also made themselves heaps of cash.

Simply put, Wall Street did what free market capitalism demanded – they met demand by providing supply, of money!  On this factor alone, I cannot and will not fault them.  In fact, to an extent, I applaud them. 

You see, those of us who are stockholders, in any form, can be broken down into two selves:  1) the stockholder; and 2) the individual.  I point this out because our stockholder self, demanding short-term, if not long-term profit, but profit nonetheless, has interests inherently contrary to that of our individual self.  Allow me to explain.

Our stockholder self wants whatever corporation we have invested in to do all it can to make a profit.  We’d like to think, in theory, that this means pure innovation to out do the competitor.  But, in reality, our stockholder self knows this may include investing in risky endeavors that yield a short-term profit, skirting environmental regulations, or increasing profit margins by cutting employee wages or procuring cheaper materials.

Meanwhile, our individual self wants higher wages even though our company is cutting costs to cow-tow to their investors, and we complain when they outsource to India or look to China for cheaper materials. 

We go to Walmart to buy clothes on the cheap, but complain when they come into our town and destroy the small businesses comprising our downtowns.   Why?  Because, on each end, whether as the consumer or as the supplier, money seems to be our governor. 

Look at the price of a Hybrid vehicle.  On average it is three to five thousand dollars more than the same car without a hybrid engine.  If it were the same cost, aside from adrenaline junkies, we’d all probably buy the Hybrid.  But even most “tree huggers” can’t choke down the extra green involved in purchasing the same car, with less horsepower, for thousands more.  Why?  Because money talks!

So, given an opening in the law, which allows you to make money, perhaps even a lot of money, and do so 100% legally, will you take it?  What if it is perhaps morally questionable and the risks are exceptional?  What if nobody questions it?  Will you go for it and become rich?  I know you’d like to say no. 

So, imagine you are a board member, one of, say, twelve, elected to your position with the solitary direction of finding ways for your company to make money for those invested.  Now this opening presents itself; an opening that means millions and millions to your stockholders, and, oh yes, yourself.  The unbridled risks that eventually backfired and thrust us into the Great Recession are proof that those on Wall Street, in any case, went for it.

It is a function of man that we try to better our position always, and, unfortunately, will do so at the cost of our fellow man if necessary.  Homo Homini Lupus – Man to Man is Wolf!  This animalistic instinct necessitates government, law, regulation!  The history of the Great Depression taught us many lessons and, if headed, many warnings could have prevented the Great Recession.  Why did Congress not listen?  Why did they allow such extensive deregulation despite the lessons of history? Again, the answer is Faction!

As James Madison argued in Federalist Paper 10, the problem of faction is, “most likely, not least, severe in a small republic, for it is in a small republic that a self-interested private group would be most likely able to seize political power in order to distribute wealth or opportunities in its favor!”  He was arguing that the policies of a federal government, comprised of the states, would not easily be hijacked by the interests of any one state, whereas, the states, individually, would be at risk of falling prey to noxious factions within.

The problem is this: Wall Street, and the individual corporate conglomerates that comprise it, being so “in bed” with the federal government is tantamount to a small republic.  In making the federal government a “good ol boys” network indebted to their money, lobbies are able to pull the strings of our congressman and bring them into their very fold.  The result is a faction, a small republic if you will, (many of them with a workforce the size of any one of the 13 colonies), that is divorced from the reality of its constituents and more concerned with distributing the common wealth to itself.  Money for power, power for money!  And such is the nature of politics.  But it does not have to be so. 

The Journey from Congress to K Street,” was published in 2005 by Public Citizen, a non-profit government watchdog group.  Their report analyzed hundreds of lobbyist registration documents filed in compliance with the Lobbying Disclosure Act and the Foreign Agents Registration Act, finding that, since 1998, 43% of the 198 members of Congress who left government to join “private life” have registered to lobby  Not only is there a job awaiting our elected officials after their term is through, but there is a seemingly endless parade of money thrown their way to convince them to vote in favor of the lobby while in office.  Between 1998 and 2006, the top thirteen lobbying sectors spent a combined $15 billion plus on persuading Congress this way and that, not even including campaign contributions.

The lamentable, clear fact is that corporate interests are taken into consideration by dint of their unmatched spending power at the apparent disregard of concern for the common constituent.  Money does buy access in Washington, access that amplifies corporate influence which often results in swaying congress to promote the interests of the few at the immediate or eventual expense of the many. The question that presents itself, then, is how can this be dealt with? 

There are three distinct avenues, and all of which, by their very nature are intrinsically entwined, I believe the corrupting weight of corporate money on the federal legislative process can be pacified:

  1. Lobbying Reform;
  2. Campaign Finance Reform; and
  3. Term Limits

I will tackle each proposed course in order, analyzing the need for each, the debates surrounding them, and then make specific proposals respectively.

(Please see upcoming post for part two of Chapter Three- LOBBYING REFORM)

CHAPTER TWO: THE ROLE OF GOVERNMENT (part two)

Given all of the above, I have come to a conclusion – an epiphany in the form of a short and simple phrase.  It boils the purpose of government down to one short truism defended by the very history ofAmerica’s birth and the legislative intent behind the framing of our Constitution.  The phrase is straightforward and easy to digest – it is therefore my hope that Republicans can better understand and thusly enact this “sound bite” as an elucidation of the phrase, “small government”.  Without further ado:

The true purpose of any government is to protect, not to do!  This is especially true of the federal government which is meant to act on only certain explicitly defined powers. 

Now, of course, it is near impossible to pare the parameters of appropriate government action into a sound bite, and as such, it is necessary to explain further what it is that I mean if only to avoid being misunderstood.  As previously discussed, the government should act only by the execution of the law.  This is because law, in its purest form, is designed to provide equal justice for all. 

Now, in applying the law, the government has two tools at its disposal, both of which, if wielded unwisely, are extremely dangerous.  The first is force, utilizing the police and military, and everything between.  The second is regulation.

Regulation can be a tricky beast, however.  Over regulation of an industry is undeniably crippling to its ability to produce and compete both in domestic and global markets.  In fact, the process of studying, organizing, preparing and then regulating and fumbling through waves of litigation has impeded American progress at an escalating and alarming rate since the 1940s.  An intricate and growing web of bureaucracy has eroded our great tradition of ingenuity and roll up our sleeve, get it done attitude, and it is why Japan is nearing8,000 milesof high-speed train line while we have only one such line.  Senseless over regulation is why our vast natural gas reservoirs remain veritably untapped and why NASA estimates it will take us twenty-plus years to put a man on the moon again, compared to just nine in the 1960s, before the microchip was even invented.  Regulation, therefore, in many respects, is a problem that must be dealt with ifAmericais to move forward competitively in the global marketplace.

Yet, regulation is necessary!  It has its legitimate purpose, and that purpose is to protect.  To protect against the over zealous, yes, but truly, regulation is properly utilized only when it tells one person or group that it cannot infringe upon the liberties of another.  Regulation properly guards the liberties of all against the desires of any particular group (faction) to directly harm another, or even to act in a way that is reasonably calculated to lead to a great harm to the constituency. 

The formulation of regulation to protect against direct harm is theoretically easier – more “black and white.”  Thou shalt not kill, by way of example.  But, regulation limiting one group from acting in a way that is reasonably calculated to lead to a great harm to the constituency is more difficult.  An example of this latter version of regulation would be a regulation that, because of the moral hazard inherent therein, forbids loan originators from lending to individuals with horrible credit only to turn around and sell that imprudent risk to another institution. 

How do we know when we’ve gone too far in regulating against foreseeable harm in order to protect the many?  At what point is it simply too much regulation, where innovation, indeed progress is halted and an erosion of our American tradition of independent, productive and competitive grit evinces a palpable threat to our future prosperity?  The answer, actually, is quite clear.  

Regulation, properly formulated, warns people that the force of the law will be used against them if they do something untoward.  Regulation, improperly formulated, forces people to do something.

Sometimes it is quite difficult, because of the gray area.  We almost ask our elected officials, if you really think about it, to be prophetic, to foresee impending, even if lurking doom.  But, this is the job of our legislators, is it not?  Every elected official is tasked to be truly judicious and consider, with extreme scrutiny, the merits of any proposed legislation.  Unfortunately, in these days of 2,000+ page bills prepared by staff members at the guidance of lobbyists, we aren’t receiving that level of service from our congressmen. 

Turning back to the 10th Amendment and the legislative intent behind its enactment: When a federal system of government is established wherein the national government is given only defined powers and explicitly forbidden to exercise any other powers, it follows that the federal government should not be permitted to expand through the creation of agencies and programs designed to do that which it was not explicitly granted the power to do. 

Unfortunately, though, the expansion of the federal government is currently escalating at an even greater pace than subsequent to the Great Depression.  The result, as we all are aware, is a government that is hemorrhaging money, building unconscionable debt, and doing so in the provision of wasteful, ineffective and or outright broken systems.

The crisis with regards to our federal government is two fold:  Not only are critical issues not being addressed, we see that those tasks the federal government does take on are handled inefficiently.  The government’s response to the devastation caused by Hurricane Katrina and the BP Oil spill in theGulf of Mexico, for example, exemplifies a federal government stretched too thin, unprepared, and incompetent at doing what is actually in its proper role to perform.

Now, many would respond to the above by simply advocating for the review of government inefficiencies and the development of standard operating procedures designed to cut waste and red tape.  There is no doubt that this is desperately needed, for the government is so wasteful it is mind numbing.  For example, no matter who I ask, not one person seems to be able to adequately answer the following question:  why is it so difficult to fire a government employee? 

Usually, the answer I receive is two pronged – one, its easier to just move them to another agency; and two, there is just too much paperwork, making it time prohibitive.  Well, ever heard of a work at will system where the employer can lay a worker off for reason as well as for no reason, of course with certain restrictions such as discrimination?  I don’t know about you, but I would feel a lot safer and more confident in my government if lazy, unproductive and disingenuous federal employees could actually be fired.  Maybe this would elevate the level of customer service we receive when we call the Internal Revenue Service or visit our local Social Security Office (with all due respect to the many hard working individuals in those agencies).

However, the problem is unfortunately more systemic than can be solved by efficiency evaluation and implementation.  And the problem has nothing to do with Democrats v. Republicans, incompetence, or even corruption, though these factors certainly aggravate the situation.

The problem lies in competing interests and detached government.  The reason why our founding fathers found it prudent to vest the overwhelming majority of government power in the individual states, rather than a central government, was because they had just lived through the reality of a government betrothed to the citizens of Britain over the interests of the citizens of the colonies, and so detached from the colonial realities, it proved tyrannical.

Why is it so important to vest more powers in the state, rather than the federal government?  Didn’t Alexander Hamilton, John Jay and James Madison, in the Federalist Papers, advocate for the creation of a central government to unify the states into one nation better able to guard against the dangers from foreign force and influence, mediate dissention and hostilities between the states, and safeguard against domestic insurrection and faction? Well, yes, but these were arguments to forge a union in lieu of America disintegrating into a number of confederacies with competing interests, less capable of defending against foreign interests and other pressures as a result of infighting much the same as was the reality of the warring city-states in ancient Greece.  Further, they were arguments in support of explicit powers to be granted to a central government.  They certainly were not arguments in support of granting all or even vast power to the federal government.

It is prudent to vest powers in the state governments because a federal government must take into consideration the competing interests of all the states in order to make a determination as to how it will regulate any given matter.  To be fair, the federal government must consider the reasonable interests of the citizens of not justCalifornia,New YorkorVirginia, but must consider the voice of every person in all 50 states.  In doing so, the government is rightfully endeavoring to be just and representative of its constituents. 

Unfortunately, this venerable undertaking is the exact cause of government inefficiency.  This is where red tape comes from, because, to gather the voices of 300 million, there must be forms.  There must be government employees to categorize these forms, and of course there must be a committee to develop protocols for the procedures to submit, decipher, and consider those forms.  And so on.

After millions and millions are spent, a system is finally implemented.  And what do we get?  We get a system that addresses little if any of the particular concerns brought to Congress’ attention by the interested localities, but instead mandates in a way that theoretically won’t upset any particular group.  The result is a wasteful program that does not address that which it was created to address, or is severely hampered in its philanthropic intent to so do.  The program burdens the entire nation, and therefore is answerable to the entire nation, depriving it of any ability to succinctly address the problems facing the region that originally requested help. 

Why?  Again- human nature!  If I am required to pay for a program, I will require a say in how that program is run.  Multiply that by 300 million, and suddenly thousands ofMainelobster fisherman, through their representatives in Congress, are telling farmers inCaliforniahow to irrigate their crops. What we get is a far off, isolated, but all too interested government engaged in false philanthropy, creating a result contrary to their altruistic purpose.  What we get is a catch-22!

The problems, though, do not stop there.  Unfortunately, and as a direct result of government programs designed to provide for the welfare of all, human nature rears yet another ugly head – entitlement. 

Entitlement programs, as they are sometimes called, are programs that are initially designed to address a particular problem plaguing a region or group of individuals.  The program is created, and, so as to not discriminate, other groups and individuals are granted access to the program upon demand.  The program grows, and grows.  It becomes more and more inefficient, wasteful and ironically, less capable of addressing the concerns of those it is “helping”.  Congress, in its right mind, then, may attempt to cut spending on that program. 

But woe to the Congressman who votes to cut spending for such a program.  He or she will be maligned for cutting funding to schools, welfare, veterans aid, or whatever program is to be cut.  There will be riots in the streets.  We are witness to this inGreece,France,England– all overEurope, and it has already begun here in theUnited States.

If a Republican votes to cut a program, the Democrat opponent will campaign on a platform crucifying him for cutting off the funds, and vice versa.  Why?  First, because insofar as political posturing is concerned, it is successful.  It is propaganda 101.  But, to truly answer the question, I find it prudent to further analyze why these programs become entitlement programs.

An entitlement program is a federal program that guarantees a certain level of benefits to persons or entities who meet requirements set by law, such as Social Security, farm price supports or unemployment benefits. If an individual or group meets the legal requisites for receipt of government aid, it leaves no discretion with Congress on how much money to appropriate.  Moreover, some entitlements carry permanent appropriations.

The reason why government programs are nearly impossible to dismantle, whether or not they fit into the narrow definition of an entitlement program, is because they breed dependency into the minds and hearts of those they “help”.

Once you become dependent upon something or someone else doing a particular thing for you, it is human nature to rely upon that external force to always do it for you.  Why should I save money for retirement if the government is doing it for me?  Why should I work if the government will ostensibly pay me not to work?  Going back to the concept of plunder, and why government is necessary to guard against man’s animalistic instinct to take from others instead of producing for themselves – we plunder and we sit idly while things, gadgets, robots and governments do for us because, just like water, it is in our nature to follow the path of least resistance. 

Now, fast forward five, ten, twenty or thirty years into the future to when people have become entirely dependent upon any particular program, and try to dismantle that program.  Good luck!  Those dependent upon the program will riot in the streets and fight tooth and nail for that which they feel they are entitled to.

Analogy time! One of my favorite channels to watch is the Discovery Channel.  Recently, they aired a series titled Life, in which Oprah Winfrey narrates to some of the most visually stunning high-definition footage of the world that surrounds us.  In one particular episode which analyzed the intricacies of mammals and how we’ve evolved to become the dominant species on the planet, we find ourselves following the lives of myriad animals ranging from dolphins and whales to meerkats and cheetahs.  The thesis of the episode is that the key to mammal’s success as a class is not just in the size of our brains, but actually results from our exhibiting the most complex social behaviors out of any in the animal kingdom.  In other words, we are successful because we live and die by the strength and weakness of our families and our capacity to use and share wisdom across generations allows us to flourish.

At one point, we find ourselves learning of the close-knit family dynamic which shapes the African Elephant’s ability to rule the landscape.   We follow a heard of six or seven elephants lead by a matriarch, the oldest and wisest female, and her daughter which has just birthed a one day old baby elephant.  Soon, the baby elephant gets stuck in waste deep mud at the edge of his first watering hole.  The mother quickly comes to the rescue, extending a trunk to push the baby elephant out of the mud.  Unfortunately, she is only pushing her baby deeper and deeper into the mud.  Finally, the matriarch pushes the mother out of the way and simply lets the baby figure out how to escape the mud on his own.

This tale of a baby elephant’s struggle is a perfect analogy for our federal government.  You see, despite the mother’s good intentions, it was best for her to let her baby figure it out on his own.  Let’s assume she helped him out.  What would happen the next time he got stuck in the mud, or the time after that?  If the baby elephant could always rely on his mother to get him out of the mud, he would understandably become dependent upon it and never have the incentive or chance to figure it out for himself.  Then, one day, he gets stuck in the mud and his mom isn’t around, resulting in him baking to death, unable to escape the sun’s rays to shade or water.

Likewise, what happens when the federal government is unable to bankroll inefficient entitlement programs through the expansion of our deficit?  All those people so dependent upon the program will be left out to dry. 

Moreover, just as the mother elephant made things worse for the baby elephant, the federal government, through action, often makes it harder for individuals and localities to efficiently govern and produce for themselves as they need and see fit. 

Understanding the dangers of a strong, vast and expanding federal government in the context of today’s modern politic, and the roadblock it places in the path toward more perfect liberty and justice for all is essential to the rebirth of the Republican platform.  The federal government must be reduced in size and efficiencies implemented post-haste.  

But what of the critical issues facing our nation?  For let me be clear- the challenges facing our nation are many, and they absolutely be met!  It is not sufficient to argue that government should be smaller, that deficit spending must be choked off, and in that same breath ignore the critical issues of our time.  It is the failure to meet these critical issues, decade after decade, that has lead us to this pivotal moment in our nation’s history.

Now is not the time to cut government funding, many will argue.  How, they will ask, can we tackle the mounting problems facingAmericawhile simultaneously reducing the size of the federal government?  The Democrats will argue that the issues cannot be met without the further extension of the federal government’s long arm into growing jurisdictions or an emergency increase in the debt ceiling.  But they are dead wrong!

The answer is found in our very own backyards, our local town, city and county governments and most of all, in our state governments.  As was the intention of our founding fathers, the true power in government to effect change is laid in the state.  For it is each locality and each state that best knows how to govern the intricacies of the varying geographies within their boarders. 

Unfortunately, the current paradigm of American governance has shifted to where the federal government increasingly administers programs that should be left to the states, either by holding the operation of those programs ransom with the carrot that is federal aid, or through the outright commandeering of those functions.  We are increasingly delving into a system of governance where the reality is that of the American management of states.  Instead, as was the legislative intent behind the 10th Amendment, it not only should, but absolutely must be theVirginia management of Virginia, New York of New York, California ofCalifornia, and so on! 

Yet, states as well as the individuals comprising each state are looking to the federal government to do more and more.  Congressmen and Senators are increasingly taking the burdens ofAmericaon their shoulders, directing the awesome force of federal government at the states in reaction to the simple fact that states are failing in the tasks provided them, such as the administration of proper education.  And so, the Democrats have taken up liberty’s torch, having seen that so much is being left undone at state and local levels, erroneously using the interstate commerce clause of the United States Constitution to mandate what should be done. 

And it is not just the Democrats who increasingly are seeing it fit for the federal government to engage in the false philanthropy of providing for the welfare of all through government mandate.  The Republicans, though their appropriations are aimed at different pockets, are equally as guilty of using the treasury coffers to fund inefficient programs outside the proper scope of federal government.

The Republicans have lost their way.  Deep down, in our stomachs, we have always known the flawed thinking of “socialism”.  We’ve read Orwell’s masterpiece, “1984”, we’ve been taught about the dangers of communism, but we’ve lost the tongue for being able to express what we even mean by “small government” in an age when government is rapidly expanding, often at our direction.

In order for the Republican party to regain its strength as more than just a viable party, but one that actually leads this great nation once again to prosperity, our platform must begin with revolutionizing local and state politics.  The core of American politics must be infused with a revitalized and re-focused Republican platform that understands that the role of government is to regulate in order to protect, not to do everything for its constituents.  This mentality will enable the implementation of fiscal responsibility in state and local budgets as well as empower those governments to more succinctly tackle the critical issues facing their respective regions.

Why is this so important?  In fiscal year 2010, state governments collectively ran a budget deficit approaching $55 billion; the result of both Democrats and Republicans allowing government to expand into improper arenas.  In doing so, we are thereby strapping state governments in their ability to properly perform the functions they ought to be performing. 

This year, in particular, the near bankruptcy of the majority of our states is analogous to the mother elephant and her newborn stuck in the mud.  The states, addicted to federal funds, almost unanimously turned to Troubled Asset Relief Funds and other sources of bailout moneys to delay their bankruptcies.  But, now, the federal government is increasingly unable, or at least unwilling to borrow money fromChinato underwrite the states and pull them from the mud.  What now?

There is absolutely no question that the federal government has the authority as well as the duty to govern in certain arenas.  But, it is with the states that the majority of power must remain if we, as Americans, are to continue to honor the intentions of our sage founders.

Empowering each region to budget for that which is of greater importance to their constituents will allow each region the flexibility to tackle their laundry list of problems in the order they see fit.  The result – pockets of happy constituents popping up across counties, cities, towns and states.  Further, as each of these local and state governments are directly accountable by their respective taxpayers as to money spent and a proximal demand for results directly effecting the region, it stands to reason that these governments will have more incentive to efficiently and expeditiously address the relevant issues than the federal government could plausibly ever have. 

This will further result in each locality creating new and innovative ways to tackle the issues plaguing their region.  One county or one state may develop craftier solutions than the other, and as capitalism goes, the next state over will be free to build upon the advances of the next.  This is the true American way.  The alternative, nationwide, top-down standard operating platforms – the trend of today, not only stifles innovation, but also sets in stone today’s system(s) as the best we can hope for.

As Republicans, we must rise from the ashes, begin at the grass roots, and institute fundamental change in every locality in this nation.  We must change politics from the inside out, from its core, starting with town, city and county government, right to the doorsteps of our state capitals. We must fight to free local and state government from the strings of entitlement programs and a host of inefficient systems, thereby bringing state budgets into fiscal responsibility. 

As the states become more fiscally responsible and resolutely focused on tackling the critical issues facing the residents within their boarders, there will be less for the federal government to do, freeing up the treasury to invest in what it properly should and providing the necessary opportunity to reduce the federal deficit.  Then, and only then, will there be less of a need for states to reach out to the federal government for aid.  Best of all, perhaps, utilizing state and local governments as they were originally intended will work to remove the Democrats’ desire to spend on false philanthropy from Capital Hill.

CHAPTER TWO:

THE ROLE OF GOVERNMENT 

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

– 10th Amendment to the Constitution (1791)

Tour the vastness of America, from sea to shining sea, and you will find that Republicans on the West Coast will almost universally answer the same as Republicans on the East Coast when asked what they believe is the core principle of the Republican platform.  “Small Government”, they will answer.

This central belief is echoed in every Young Republican or County Republican Committee meeting across this great land.  On our campaign brochures and bumper stickers you will usually find key phrases such as “cut government spending”, or “Washington is spiraling out of control”.  In one form or another, the concept finds its way into nearly every Republican campaign.

But what do we mean when we say government needs to be smaller?  At first blush, you may think this to be a rhetorical question.  But it is not!

I ask the question because, unfortunately, as Republicans, and certainly as a nation, we’ve forgotten the answer and seem to remember only the slogan.  So many of us no longer fully understand the power of this political “sound-bite”, and it is evidenced by the way we have been leading our constituents. 

During the Bush presidency, government spending at the federal level increased at a historic pace, and concomitantly, the deficit spiraled out of control.  Did the federal government shrink?  Now there’s a rhetorical question! 

Now, when I bring this up at the county meetings, my fellow Republicans are quick to point out that President Obama is much worse, and Nancy Pelosi is tantamount to a socialist antichrist.  The disdain expressed for the Democrats is visceral.  And, to be frank, I find it distasteful. 

I find it repugnant because the former affability and deference in politics is not just missing, but will soon prove extinct when the hatred of the “other side” is systemic, right down to the grass roots, as a preached and learned incantation.  What’s worse is that the ones who lose out are the people.  “We must retake America,” my fellow Republicans will shout- and I agree, but they go further to rant that the Democrats are liars, socialists, communists, evil.  This is plain ridiculous. The fact that they are misguided does not make them evil. 

It is necessary that we, as Republicans, break free from this need to vilify the Democrats.  This is necessary for many reasons, but of paramount importance is the fact that the problem in government does not stem only from the Democrats’ misguided ways.  Unfortunately, the problem lies on both sides of the isle.  Both are spending too much and doing so while presiding over the expansion of our federal government into arenas entirely outside its appropriate reach.  Both parties are running afoul of the true purpose of government and, as such, it is unacceptable to point out the inequities of the Democratic Party with a blind eye to the problems permeating our own. 

So, back to my “rhetorical” question: What do we mean when we say “small government”?  And to be more succinct, I suppose I should ask – what should we mean?

One answer to the question is rooted in the Bill of Rights.  The 10th Amendment to the Constitution is clear: “The powers not delegated to the United States (Federal Government) by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”  Seems pretty explicit, right?

Thomas Jefferson described the 10th Amendment as “the foundation of the Constitution” and added, “to take a single step beyond the boundaries thus specially drawn … is to take possession of a boundless field of power, no longer susceptible of any definition.” I couldn’t have said it better myself. 

Jefferson’s formulation is where we glean the doctrine of “strict construction”, an adherence to the actual or intended meaning of the language found within the four corners of the Constitution. 

But, just as the definition of the American Dream has proven to be complicated, so too has the doctrine of strict constructionism.  In fact, the meaning of “strict construction,” may be different depending on who uses it and in what context.  A Justice of the Supreme Court asking counsel at oral argument whether a statute should be construed strictly is likely using the term differently than a candidate on the campaign trail using the term as a surrogate for a broader set of conservative values.

The problem with the Republican campaign trail today is that so many of us have not only lost the true understanding of what we mean when we say “small government” but we have also misconstrued the purpose of Jefferson’s words. 

From Nixon to Regan and through the Bush administrations, our Republican presidents have promised to appoint strict constructionist judges to the Supreme Court.  Yet, even Ronald Regan’s 1986 appointee to the Supreme Court, Antonin Scalia, the justice often touted as the intellectual anchor of the conservative wing, and the justice most identified with the term, has himself said that he is “not a strict constructionist and no-one ought to be,” calling the philosophy “a degraded form of textualism that brings the whole philosophy into disrepute.” 

One can understand and even appreciate Justice Scalia’s words as they seem to be a reaction to the political misuse of the term as a coded label to earn votes while simultaneously misrepresenting the true spirit of the philosophy as a theory of Constitutional interpretation.

Again, canvass the whole of the electorate spanning the nation, and innocently, our fellow Republicans will almost universally say that strict constructionism requires that only the exact language found in the Constitution may be followed.  This is wrong!  And the problem with this message being mistaken is that its true definition and meaning absolutely must form the foundation upon which the true and correct Republican platform ought to be re-constructed. 

Instead, strict constructionism is a philosophy that emphasizes judicial restraint and fidelity to the original intended meaning of the Constitution. 

Allow me to give an analogy for clarification:

As an attorney at law, when a client asks me a question to which I do not know the answer (which, by the way, let me point out the rarity of this occasion, wink)… what do I do?  The first thing I do is go into my firm’s library and pull the Virginia Code to look for a statute on point.  I pull the actual book over searching Westlaw or LexisNexis for a very particular purpose: to learn the legislative intent behind the subject statute! 

When I look up a particular code section, I not only get the black letter/strict language of the legislation, but I am also able to read a description of the history behind the enactment of the statute as well as case law on point.  In reading through and understanding the legislative intent behind the strict, stone-etched statute, I am able to extract the full meaning of the codified law.  As a lawyer, this is invaluable. 

The same modus operandi absolutely must be followed in the application of the Constitution to how we, as Republicans, lead this great nation, and promote the varying actions of state and local government in relation to that of the federal government.

When we say, “small government,” in addition to an understanding of the proper purpose of government, whether on a local, state or national level, we must also be conveying the necessity of adherence to the intended meaning of the 10th Amendment as a means to hamper the federal government’s ability to hinder our individual ability to carry forward liberty’s torch.   

Why is this so important?  Because we, as a nation, are losing control.  Individual liberties are being trampled by a federal government expanding at unprecedented speed.  State sovereignty is being usurped through over dependence on the interstate commerce clause.  Deficit spending is out of control, states have become reliant upon federal funding, and the balance of power has shifted, wherein the federal government ostensibly has all the power and the states only those explicitly granted to them.  In different form, and in a different millennium, we are finding a tea party necessary to show our disdain for a tyrannical hand taxing us without properly representing us.

Turning once more to the annals of history, we are thereby able to extract the legislative intent behind the adoption of the 10th Amendment.  And it is vital that we do so, because an understanding of the intended meaning behind these final words in the Bill of Rights educates us as to the true and proper purpose of government under our Constitution.  This precise knowledge is what we as Republicans have lost; and we must regain it in order to empower us to lead by example again.

To begin, one need look no further than the Declaration of Independence itself.  Our decision to absolve ourselves of any allegiance to Great Britain was made in reaction to, “a long train of abuses and usurpations,” by the British Crown, evincing, “a design to reduce them (us) under absolute depotism.”  Jefferson next penned a list of grievances to which petitions for redress had long been unanswered and which established factual evidence of the establishment of an absolute tyranny over the colonies by the British Crown.

The tyranny of a far off government which ruled over the lives of the colonists without regard to justice and the common good, which stripped us of all representation, voice and security, necessitated the waging of the Revolutionary War.  And when our independence was won, we were justly reticent to create a central government to preside over the union of the states, much less grant it powers over their sovereignty. 

This fear of a strong central government was further evidenced by the delay in the endorsement of the Articles of Confederation.  Although the Articles of Confederation were adopted by Congress on November 15, 1777, it was not until March 1, 1781 that Maryland became the final state to sign, thusly forming the union of the states as a single nation for the first time.  The delay was caused by the ongoing war, but also as a consequence of strong public sentiment in opposition to vesting powers in a national government presiding over the sovereign states.  

As a result, Article II of the Articles of Confederation declared that, “each state retains its sovereignty, freedom, and independence, and every power, jurisdiction, and right, which is not by this Confederation expressly delegated to the United States, in Congress assembled.” 

This intent that the central government have few and well defined powers was so universal, in fact, that the government proved too weak to function.  Because the central government had no power to collect taxes, for example, the Articles of Confederation were dissolved and replaced by the Constitution. 

And finally, the history of the ratification of the Constitution itself lends to the legislative intent behind the enactment of the 10th Amendment.  An ideological battle raged between the Federalists and Anti-Federalists who disagreed as to whether a Bill of Rights was even necessary to the ratification of a Constitution which vested powers in a federal government. 

In Federalist Paper 84, Alexander Hamilton asserted that ratification of the Constitution did not mean the American people were surrendering their rights, and, therefore, protections were unnecessary: “Here, in strictness, the people surrender nothing, and as they retain everything, they have no need of particular reservations.”

Anti-Federalists, such as Patrick Henry, on the other hand, publicly argued against the Federalist proposed Constitution as a clear threat to individual rights, expressing fear that the President would become a king much the same as the tyrannical King George from whom they had just won their independence.

The desirability of a Bill of Rights was powerful and widespread, a sentiment the Anti-Federalists capitalized on in the 1788 ratification convention in Massachusetts.  The Federalists were forced to agree to the Massachusetts Compromise permitting delegates with doubts as to the Constitution to recommend amendments to be considered by Congress subsequent to ratification.  Notwithstanding this compromise, North Carolina refused to ratify the Constitution until clear progress was shown toward the codification of a Bill of Rights.

And so, in 1789, the First United States Congress met in New York City’s Federal Hall, first, and foremost, with the task of considering proposed amendments to the Constitution, the majority of which pertained to the protection of individual rights.  As a result, the Bill of Rights, penned by James Madison, and based in large part on George Mason’s Virginia Declaration of Rights, were adopted.

The legislative intent behind the enactment of the Bill of Rights, which includes the 10th Amendment, then, is quite clear. Learning from then recent history, Americans were aware of the dangers a disassociated, central government with vast, undefined and unquestionable powers, posed to the liberty for which they had just fought and won.   They understood the necessity of explicitly outlawing the encroachment by the government onto those liberties, and in doing so, intended to delineate the limits of the federal government’s powers.

Through a long line of Supreme Court rulings, ranging from Wickard v. Filburn, wherein the court ruled that the Congress, via the commerce clause, could regulate the production of wheat on a family farm; to Garcia v. San Antonio Metropolitan Transit Authority, where the court forever changed the standard of review of the constitutionality of a federal law to whether that law is “destructive of state sovereignty or violative of any constitutional provision,” the intended meaning and application of the 10th Amendment to the provision of federal governance has changed drastically.  

However, while many of my contemporaries quibble in the fascinating intricacies of each of these cases and the effects they have on the way in which the federal government goes about its business, I posit that the true meaning of the 10th Amendment, the legislative intent behind its enactment, comes from a historical understanding of the very purpose of government itself.  As such, any “construction” of the 10th Amendment, or the Constitution, and the powers therein granted to the federal government and reserved to the states, absolutely must be based upon the proper purpose of government, and be rooted in a proper understanding of that purpose. 

In other words, I believe the best way to understand the 10th Amendment is to gain an understanding of what law is meant to accomplish and what government’s true and limited purposes ought to be.  This knowledge of the true purpose of government was the antecedent to the Declaration of Independence, the Constitution and the Bill of Rights, for without it the founding fathers could never have penned any of the documents as they did, nor would they have structured our system of ordered liberty as they did. 

The legislative intent behind the 10th Amendment, then, is found in an understanding of the role of government.  Moreover, an understanding of the proper purpose of government allows us to regulate how we, as Republicans, promote certain actions as government leaders.

What, then, is the role of government?  What ought to be its purpose and its limits?  As Republicans, we must re-learn the answer to these questions, for it is out of a misguided and ill-informed understanding of the role of government that the Democrats are operating to project what we call “socialism” onto our society.

Government, by very definition, is political direction and control exercised over the actions of the members, citizens, or inhabitants of communities, societies, and states.  This political direction and control is both created and exercised in the application of law.  To understand government, and its proper purpose, then, we must delve even deeper to define law.

Building from history, I again find that it is unnecessary for me to re-invent the wheel when defining law.  In his thesis, The Law, French economist and statesman, Frederic Bastait, defined law as “the organization of the natural right to lawful defense.  It is the substitution of a common force for individual forces.”  He went on to say that, “this common force is to do only what the individual forces have a natural and lawful right to do; to protect persons, liberties, and prosperities; to maintain the right of each, and to cause justice to reign over us all.” 

Government, being the administrator of the law, therefore, can only have, as its purpose, the protection of persons and their liberties and prosperities, and do so through the administration of justice.  It is when the government attempts to do more than this that it not only tramples the rights of some of the constituents it is sworn to protect, it becomes a legal framework for injustice. 

To be more clear, a legal framework for injustice arises when the government, sworn to protect liberty, destroys that liberty through the enactment and execution of laws designed to give government more power than it ought to have.  It is on this slippery slope that the government is able to transfer property in whatever form, land, money, etc., from the person who owns it, without his consent or compensation, to someone else, and do so legally.   And it is well down this slippery slope that our federal government now finds itself.

This, “legal plunder”, as Bestait called it, is born of two roots:  the first is human greed.  Law itself is necessitated by this first root.  And it was the legislative intent of our founding fathers to guard against this greed by creating a system of checks and balances through the division of power amongst the executive, legislative and judicial branches of government.  The second cause of legal plunder grows from the seed of false philanthropy.  Today, though, it has become the mentality of too many, Republicans and Democrats alike, that the government should not only be just, it should also be philanthropic.  The government, for the better part of a century now, has been utilized as a tool to extend welfare to all. 

This is certainly not to say that welfare for all is a bad thing – no, I’m instead pointing out the problem with how this philanthropic ideal is currently being implemented.  Unfortunately, a paradox occurs when the federal government tries to create welfare for all.  Ironically, by taking more and more from the haves, and giving to the have nots (legal plunder), the government makes things worse for everyone. 

Going back to why I find it distasteful when Republicans vilify Democrats:  Given the state of affairs in America; how much has been left undone and needs to be tended to, it is no wonder that the Democrats find it necessary to utilize the government toward social agendas designed to establish a greater welfare for their constituents.  Their “socialist” agendas, I don’t think are born of any hatred for America and the continued prosperity of our people.  To the contrary, they are trying to fight, as they know how, for the continued prosperity of our people.  Their intentions are admirable, not evil, and we, as Republicans, must understand and certainly respect this if we are to ever work in concert with them to properly address the critical issues facing our nation. Simply put, it is not a question of whether these critical issues need to be addressed, rather, it is a question of how!

My applause for the Democrats, therefore, stop there.  The Democrats may not be immoral and plot through malevolent conspiracies, but they are certainly misguided. And, unfortunately, their well-intentioned imprudence has grave consequences, many of which we now face.

The Democrats’ use of the federal government to not only promote, but require social change through federal programs that reach across state boarders into communities and households, is born of false philanthropy.  Many of the ills in our society that these federal programs are intended to address, desperately need to be addressed, no question, but it is not the role of the federal government to address them through ever expanding agencies designed to mediate the welfare of us all.

The problem with socialism and the redistribution of wealth, as policy, is that it not only erases the incentives to innovate, but causes great displacements in capital, labor and even populations as both intended and often as an unintended consequence.

A historical example of this is the Smoot-Hawley Tariff Act of 1929 which is commonly considered to be one of the contributing causes of the Great Depression.  The law was passed by Congress to institute the highest tariff in U.S. history.  It taxed thousands of imported items at increased rates with the intent to increase our nation’s revenue on imported commodities.  The idea was to make American goods less expensive than foreign goods, putting money in the pocket of American industry rather than foreign.  Seems like a pretty good “philanthropic” intention, right? 

Unfortunately, foreign nations passed retaliatory tariffs and refused to import many of our leading American exports, such as cars and radios.  Retaliatory tariffs were passed by countless countries and the European continent even went so far as to repudiate its war debt from World War 1.  The result: American exports plunged over 50% from 1929 to 1932.  The unintended consequences, though, were far more extensive. 

The tariff hike crippled leading American industries.  The Act, for instance, spiked the tariff on countless items used in the manufacture of Ford’s and General Motor’s vehicles.  U.S. automakers not only sold fewer cars to Europe as a result of retaliatory tariffs, they also had to pay higher prices for crucial components in their end product.  This cost, of course, was passed on to the American consumer who now had fewer and ironically more expensive options, as well as less money. 

A second historic example arises out of President Roosevelt’s New Deal intended to combat the Great Depression.  In 1933 he succeeded in passing the Agricultural Adjustment Act (AAA).  In essence, AAA worked as follows:  some farmers were paid to not plow and produce from part of their land; produce prices were set to pre-depression levels; processors were taxed to pay for the massive cost of the program; and the secretary of agriculture was vested with vast power to set the processing taxes, peg the price of countless commodities and determine how much land farmers should not harvest.

AAA was passed in a philanthropic effort to combat the farm problems exacerbated by the Great Depression.  The problem, boiled down to its roots, was that there were too many farmers producing too much.  Too much?  Here’s how.  Farmers could not sell their farms and move to the cities as they had in the years leading up to the Great Depression as result of the housing crash.  As a result, each farmer produced as much as he could in an effort to sell as much as he could with hopes of earning enough to put food on the table.  Problem was, every farmer was doing that, and the market was saturated, driving prices further and further down.  The economic law of supply and demand was, unfortunately, working against the farmer.

Moreover, the Smoot-Hawley Tariff Act, which caused the unintended consequence of retaliatory tariffs, meant that foreign nations were no longer buying farmer’s overproduction.

AAA, then, was designed to rein in overproduction by paying farmers not to produce and lift farm prices by setting them to a more affluent period, pre-depression.  But, again, unintended consequence reared its ugly head.

Giving the Secretary of Agriculture the power to make contracts with millions of processors, farmers and distributors, to set prices, levy taxes and legislate parity, resulted in an unprecedented expansion in the Department of Agriculture.  The Washington bureaucrats, in an effort to regulate supply and demand on a national level, and despite their compilation of voluminous data ranging from average acre yield to production aggregates, turned the U.S. from a top food export to a major food importing nation. 

Everything from cotton, corn, and wheat, to pork and beef production in America declined rapidly.  Why?  1) The bureaucrats proved inept at accurately predicting what prices were reasonable, taking into consideration weather variation and world production levels; 2) farmers switched from producing crops set at a low price to higher pegged commodities, and farmed their best acres, leaving fallow their already unproductive acres; and 3) competition between farmers was rendered futile because prices were fixed and kept in parity with the prices of other industrial and consumer products.  While the farmers earned more for their reap, AAA sewed the reality of higher costs and greater scarcity in food and other commodities.  With America still enduring the Great Depression, AAA resulted in many impoverished Americans going hungry.  Also, with fewer commodities being produced and sold, unemployment rose as textile companies were forced to lay off their workers.

Contemporarily, there can be no doubt that the government bailouts in reaction to the financial crisis of 2008 are already producing unintended consequences.  For instance, despite the prolonged “solvency” of many of our lending institutions, very little has trickled down to the consumer and lending has continued to dry. 

Given all of the above, I have come to a conclusion – an epiphany in the form of a short and simple phrase.  It boils the purpose of government down to one short truism defended by the very history of America’s birth and the legislative intent behind the framing of our Constitution.  The phrase is straightforward and easy to digest – it is therefore my hope that Republicans can better understand and thusly enact this “sound bite” as an elucidation of the phrase, “small government”.  Without further ado:

STAY TUNED FOR THE RELEASE OF THE SECOND HALF OF CHAPTER TWO: THE ROLE OF GOVERNMENT!!  THANK YOU FOR READING AND FOR YOUR COMMENTS.