An Army of One and Fiscal Uncertainty

In a January 24, 2013 breakfast speech, Gen. Raymond T. Odierno warned his audience that “Today, the greatest threat of our national security is fiscal uncertainty.” (www.army.mil/article/95007/Jan242013CSAremarkstoAUSAILWBreakfast/)

Our volunteer army has over 88,000 soldiers deployed, 56,000 in Afghanistan alone, thousands in Kuwait, Qatar, Kosovo, Sinai, Horn of Africa and 91,000 soldiers stationed in 150 countries. In the last twelve years, 1.5 million men and women have deployed overseas and half a million of these soldiers served on multiple tours, some 2-5 times. My friend’s daughter Bonnie served four tours. It is a strong, well-trained, remarkable, and honorable army. But no army and exceptional training in the world can protect and serve our country’s needs without proper funding.

The Joint Chiefs of Staff wrote a letter on January 14, 2013 to Congress leaders expressing angst over the future readiness of our Armed Forces in light of the current budget conditions.

The Senate has not passed a budget in four years. Operating on continuing resolutions and the specter of more continuing resolutions for 2013 has already cost the Army a deficit of more than $6 billion in operation and maintenance accounts because money cannot be moved from one budget that is “overprescribed” to another budget that is “undersubscribed.”

The sequestration threat of 9 percent across the board cuts and the Department of Defense cuts will cause an additional shortfall of $6 billion in operations and maintenance for the FY 2013 for a total of $12 billion.

The funding of the wars in Iraq and Afghanistan (Overseas Contingency Operations) is also uncertain, potentially experiencing a $5-7 billion gap in financial needs for operations and maintenance. By March 1, when the debt ceiling is reached again, the Army will face a drastic total shortfall of $17-19 billion.

According to Gen. Odierno, prioritizing will guarantee that soldiers in Afghanistan or going to Afghanistan will be prepared, soldiers going to Korea will be properly equipped, but the readiness of the Division-Ready Brigade at Fort Bragg may suffer, as well as the training and maintenance across the Army.

Immediate effects in the next six months will include “extremely low levels of readiness,” cancellation of rotations, delay in equipment coming out of Iraq and Afghanistan, and maintenance on current fleets. Afghanistan is a land-locked country and moving equipment out is very expensive. Delays due to lack of funding in 2013 will definitely snowball into FY 2014 and FY 2015.

To mitigate the fiscal uncertainty, the Secretary of the Army and Gen. Odierno have prepared to:

-          Freeze immediately all civilian hiring

-          Terminate temporary employees

-          Furlough the civilian workforce

-          Curtail temporary duties and missions that are not critical

-          Reduce thirty percent in installation operation costs

-          Cancel and reset of orders for 2013 of units that have not deployed or were set to deploy

Decisions have not been made yet for contracts, studies, facilities management, community services, and research and development programs.

Gen. Odierno described the situation as serious in the “highly uncertain global security environment.” He surmised, “This is a time that I would say is not a time of peace and stability around the world.” There is great instability around the globe, in Algeria, Libya, Syria, Iran, North Korea, and the Middle East. “The Arab Spring has not sprung yet.” The Sinai is the biggest concern [we’ve had] in the last 30 years in terms of stability, particularly at a time of fiscal problems.

In the next five years, the Active Duty force will be reduced to 490,000 in an environment where the Budget Control Act has already cut $500 billion. Plans were made before sequestration for the removal of soldiers from 21 installations in the United States. Modernization efforts were reduced; this begs the question, how ready and strong are we? And what will happen to veterans’ services, medical care, military families, Wounded Warrior program, and transitioning back to civilian life program?

Can we afford to become too weak militarily? Can we really ensure that we don’t have to go to war, that we can prevent conflict when the world is a basket case of uncertainty and renewed aggression from many directions? Are we so naïve to believe that we can hit a reset button that will make everything peaceful, new, and friendly? We should always remember that “The strength of our Nation is our Army” and the ability to defend ourselves in the face of evil.

 

 

 

Carbon Tax is Still Environmental Piracy

“Why would they [illegal immigrants] vote for a party that is going to cut taxes they do not pay, but take away government benefits they do receive?” Patrick J. Buchanan

As the country is reeling from the electoral loss and the re-election of President Obama, half rejoicing and the other half in stunned disbelief, the economic reality is beginning to sink in.

People chose the promise of Santa Claus and Christmas every day of the year. Government Santa is likely to slow down in delivering unearned freebies as the economy worsens.

The Dow Industrials reacted immediately to the re-election by dropping more than 300 points. All other indexes also dropped more than 2 percent the next day. The finance and energy sectors will be the hardest hit by the promised increased regulation.

De-developing America has been a stated goal of the President’s platform during the first campaign by increasing energy costs through the bankruptcy of many coal plants via onerous EPA regulations.

Republicans are co-culprits to the de-industrialization of America. They approved NAFTA, GATT, WTO, and allowed free trade with China. Multi-national corporations moved their factories overseas, fired workers, destroyed 6 million manufacturing jobs in the U.S. and moved 55,000 factories out of the U.S. (Patrick J. Buchanan, “Is the GOP Headed for the Boneyard?” November 8, 2012)

The stranded homeless from Hurricane Sandy in New Jersey and New York are poorly cared for, electricity is still absent in many areas, and the infrastructure damaged from the storm surge is at least eight months away from being repaired. To make matters worse, a cold front and a virus outbreak in the FEMA camp is exacerbating the misery.

The divided government, the Democrat controlled Senate and White House, and the Republican controlled House, has many challenges to address. The “fiscal cliff” and reaching the debt ceiling are the most immediate.

On January 1, 2013 the Bush era tax cuts will expire and new higher taxes will take effect, a total of $500 billion, affecting individuals, families, struggling small businesses, and investors. In such a climate of more taxation and lower business confidence, it will be very hard to create jobs. The Obamacare mandate and penalties will additionally force many businesses to make painful layoffs – resulting in higher unemployment.

Massive budget cuts to the military will be automatically enforced through sequestration, a legislative tactic to hold the military budget hostage to the tax increases that Democrats and the administration wish to enforce. Cutting the military drastically and its budget at the time when the Middle East is a basket case, North Korea, China, Russia, and Iran are exercising their military muscles, is not a very safe idea.

Speaker Boehner’s tax reform plan to lower tax rates and eliminate certain tax deductions would lead to higher economic growth than the current anemic 2 percent, resulting in more tax revenues. Raising tax rates without cutting spending is not a viable option. The Speaker of the House believes that “shoring up entitlements and reforming the tax code to bring jobs home” would go a long way to increase economic activity and raise revenue.

Democrats in Congress are eager to raise taxes and continue deficit spending to stimulate the economy. Keynesian economists, who believe it is the government’s job to smooth out the fluctuations in the economy, would choose government spending and tax breaks to stimulate the economy in bad times.

The Washington Post’s Steven Mufson has a bolder suggestion to solve the problem of out-of-control deficit spending that Congress has engaged in: pass a carbon tax to raise enough money to bring the budget deficit under control. “Climate activists hope a carbon tax would reduce greenhouse-gas emissions by penalizing the use of coal, oil, and natural gas.” (Carbon Tax getting closer look, November 10, 2012)

Mufson quotes William Pizer from Duke who said that a “$20-a-ton tax on carbon dioxide would raise gasoline prices by about 20 cents per gallon and boost electric bills slightly.” The tax would take place “upstream, at coal mines, oil and gas wells, or terminals for oil tankers at U.S. shores.”

The problem is that higher gasoline and electricity prices would fall on those who can ill-afford them because average Americans spend a larger percentage of their incomes on gasoline and electricity. Companies who export to countries that don’t have carbon taxes would have to be given subsidies in order to compete, more government spending of taxpayer dollars we do not have. Liberals forget that there is also on-going carbon trading in California and the northeastern part of the United States. The environmentalists proposals to tax CO2 emissions is nothing more than a get-rich scheme for those in power, and a sure way to raise cash for more spending, it has nothing to do with the environment or saving the planet, it resembles more environmental piracy.

Jeff Flake (R-Arizona) co-sponsored a carbon tax bill in 2009 but now “has no plans to reintroduce it or support it as part of a tax reform package.” The American Petroleum Institute opposes the carbon tax on grounds that it will constrain energy production and it will impact the American people by increasing costs.

Add all the EPA onerous new regulations and you have a recipe for economic disaster. It does not matter to liberals that China and India would continue polluting with a vengeance. As long as our polluters are taxed, which in turn will pass these taxes to consumers, the budget deficit gap will be solved – until liberals run out of money and the debt ceiling must be raised again or another scheme will be devised to bring in more revenue.

If the fiscal cliff is not averted, the fiscal crisis will be accompanied by higher unemployment, higher inflation, higher food and energy prices, and higher interest rates. Republicans will have to cave in to Democrats because all the subsequent pain the American public will experience will be blamed on Republicans. After all, we’ve been hearing for the past years every day, everything is Bush’s fault and President Obama inherited a mess from President Bush.

Hurricane Sandy gave mayor Bloomberg a fresh excuse to promote global warming and his Agenda 21 plan for New York. EPA can step in and limit CO2 from power plants and other sources through executive orders. Expensive renewable energy will be pushed again at the forefront in spite of the 12 or more bankruptcies that occurred in the last four years. Corn will be taken out of the food supply and put into bio-fuels, including a new brand of Diesel mixed with rapeseed oil that Europeans are already using, DieselMaxx.

According to Paul Driessen, “Billions of dollars in taxpayers’ subsidies continue to flow each year to bureaucratic zealots, environmental pressure groups, universities, and other organizations. These dollars fund junk science, strained justification for indefensible rules, more pressure to regulate for increasingly diminished returns, and outright propaganda.” (Green agenda threatens economic future, Washington Times, November 8, 2012)

Americans are perennially optimistic and that’s a good thing. Fifty percent of Americans are also extremely gullible and believe in government as Santa Clause. They refuse to accept the fact that “fundamental change” is inevitably life-altering, cannot be reversed, may not have a quick fix, or may not have a fix at all. It is not a piece of merchandise that you can return to the store later if dissatisfied.

When faced with pessimism, Americans react by either verbally shooting the messenger with personal insults or discounting experienced opinion as ranting or defeatist attitude. We are Americans and we can fix everything. President Obama is going to help all poor people by giving them the opportunity to succeed. Somehow before Obama arrived on the world stage, the opportunity to succeed did not exist.

I live in Realityville and have observed carefully the European Union and its disastrous socialist economic policies and multiculturalism. These policies are finally bearing fruit in the U.S. We are a new country today, following into the footsteps of the failed lab experiment of the European Union, including the proposed carbon taxes, a form of environmental piracy.

Butler on Business WAFS 1190 Atlanta, 9-12-12

My 10 minute radio commentary on sequestration of disaster relief. I come on at the 30 minute mark.
http://host1.cyberears.com//17399.mp3

Sequestration in Disaster Relief

The upcoming 2013 budgetary fiscal cliff has prompted some in Congress to consider sequestration in disaster relief in order to save money. Sequestration is simply defined as automatic spending cuts.

The Congressional Research Service has published a report, “Stafford Act Declarations 1953-2011: Trends and Analyses, and Implications for Congress.”(Bruce R. Lindsey and Francis X. McCarthy, August 31, 2012)

The Stafford Act gives the president the authority to issue declarations for federal assistance to states and towns in the event of natural and man-made disasters.

Suddenly, there is skepticism that declarations are not issued just to provide disaster relief. Some believe that declarations are political instruments before and during election years. There is also heightened worry about the spending associated with such disasters. In 2011 99 major disasters were declared, with an average of 56 per year since 2000. Between 1953 and 2011 the average was 35 per year.

Under the Stafford Act grants can be given for fire management, emergencies, and major disasters. In the case of disaster declarations, floods, storms, hurricanes, and winter storms are included. According to CRS," most emergency declarations are for snow related events, followed by hurricanes, droughts, and fires.

A group in Congress wants to shift some financial responsibility to the states while another group argues that limiting federal help would impede speedy recovery.

FEMA, upon request from a governor, makes a damage report and a recommendation to the president if a declaration is needed. The president can approve or deny any request.

Congressmen are worried about the federal cost. 75% is paid by the federal government and 25% by the state and local governments. Congressmen are interested in" offsetting some portion of disaster assistance spending by implementing budgetary mechanisms that might trigger a sequestration." (CRS, p. 1)

Some contend that disaster relief is given to" marginal incidents" and that the federal government is too generous in its interpretation criteria of disaster or emergency. Because the federal government is so “open in describing factors considered for declarations has led a formerly discretionary program evolving into a form of entitlement.”

A governor cannot request a declaration unless the state is overwhelmed by a disaster. If the governor’s request is denied federal assistance, it is called a" turndown." The first disaster declaration was issued by President Eisenhower on May 2, 1953, for damages caused by a tornado in Georgia.

The qualification formula for a fire threshold for any state is the greater of $100,000 or 5% multiplied by $1.30, multiplied by the state population. Cumulative fire cost threshold is $500,000 or 3x5% x $1.3, multiplied by the state population.

CRS reported that16 states qualified for the minimum $100,000 while California has a minimum for a single fire of over $2.2 million. (FEMA, Fire Management Assistance Grant, September 2011, p. 24)

According to CRS analysis based on data provided by FEMA, Texas has received the most fire management grants (234), California (120), Oklahoma (78), Florida (57), and Washington (53). (CRS, p. 4)

The state of New York has benefitted from the most emergency declarations (18), Maine and Massachusetts (14 each), and New Hampshire and Texas (11). Emergency declarations are for winter storms, hurricanes, and drought." FEMA does not use specific categories to classify disaster types." (CRS, p. 8)

Major disasters beneficiaries can be state and local governments and nonprofit organizations. Grants are given to repair and/or restore public infrastructure such as roads and buildings, for temporary housing, unemployment assistance, crisis counseling, recovery programs, such as disaster loans for a specific community.

"The states that have received the most major disaster declarations are Texas (86), California (78), Oklahoma (69), New York (65), and Florida (63). (CRS, p. 10)

Presidential denials for major disaster declarations have averaged almost 11 per year during the last decade. (CRS, p. 9)

Increases in disastrous weather events and changes in federal policies may explain the perceived increase in major disaster declarations. It may appear that more weather events occur, when in reality we have better tracking technology. To validate this hypothesis, a well-researched link between historical weather patterns and major disaster declarations should be established.

Recovering from a disaster is much more expensive due to increased population size and increased standard of living. In the period1953-2011 the US population has doubled in size. Population density pushed habitation into areas previously uninhabited which may have been affected by severe weather previously but nobody recorded it or needed help. (CRS, p. 12)

Some members of Congress complained that political motivations are reflected in the number of disaster declarations. Around the clock news bias the president to issue increased disaster declarations in the year prior and during an election. Public scrutiny may have major consequences on how the president handles a disaster. He may appear uncaring if he does not intervene.

Policy changes include federal legislation and various FEMA declaration policies. Because states are cash strapped, they may be eager to apply for disaster aid. The $1 per capita formula for preliminary assessment had been used by FEMA since 1986. The number was changed in 1999, adjusting for inflation. The Inspector General said, in the 13 years, adjusting for inflation would have resulted in 36% fewer disaster claims, saving federal government money. (CRS, p. 23)

The Disaster Recovery Act of 2011, if passed, would amend the Stafford Act and authorize the president to declare a catastrophic incident if a panel of experts would determine that federal assistance is needed. An expert panel may:

 

      -          Make more objective decisions
      -          Slow down the process
      -          Infringe on the President’s authority

The President may still declare a disaster in spite of the panel’s recommendations. (CRS, p. 25) Could this panel become another Obamacare style recovery death-panel if their expert opinion becomes politicized?

Suggestions have been made to offer low interest recovery loans. In such a case a state could resolve a disaster without federal assistance.

-          By repealing section 320 of the Stafford Act, states would have to meet certain levels to qualify for assistance.

-          Section 404 of the Stafford Act gives the President the power to contribute 75% of the cost of a disaster. Section 404 could be amended to give only 50% if a state does not meet certain “mitigation standards.” Would that not dictate to states how they should govern?

Several other amendments to the Stafford Act have been suggested in order to limit the number of declarations issued or the amount of help provided to the states by the federal government:

-          no administrative adjustment of the cost-share

      -          no federal assistance to states without programs such as housing assistance
      -          discontinue all assistance for snow removal.

The federal government wants to pay less and less for the increased declarations of natural disasters. It appears less willing to help American disaster victims while it is more willing to help disaster victims and causes in other parts of the world. Lindsey and McCarthy state,” it is unclear whether the fiscal responsibility for victims in time of need resides primarily with the federal or the state government.” No matter how much taxes we pay to the state or the federal government, we are ultimately on our own.