The Constitution, Capitalism, Corporatism, Health Care - and Egypt

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politeia's picture
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As I mentioned to one blogger recently, if you have topics that are not directly related to local issues, and may relate to a particular political ideology, instead of inundating the SAC blogs with blog posts on those topics, why not combine them into one substantive post every now and then instead of providing for “blam” - blog spam?

Well, that’s exactly what I am doing with this blog post. I’m providing an update on the only two members of the Gang of 535 on Capitol Hill I strongly support (there are a few members of the House I also like).

Rand Paul has just completed his first month as a U.S. Senator.

It certainly is refreshing to see a member of the Senate who has never run for political office before or been involved in establishment politics in any way, shape or form.

The first big issue Rand got to speak about on the floor was the failed Republican attempt to repeal Obamacare.

What I like about what Rand had to say here is not so much about whether Obamacare is a good thing or a bad thing, but how Rand spoke about the Constitution and what the role of government should be.

I liked Rand’s points on how the Commerce Clause and the General Welfare Clause do not mean the U.S. government can do anything it wants to.

SAC blogger outtathere has this post at the end of each post he makes:

"The only difference between the Republican and Democratic parties is the velocities with which their knees hit the floor when corporations knock on their door. That's the only difference." - Ralph Nader

I found This Opinion Piece comparing Ralph Nader to Ron Paul (Rand’s father who is member of the U.S. House of Representatives) in reference to corporatism most interesting.

Nader and Ron Paul are on the opposite ends of the spectrum on many issues, but one thing you can’t say about either of them is that they are members of the establishment political elite, and I find it interesting in regards to how much common ground these two individuals have. Traditional liberals and traditional conservatives have far more in common than people would think. Establishment Republicans and Democrats just pretend to be different. Their ideology is the same, which is self-preservation and catering to special interests and the status quo.

From the above linked article:

What is American politics coming to? I just watched a joint interview with Ralph Nader and Rep. Ron Paul -- and they were mostly on the same side!
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And yet it makes total sense. What's so exciting is that their common cause shines the spotlight right where it's needed: on corporatism -- the constellation of government policies that primarily benefit wealthy and well-connected business and banking interests at the expense of the rest of us. While much of the Right Wing sees the danger of the Obama administration in Marxism and state socialism, Paul and Nader realize that that makes no sense. Bill Daley, Tim Geithner, Larry Summers, Paul Volcker, and Jeff Immelt are not the men a Marxist would pick as advisors. But they are the picks of a president who believes that economic stability can exist only if government and major businesses manage the economy together. Corporatism is the opposite of free markets, competition, and full individual liberty.

In reference to Big Government at home, I can’t help but think of Big Government abroad with Egypt.

Yet another country gone haywire as its people revolt against a bought-and-paid for U.S. dictator.

If the people of countries like Iran and Pakistan with previous rulers and now Egypt despise the puppets who rule them, is it any wonder why they do not like the U.S. when the U.S. government is the puppet-master pulling the strings?

I found Rand Paul’s inaugural speech most interesting.

Establishment Democrats in Kentucky, across the country and in the media did their best at playing their typical card in trying to paint Rand Paul as a racist, and I like how Rand not so subtly addressed that.

Former Kentucky Senator Henry Clay was known as the "Great Compromiser", but Rand Paul makes the point that there are some things you just don’t compromise on - like slavery.

Unlike just about everybody who ends up in Congress, I don’t expect Rand Paul to compromise his principles.

I like how Rand references abolitionists Frederick Douglass and William Lloyd Garrison, amongst others.

Douglass and Garrison were on Nantucket for a week in August of 1842 for an anti-slavery convention where women‘s rights supporter and abolitionist Stephen S. Foster denounced churches, and particularly those in the south, as the "Bulwark of Slavery," its clergy "a designing priesthood," and its membership a "Brotherhood of Thieves", in turn causing the Riot of 1842 on the island of Nantucket.

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Brotherhood of Thieves ~ As we must account for every idle word, so must we account for every idle silence.

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fedup's picture
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It’s nice to see members of Congress espouse viewpoints outside of the political mainstream, because I for one am fed up with mainstream politics.

I like how Sen. Paul kept his maiden speech, for which he was allowed 20 minutes, to under 9 minutes.

A lesson that the Lower Merion Commissioners could learn as they bloviate on incessantly while keeping residents on an egg-timer and ignoring what they have to say because the Lower Merion Commissioners just do what they personally want to do, irrespective of what residents want or say.

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bubbahotep's picture
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Hmmm...Rand Paul was originally against the Civil Rights Act so that made him a bit suspicious and probably makes him more so.  Yes we can all agree slavery is bad.  We can also agree that so is racial discrimiantion.  I am glad he came around.  I hope he stays that way.  I guess he could say that this was a matter of state concern, which really would have worked so well in the south during the 50s and 60s.

I totally disagree with comparing any Pauls to Ralph Nader.  Libertarian ideology does nothing to protect against coporate excesses which Nader has made his cause celebre.  When the Pauls find a way to make an even playing field between persons and corporations, maybe that comparison will be credible.

As far as the interstate commerce clause goes, nothing affects interstate commerce like health care.  Funny how strict constutionalists let some amendmets run free like the 2nd Amendment but others get reigned in like the interstate commerce clause (unless it is propping up something like negativing state regualtion or tort reform).

Not impressed.

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politeia's picture
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As far as the interstate commerce clause goes, nothing affects interstate commerce like health care. Funny how strict constutionalists let some amendmets run free like the 2nd Amendment but others get reigned in like the interstate commerce clause (unless it is propping up something like negativing state regualtion or tort reform).

You argument is flawed.

The Bill of Rights tells government what it can't do (infringe upon free speech, equal protection under the law, right to keep and bear arms, etc.).

The Constitution specifically enumerates what the federal government can do - and nothing else as everything else is left for the states and the People per the Tenth Amendment.

There is nothing hypocritical about holding the federal government to its enumerated constitutional powers in regards to what it can do, while also telling it to stay out people's lives in regards to what the Bill of Rights tells the federal government it can't do.

There can be disagreement on what limitations should be, but there is a fundamental difference between what the Bill of Rights and the Constitution are meant to accomplish from a legislative standpoint (Constitution limits what government can do/Bill of Rights tells government what it can't do), and this is right in line with what Rand Paul stated.

As for your statement on Ralph Nader, then why did he sit down in a joint press conference with Ron Paul?

If Ron Paul has no interest in protecting people from corporations, then why is Ron Paul the most outspoken opponent in Congress of corporations eating at the government trough where they in turn harm citizens trying to start businesses that would compete with them due to the harmful effects to competition of the regulatory capture corporations achieve with government via crony capitalism/corporatism?

As for how employees are treated by corporations, do you really think the federal government will do much about that when it is bought and paid for by corporations, bubba?

Ron Paul a different philosophy that you are certainly entitled to disagree with, but it does not mean Ron Paul supports corporations over employees.

Ron Paul supports a true free market, and he supports unions that operate in a true free market where they (as well as corporations) do not receive special benefits from government.

The concept of a true free market is that there is a lot of competition due to government being out of the picture and not distorting the market and harming competition and job creation.

With more competition, corporations need to treat their employees well because they are a valuable commodity. When you have less competition and higher unemployment due to government intervention, corporations can treat employees worse because there is a scarcity of jobs.

If this gets out of kilter even in a true free market, let unions come to the rescue. Ron Paul opposes corporations and unions receiving special benefits from government, but he has never opposed unions acting on their own in a true free market.

Rand Paul spoke about when and how to compromise in his above inaugural speech. What I see with Nader and Ron Paul is a great example on when to work together with others while also not compromising your other principles.

As for bubba stating s/he is "not impressed", my goal is not to “impress” even though I agree with the Paul's for the most part.

I don't agree with much of what bubba posts, but I welcome all viewpoints from other bloggers because that is one way to learn (plus I respect free speech), and thus I feel no need to just write off what others post - though I will argue points.

I do appreciate you having more substance and less blam in your blog posts recently, bubba.

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Brotherhood of Thieves ~ As we must account for every idle word, so must we account for every idle silence.

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The Bill of Rights tells government what it can't do (infringe upon free speech, equal protection under the law, right to keep and bear arms, etc.).

The Constitution specifically enumerates what the federal government can do - and nothing else as everything else is left for the states and the People per the Tenth Amendment.

What about the amendments after the 10th? Do you put those in the category of what the govt can do or what it can?

NOT to imply that any of us thinks this way, but there are those out there who make the basis of a political philosophy to deny the legitimacy of amendments from Reconstruction forward.

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politeia's picture
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A strict constructionist can't deny the legitimacy of any amendments after the 10A because they were passed in a constitutional manner via constitutional amendment. What a strict constructionist can do is deny the legitimacy of any and all court decisions and legislative actions that do not adhere to the Constitution.

It is true that while the first ten amendments in the Bill of Rights tell the government what it can not do, and while future amendments in many cases tell the government what it can do (pass an income tax), that does not take away from these additional amendments passed via legitimate constitutional authority.

What it does say is that as our country evolved, and in regards to constitutional amendments, that it got away from the founding principals of less government, but that should not surprise as the federal government has exploded in size and scope in all manners that don't pass constitutional muster - and it does make sense that as time goes on and society evolves that there may well be areas where the scope of government needs to be increased via a constitutional amendment.

And that’s fine with me. My problem is all the unconstitutional things government just does as if it does not matter. The Constitution is the rule book for government, and when government breaks the rules, it should not surprise that we have unnecessary and endless wars, massive government debt and deficits, corporations feeding at the government trough, and government interfering in just about every aspect of our lives.

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Brotherhood of Thieves ~ As we must account for every idle word, so must we account for every idle silence.

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I think your analysis is correct. In my opinion, though, the expanded constitutional role of government in the last 150 years has come at least in part from expanded needs for the role of government. The Reconstruction amendments were put in place to govern the south after the civil war. Prohibition  was put n place due to the perceived need at the time to control alcohol.

As to the clause which gives the government the authority of regulating interstate commerce, the expansion of that authority might have something to do with there being a heck of a lot more interstate commerce now than previously in history.

So love or hate Reconstruction, prohibition, expanded interstate commerce, and other new things throughout history, the founding principles of less government occasionally seem inadequate to address the needs of an evolving country and changing times.  Weapons are deadlier now. Substances and emissions are more harmful now. What one person or company chooses to do can effect the lives, health and well being of many.

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politeia's picture
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What I don’t think most realize (if they even bothered to watch the YouTube of Rand Paul speaking to the Commerce Clause) is that Rand Paul is playing it smart.

While he no doubt thinks the federal government has usurped it authority in regards to interstate movement and purchase of goods, that is not what he was even arguing needs to be overturned by SCOTUS in that floor speech in the above YouTube.

Rand Paul referenced overturning Wickard v. Filburn, 317 U.S. 111 (1942), where a farmer was prohibited from growing wheat to feed to his own chickens on his own farm under the Interstate Commerce Clause.

Now, using common sense and basic logic - what in the world does that have to do with interstate commerce?

That SCOTUS ruling opened the flood gates for the federal government regulating anything and everything, and makes no constitutional sense to me.

So forget about true interstate commerce. That is not what Rand Paul is addressing. How the U.S. Constitution provides for telling a farmer how much wheat he can grow on his own land to feed his chickens goes beyond absurdity in my view - unless someone would like to provide a logical reason why that ruling makes any sense from a constitutional standpoint in relation to interstate commerce?

If readers of this blog think that is the type of thing the federal government should be regulating, then god help us.

The true danger of Wickard is the precedent it set and the overreach it has allowed.

In Gonzales v. Raich, 545 U.S. 1 (2005), SCOTUS essentially upheld Wickard, but I have to agree with the dissent of Justice O‘Conner:

Relying on Congress’ abstract assertions, the Court has endorsed making it a federal crime to grow small amounts of marijuana in one’s own home for one’s own medicinal use. This overreaching stifles an express choice by some States, concerned for the lives and liberties of their people, to regulate medical marijuana differently. If I were a California citizen, I would not have voted for the medical marijuana ballot initiative; if I were a California legislator I would not have supported the Compassionate Use Act. But whatever the wisdom of California’s experiment with medical marijuana, the federalism principles that have driven our Commerce Clause cases require that room for experiment be protected in this case.

I also agree with the dissent of Justice Thomas:

Respondent's local cultivation and consumption of marijuana is not "Commerce ... among the several States."

Certainly no evidence from the founding suggests that "commerce" included the mere possession of a good or some personal activity that did not involve trade or exchange for value. In the early days of the Republic, it would have been unthinkable that Congress could prohibit the local cultivation, possession, and consumption of marijuana.
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If the Federal Government can regulate growing a half-dozen cannabis plants for personal consumption (not because it is interstate commerce, but because it is inextricably bound up with interstate commerce), then Congress' Article I powers -- as expanded by the Necessary and Proper Clause -- have no meaningful limits. Whether Congress aims at the possession of drugs, guns, or any number of other items, it may continue to "appropriate state police powers under the guise of regulating commerce."

If growing six marijuana plants on your own property for your own consumption is "economic activity" that can "affect" interstate commerce, then there is absolutely nothing under the economic sun (including pot luck dinners) that cannot be regulated by the federal government.

If that is not an unconstitutional interpretation and bastardization of the Interstate Commerce Clause, I don’t know what is.

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Brotherhood of Thieves ~ As we must account for every idle word, so must we account for every idle silence.

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I wasn't familiar with the Wickard case before, so thanks for pointing it out and providing a link. Basically the government's rationale for restricting the amount of wheat that could be grown was to attempt to manipulate prices under programs designed to pull the country out of the Depression.  I'm not read up enough at all to comment on the pros and cons of government action during the Depression, so I'll refrain from trying to defend it. However, as per my previous post, this action seems to have come about as a result of a perceived need for the government to act in a specific situation. Call it a power grab by the government, but for the fact that we did recover from the Great Depression, there is now in 2011 no perceived need to restrict the farming of wheat, and (I assume) that the government does not continue to restrict the growing of your wheat to feed your chickens. As with other instances of extension of government authority that we may love or hate such as the aforementioned Prohibition and Reconstruction: when the perceived need for that authority passed, so did the exercise of that authority.

 

 

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politeia's picture
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Needless to say, you know my view is that government price controls in the 1930's only made the Great depression worse.

However, a more recent SCOTUS case I posted above is the Gonzales case in 2005 which uses Wickard for precedent that the federal government can swoop into any state and usurp state laws for any reason.

The People of California voted on and passed a Compassionate Use Act for medical marijuana. The seriously ill man in that case violated no California law (he obeyed it to the T) in growing personal use marijuana for medicinal purposes based on the recommendation of his doctor.

So the FDA decides they don’t like this California law and come in and arrest this very ill person who is violating no California law under the Interstate Commerce Clause of all things - and thanks to Wickard, and essentially ruin this seriously ill guy‘s life by arresting him and making him make bail, hire a lawyer, and defend himself for doing what his state told him he could do.

I would hope even the strongest adherents to federal government control of all things that exist would find this wrong, but I‘m not going to hold my breath on that.

In turn, what this says is that state laws don’t matter. Individual states really have no autonomy as the founders insisted and as the Constitution clearly states, and we essentially live under federal rule.

And, if a state does not want to do some unconstitutional thing the federal government wants it to do, the federal government blackmails that state by refusing federal funds/aid from the money it prints out of thin air.

Zero respect for the rule of law by government, but what else is knew?

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Brotherhood of Thieves ~ As we must account for every idle word, so must we account for every idle silence.

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Interesting how votes are all over the place. Now what would cause low votes given what I blogged about?

Don't like constitutional government?

Don’t like capitalism/free markets?

Like corporatism/crony capitalism?

Like massive debt and deficits by government?

Like propping up dictators?

Don't like people denouncing slavery?

Like government controlling most aspects of our lives?

If none of the above - what is the alternative, establishment politics as usual in Washington by both parties?

Good luck with that Sticking out tongue

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Brotherhood of Thieves ~ As we must account for every idle word, so must we account for every idle silence.

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Very nice wrapup post, politeia! 

 

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Laurence Tribe, an actual Constitutional scholar, had this to say about the constitutionality of the health care bill.  It is constitutional.  And if it is not based on the non-participation idea, then Social Security would be unconstitutonal too.

Everybody wants new ideas, just rational ones. Eye-wink

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politeia's picture
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And I can make an easy constitutional argument, using constitutional scholars, that Social Security is unconstitutional - and I believe it is.

However, I am not necessarily for doing away with the concept of Social Security if the government actually had accounts for individuals where it saved the taxes we pay for Social Security instead of spending it on general government expense immediately.

This makes Social Security a Ponzi scheme where current workers pay for the retirement benefits of current retirees, but when you have more retirees than the Ponzi scheme can manage (as with all the baby boomers retiring and living longer), the Ponzi scheme either collapses or all our tax revenues go to Social Security and nothing else.

Regardless of whether we should have Social Security or not, I don't think government run Ponzi schemes a la Bernie Madoff are a good idea Eye-wink

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Brotherhood of Thieves ~ As we must account for every idle word, so must we account for every idle silence.

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You would have invested the social security surplus in . . . .  what?  A mattress?  An index fund?  Emerging (non-U.S.) markets?  You think the full faith and credit of the United States is a Ponzi scheme?

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politeia's picture
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One problem I see with people who read my views is they just fall back on talking points that have been drilled into their head by their political party and they don't think critically - and I'm not saying that is you, Hugh. You tend to make very insightful posts Eye-wink Smiling

Realize my views are my own, I can’t stand most Republicans, and my well thought-out views don’t adhere to the Republican, Democratic or Tea parties, though I agree with something from each, but not much.

I did not say the entire U.S. government was a Ponzi scheme.

I put full faith and credit that Social Security is a Ponzi scheme.

And yes, I would go so far as to say we have a Ponzi-like economy.

The Federal Reserve is a form of a Ponzi scheme in that it prints money out of thin air, "lends" it to banks, and federal law then allows banks to lend out nine times as much money as it has on deposit. If there is a bank run, it is every easy to deplete 1/10 of the supposed deposits a bank has (that's all it has), and that form of a Ponzi scheme collapses.

Note I stated I did not think Social Security was necessarily a bad thing if the government actually saved our Social Security tax dollars in an account for each American instead of spending it immediately and relying on future American taxpayers to pay for present retires - just like a Ponzi scheme.

As for alternatives to Social Security, one option is to opt out and keep those dollars to invest yourself. That would be the constitutional option. However, if people want the government to take taxes out for Social Security, let them do that.

However, I am for personal choice and personal responsibility and I feel people should be able to opt-out of Social Security if they want to.

It’s not as if most American's have enough to retire on anyway as is and Social Security will be bankrupt by the time I retire, so why should I have to pay taxes for something that will go bankrupt, or in order to make it work, pay me a negative return on the taxes I paid?

I'd much rather invest the money myself. However, I am not for forcing all Americans to do that if they want Social Security, just like I am not for forcing all Americans to buy health care.

I do understand the concept behind Social Security - that some people won’t save for retirement, or can’t afford to save for retirement, and will be left destitute.

However, the government is just going to give younger people a negative return (at best) going forward on Social Security due to the Ponzi structure and too many retirees.

If we are going to have forced government retirement savings, have it be taken out of your paycheck and go into your own personal account like a 401k (perhaps even setup matching dollars for lower income makers) and have that have only conservative investment options that you can‘t touch until 65 or 70.

Much better than the federal government taking social security tax dollars and immediately spending it on wars and Wall Street bailouts like it currently does.

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Brotherhood of Thieves ~ As we must account for every idle word, so must we account for every idle silence.

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Hmmm, I don't think allowing people to opt out of paying Social Security tax in order to invest on their own would work any more than allowing people to opt out of paying taxes toward the Defense Department in order to defend themselves on their own.

And furthermore, it's the same reason why allowing people to be medically uninsured also has not worked for the health system.

It may sound all gungo-ho and independent and rugged individual to let people just do whatever they want and let them sink or swim on their own wits; but in practice - after you've gambled and lost, bet your opt-out social security money on losing investments, or declined medical coverage and ended up sick - unless you're willing to just lay down and expire on the spot, you're going to have to fall back on something, and someone is going to have to pick up the tab for you.

Last thought for today: Imagine what might have happened if president Bush had got his way in 2005 and managed to privatize social security into the stock market.

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I think you are taking a rather simplistic view.

I stated I personally would love to opt-out of Social Security because I know I am not going to get back what I put in.

I agree Bush’s privatization view was insane.

Note I’m not taking an all or nothing approach.

I stated above:

If we are going to have forced government retirement savings, have it be taken out of your paycheck and go into your own personal account like a 401k (perhaps even setup matching dollars for lower income makers) and have that have only conservative investment options that you can‘t touch until 65 or 70.

I am trying to offer solutions as opposed to the all or nothing options of we keep the Ponzi scheme Social Security we already have that will consume all tax revenue in 30 years or we privatize.

The problem with most Americans is they just think and speak in all or nothing sound bites based on the positions of their political party and they don’t think critically.

I am sure I got a lot of down votes on this thread just because people saw Rand Paul and did not even bother to read what I had to say.

Note in the below CPAC YouTube Rand Paul speaks to opting out of Social Security, but as a realist he is only suggesting having to raise the age to receive Social Security in order to make it more financially manageable.

Are you telling me, Lexo, that the answer is business as usual with Social Security, because that is certainly what it appears you want?

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Brotherhood of Thieves ~ As we must account for every idle word, so must we account for every idle silence.

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I think that's a misunderstanding of what Social Security is. What you pay into Social Security goes to current retirees, not held or invested for you.  You're not supposed to get that money back. When you retire your benefits will be paid by future workers. 

I understand the system is broken and needs to change, I'm just telling you how it's meant to operate. But if people don't understand how it operates it's going to be hard to come up with meaningful fixes.

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Not entirely true.  When Alan Greenspan and his commission "fixed" social security in 1983 by raising the payroll tax and raising the age of retirement, it was with the baby boom retirements in mind, which is why social security has built up an enormous surplus, which is invested in treasury bonds -- the kind of safe, conservative investment that Politeia suggests be used to invest retirement funds for lower income wage earners. 

Dean Baker has been studying the Social Security Trustees' Reports for years and has often noted that (1) without making any changes, Social Security is fully paid up through 2037, based on very conservative estimates of future economic growth;  and (2) without making any changes, the benefits Social Security will pay out in future years, even though less than 100% of scheduled benefits, would still be higher in inflation-adjusted dollars than they are today. I commend to your attention his recent letter to Sen. Shelby on this topic. http://www.cepr.net/documents/publications/shelby-ss-2011-02.pdf

All the scare talk about Social Security  (which is almost always fraudulently lumped in with Medicare, which is in a completely different financial pickle, such pickle being intensified by the unfunded Medicare Part D invented by the late Bush administration) is designed simply to allow private investment firms to get their hands on those funds so that they can rake off fees and commissions. 

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I absolutely agree, Hugh, that private corporate financial interests are lobbying Congress in a form a regulatory capture to get their hands on Social Security money and you know how I feel about lobbyists seeking financial gain for their own companies. I despise it because it almost always hurts the little guy, benefits the wealthy corporate interests, and in most cases harms competition, drives up prices and harms the job market.

I just have a inherent problem with government taking my money that is meant for my retirement and not only spending it immediately, but it bothers me what they spend it on- things like undeclared, unconstitutional and needles wars and to bail outs of Wall Street (though no doubt Social Security taxes go to good things too).

This just really annoys me.

It is also not fair. Since they have current workers pay for current retirees, if the number of retirees increase relative to the work force (as is happening now and that is why I call it a Ponzi scheme), younger people will receive less benefits than those who retire now for paying the same percentage of their income into Social Security taxes as no doubt the retirement age will have to be raised and benefits will be reduced because the government immediately spends Social Security tax income instead of putting it in a retirement account.

That is not fair, but it would be fair if the government actually put your Social Security taxes into a retirement account for you each paycheck as each person would get the same amount regardless of having more retirees down the road.

If you want to ask me what irks me the most about Social Security it is that. It is unfair to younger workers and I don't like the government immediately using my Social Security tax dollars in a manner that is not very transparent at all so I don't know how my tax dollars are being spent.

Those are my problems with Social Security when you take away my ideological view points (and from an ideological standpoint outside of constitutionality, one reason government has to loot Social Security retirement funds is because it is spendthrift and can‘t balance a budget).

I would like to see these basic things at least fixed, but it hardly seems to be a topic of conversation in Washington because just as you mentioned the right uses scare tactics, the left will too. If a member of Congress calls for fixing what I just mentioned, the left will paint it as trying to do away with Social Security.

Any wonder why nothing ever gets done in Washington and why I can't stand politics as usual in Washington - and you have seen me post a laundry list of other reasons over time.

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So Hugh, I got to thinking about this so-called Social Security surplus and I find that the government does say there is a surplus. Here is what the SSA says on its website about the Greenspan report of 1983 you mention above:

The National Commission on Social Security Reform (informally known as the Greenspan Commission after its Chairman) was appointed by the Congress and the President in 1981 to study and make recommendations regarding the short-term financing crisis that Social Security faced at that time. Estimates were that the Old-Age and Survivors Insurance Trust Fund would run out of money possibly as early as August 1983. This bipartisan Commission was to make recommendations to Congress on how to solve the problems facing Social Security. Their report, issued in January 1983, became the basis for the 1983 Social Security Amendments which resolved the short-term financing problem and made many other significant changes in Social Security law [my emphasis].

Unlike many people, my first inclination when the government states something is: where and how is it lying?

So how did the Greenspan Commission turn around the bleak prognosis for Social Security? From its own website, SSA raised taxes and reduced benefits.

This does not reassure me, because as more baby boomers retire, Social Security taxes are going to continue to go up and benefits will continue to be reduced. Since I became self-employed I have paid $14.8% of my income to Social Security and Medicare. I will not be pleased down the road to be paying 16, 17 or 18% for fewer benefits.

And why is this? Again, it's because government is paying for more current retirees than current workers can support in what I call a Ponzi scheme. If government invested these taxes in individual accounts instead of immediately spending it, FICA taxes and benefits could remain the same.

Currently, Social Security debt is about 30% of total public debt, but is expected to account for 45% of public debt by 2019 - and this per the Congressional Budget Office. How is this sustainable?

Further, this does not include "intragovernmental debt", which is Treasury debt held by other arms of the federal government where the feds owe SSA $4.3 trillion!

Yes, the assets of the SSA are supposedly increasing, but government would never use accounting tricks - would it?

In reality there is no Social Security surplus for the reasons I have pointed out above. The government “owes” the Social Security Administration $4.3 trillion in intergovernmental debt because Social Security has collected more in payroll taxes than it has paid out in benefits. But the government didn’t save that money, it spent it. How can the Social Security “trust fund” have a surplus if the feds have already spent the money? As the baby boomers continue to retire, the government will have to pay their benefits with even more borrowing.

Further, government is "solving" this problem by creating Treasury IOUs out of thin air and sticking them in the Social Security "trust fund". No matter how many Treasury securities there are in the “trust fund” - currently, around $2.6 trillion - this is merely another accounting fiction that has no economic value when it comes to protecting Social Security beneficiaries.

So how does this work? Next year workers subject to Social Security taxes will pay only 4.2% of their "covered wages" rather than the normal 6.2% due to the Social Security "surplus". This will reduce Social Security's cash proceeds by $112 billion, according to Congress' Joint Committee on Taxation.

What impact will this cash shortfall have on the Social Security “trust fund“? None. Zero. Zip. Nada.

How in the world can a $112 billion cut in Social Security revenues not affect the "trust fund"? Because the Treasury will give the "trust fund" the same amount of bonds it would have gotten if the 2% Social Security "tax cut" did not exist.

In other words, the Treasury isn't selling bonds to Social Security, it's creating bonds out of thin air and putting them into the trust fund. The missing cash? The government will just borrow it from elsewhere and hide it in intragovernmental debt in an equivalent tax increase that can't be tied to Social Security.

This is not just for Social Security. Dig into what the government does with any program and it is always a shell game full of accounting tricks.

=================

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The intent of the Greenspan Commission reforms was to ensure the solvency of the system through 2056. http://www.ssa.gov/history/reports/gspan5.html

I still want to know what you would have done with the surplus, rather than investing it in treasury securities.   

I agree that it is a quasi-fraudulent accounting trick to use the surplus to disguise the federal government's deficit, but that's an accounting issue, not an investment issue.

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Hugh, there is no surplus. Never has been. Social Security taxes are immediately spent by the government.

Social Security taxes have always been looted and spent for other purposes. As I stated above, the Treasury has replaced the money taken from the Social Security "Trust Fund" with non-marketable “special-issue” government bonds it prints out of thin air that are essentially worthless and they call this a "surplus".

The Office of Management and Budget admits as much:

These [surplus] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense.... They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large Trust Fund balances [Read “surplus“, Hugh], therefore, does not, by itself, have any impact on the Government’s ability to pay benefits.

If I didn’t know better, I would expect that quote to be from a Nigerian scammer (most kind sir, we will give you 1,000,000.00 USD Social Security surplus if you give us your checking account number) instead of the White House OMB, but I can’t say I’m surprised.

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I understand that you don't approve of having invested the excess funds (I don't know why you don't want to call it a surplus, even the Heritage Foundation calls it a surplus, what would you call the difference between current revenues and current expenditures on benefits?) in treasury securities, the proceeds of which are being used to fund current federal government operations.   I don't understand what you would do with this excess revenue.  What would be a better, safer investment?  Greenspan:  “The crucial question: Are they [assets of the Social Securit Trust fund]  ultimate claims on real resources? And the answer is yes.”    Just like any other kind of government bond.

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In my view there should be no excess revenue - and whether it gets spent immediately or not. I don't call it a surplus when you spend it immediately on something other than Social Security (I still don‘t buy that there was a “surplus” because the additional revenue from increased Social Security taxes still was not enough to cover future retirees except for the very short term. Just because a Ponzi scheme has a short term infusion in cash from duped investors still does not mean it will fail. The failure has just been put of for a sort period of time.).

If I have a legitimate business that sells cars and trucks, and I have a surplus in revenues due to car sales, but I spend that surplus immediately on my ailing truck business, it has not helped my car business, but rather immediately been sucked up by my hurting truck business - so I never really had a surplus.

What would I have done with the Social Security "surplus". Like I said, I never would have had one - real or imagined. However, if there was a Social Security surplus, why not put it back into Social Security so taxes don’t go up and benefits don’t do down?

My view on Social Security is that the government should put FICA taxes in an account for each American based on conservative investments (government bonds will do, I guess) instead of spending it immediately on other things. Your money is then there when you retire. What is wrong with that?

That way you have neither a surplus or a deficit and it does not become a Ponzi scheme when you have more retirees than current workers can afford to pay for, thus causing benefits to drop while taxes to pay for it go up.

That's what Greenspan did in 1983 (sure did not last to 2054 as we were told it would), and that is what is coming down the pike due to all the Baby Boomers.

This would not happen if your FICA taxes were put in an account for you instead of being immediately spent on wars and Wall Street bailouts.

This makes perfect common sense to me, and it amazes me that some many just want to keep the current Ponzi scheme going.

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CPAC 2011 just got started, and Donald Trump just made a Huge Mistake by pissing off Ron Paul supporters if he were to run for president. This egomaniac just does not get it.

Any Republican candidate who goes after Ron Paul will not win the upcoming GOP presidential primary.

And in some really excellent news from CPAC, Dick Cheney was booed, heckled and called a war criminal.

Rand Paul got the warmest welcome so far, and I like how he went after the defense budget in a reasonable manner.

And so readers know, I don’t support the Tea Party - just Rand Paul. My hope is he and his father will take the Tea Party back from the warmongering, religious-right neocons who have co-opted the Tea Party from Ron Paul - who started it in 2007.

I was also very happy to see CPAC listen to Ron Paul and invite the gay-rights group GOProud.

The place will go bonkers when Ron Paul speaks, and I’ll post that YouTube.

Oh, and Sarah Palin is a no-show for CPAC. I think she realized there would be a lot of Ron Paul supporters there and they would give her a really hard time.

=================

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Andy,

Your original post is a very good one and i appreciate and agree with a lot of what your saying.  I have no time to listen to the videos, I'm just too busy right now, but I'm sure i would like them, and probably disagree with some of the strict constitutional approach taken by Rand, Ron Paul and you.  

But, i just wanted you to know it is a good post with good information representing your point of view.  Nicely done!

 

ps-Hail Egypt.  Very cool, impressive though they will be in for a long road and a lot of hard work and set-backs.  But, it is very inspiring to see so many people so hopeful in the world.  Less a few people, this might have been what it looked like once upon a time here in the late 18th century.                                                         

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It may not be so heart warming and awe inspiring if it hardens into a military dictatorship, which seems like a distinct possibility.

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Good point, Hugh, and Ron Paul addressed that in the above YouTube.

My take is along Ron Paul's position. Stay out of the business of other countries/governments and let them develop as they see fit.

By installing dictators it is a crap shoot. You can get a worse or better leader, BUT you often get a worse leader who despises the U.S. because the dictator that was overthrown was a U.S. puppet.

I also see the U.S. installing dictators in other countries as hypocritical and anathema to what the U.S. is supposed to about. Our country was founded on a revolution that gave power to the People to elect their representatives (amongst other things), so it strikes me as arrogant hypocrisy that the U.S. would go around the world installing dictator and puppet regimes in other countries.

And, even when the U.S. installs a democracy it can backfire. Look at Iraq. Who did they elect? Shiites who are allies with Iran.

Saddam's Iraq and Iran were mortal enemies who kept each other in check. Now we have Iran with more freedom to do what it wants because it does not have to worry about Iraq.

I can go on and on with how our intervention in other countries almost always backfires and we get blowback.

The founders were right. Stay out of entangling alliances. Be friends with countries. Trade with them, negotiate with them, be diplomatic. This constant unwanted intervention in other countries only creates hostility towards the U.S., and in the Middle East I believe (as the CIA does) that it motivates suicide terrorists.

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Amen to that. Enough is enough.  And it's expensive and it doesn't work.  We spend billions propping up a dictatorship for decades, and the people of Egypt just overcame it essentially for free.

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Thanks Willey!

I respect the viewpoints of others, and even though I argue my points strongly, it does not mean I don't understand where others are coming from, and even if I don't agree with their views, I certainly respect them if they are well thought.

Unlike some poeple, I don't judge or dislike people based on their political views. I actually rarely judge everyday people (government is what I judge, as is my right).

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I think your absolutely right in your above last post.  I thought it interesting that the news(BBC, NPR international) covered the CIA and other US intelligence regarding their utter lack of ability to see this revolution in the Middle East coming and quoting the CIA director (I believe) as predicting incorrectly Mubarek's resignation and then citing that he read's the newspapers for his "intelligence".  I have wondered aloud to myself whether our lack of intelligence might not be a bad thing considering our long, nefarious history in the region(which you cite correctly), that it might just give these folks a chance to get something going without our political/national/international interests mucking it up.  I also thought it interesting that a disagreement took place regarding what the White House's message should be between the old guard (Hillary Clinton types) and the new, younger blood.  The old guard was pushing for "stability" which equates in my mind to Mubarek or the status quo.  The younger folks in the White House staff were pushing for more support for the anti-Mubarek, peaceful protesters and the call for Mubarek to step aside.  Interesting indeed!  

(did you see footage today of these same protesters cleaning the streets, putting back the paving stones, resetting them, that were used a few days ago as weapons - these folks are incredible!  I think we are seeing something truly unique that goes to the character, education and pride the Egyptians have for their nation)   

 

Hugh , your point is well taken also.  I think no matter what happens it will be difficult, full of set-backs, but it's something 'they' must go through for it to work.  Our country took an extremely long time to develop(1890-1910 or just over a hundred years) and I doubt it will be different for the Egyptians, the Tunisians or any other country that moves as Egypt has done. ( and it looks like other countries, other people are going to move towards freedom by the looks of all the protests that are happening)  But, what is true for us is we are going to see oil/gas prices go way up and this is in-spite of "stability".  Big international business does not like what it see happening in the middle east, it cares not for democracy when that is uncertain.  It and our old guard politicians(the likes of which Andy has described above) will be sleeping in the same bed regarding this issue.  And as Andy has said and I concur, these are not the principles on which our country was founded under! 

 

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Ron Paul wins CPAC straw poll for the second year running. Students and younger conservatives make it happen.

Happy to see Palin and Santorum way back in the pack.

Ron Paul’s CPAC speech:

=================

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I am just trying to figure out who Hugh Cain is.

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From Wiki:

Herman Cain (born December 13, 1945) is an American newspaper columnist, businessman, politician, and radio talk-show host from Georgia. He is best known as the former chairman and CEO of Godfather's Pizza. He is a former chairman (1995-96) and deputy chairman (1992-94) of the Federal Reserve Bank of Kansas City.

I only watched the first couple of minutes, but I agree with him on the attack of the "ations".

Being a former chair of the KC Fed would concern me, but since he announced on his radio show in 2009 he agrees with Ron Paul on going back to the gold standard, sounds like he is very disillusioned with the Fed and its fiat empire - and I like that.

He is supposed to be a big Fair Tax proponent, which I am not.

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The message from CPAC 2011: establishment politics still rule the roost in Washington and there is just about no difference between Republicans and Democrats.

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Pol, I disagree with you so much, but I just want to know that I respect you a lot.  I would even borrow money from you! Eye-wink

The problem I have with the gold standard and the treaty position is that both belong in the 19th Century.  I mean, if the dollar was based on gold, practically no one could afford dollars.  Imagine what that would do with parity to the Renminbi!  People would start using euros or Canadian loons.  With treaties, I understand your point, however, I can't imagine the Cold War going quite so well without NATO.  With the future, I don't see the U.S. doing things like defending Taiwan but I do see it as using its power to thwart illiberal powers like China and Russia from throwing their weight around.

There is also a heck of a difference between Republicans and Democrats.   I know it everytime I talk to a Republican.  If we were the same, I would think we would be agreeing a lot more.

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Oh, I think individual citizens as Republicans and Democrats have differences. That’s what the two parties want. I do think the two parties in Lower Merion are different on many issues, and I see that as a good thing because they counter-balance each other.

What I reference is how I feel our representatives in Washington on large, substantive issues are no different.

Both parties in Washington support these needless, endless, counter-productive, undeclared and unconstitutional wars all over the Middle East. Both parties support doubling the defense budget over the last decade, to the point we spend as much as the rest of the world combined on the military - while our biggest threat is some crazies in caves half way across the world with no modern weapons.

Both parties support entitlement programs like Social Security and Medicare/Medicaid without any attempt to contain costs or look at reasonable alternatives.

Both parties support a fiat/fractional reserve monetary system where the Federal Reserve "manages" the economy by setting interest rates and manipulating the money supply, availability of credit, etc. - thus causing the business cycle and these economic collapses due to their mismanagement and therefore feeling the need to bail out Wall Street, large corporations and even other countries - in secret - and at the expense of Main Street.

Both parties support a fiscal policy with massive deficit spending and ever increasing government debt. Neither party offers anything that will reduce the deficit or debt. Democrats are offering to freeze spending and Republicans are offering to cut spending by $35 billion a year. The end result is the same as both proposals will increase the national debt by roughly $3 trillion over the next 4-5 years.

Both parties disparage civil liberties and the Constitution with their support of the Patriot Act, warrantless searches, denial of habeas corpus, rendition/secret prisons, torture, and the assassination of American citizens.

Both parties are bought and paid for by corporate special interests, though those special interests may be different in some cases, but not all - with Wall Street being one special interest both parties cater to bigtime at the expense of everyday Americans.

Both parties in Washington treat the Constitution as if it were a piece of toilet paper.

That's why I support Ron and Rand Paul - because they don't support any of what I just described.

What the parties do like to do is cater to citizens who have different positions on emotional issues like abortion and gun control so they can appear different, but in my view in regards to the big picture on a national level - there is no difference between the two parties.

As for the gold standard, rather than get into it, I will provide This Link from a previous post of mine with some discussion (read entire thread and links in it for full detail).

You can't just switch over to the gold standard (does not have to be gold - could be a basket of commodities) as there would be economic chaos and interest rates would literally go through the roof.

My suggestion is along the lines of what Nobel laureate economist F.A. Hayek proposed - competing currencies within the U.S. One the current fiat dollar and the other a gold or commodity backed dollar.

Circulate both types of dollars and let the People and the markets decide which type of dollar they want to hold, conduct business with and invest with.

If the gold/commodity backed dollar wins out, it would be a natural and seamless progression and the rest of the world would follow suit as the U.S. maintains the world reserve currency (and don‘t expect the current fiat dollar to be the world reserve currency for more than a decade or two more).

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On another blog thread I mentioned how Ron Paul most likely does not have a chance to be president if the media does not treat him fairly.

Well, don’t expect that from the neocon network - Fox News.

As I have stated, I like Freedom Watch and Stossel (which are actually on Fox Business) and won’t watch anything on Fox News.

This shows Fox using the 2010 CPAC results where Ron Paul received more boos instead of the actual 2011 results where Ron Paul received more cheers.

The unfortunate thing is most Americans get their views from the mainstream media, and they have the ability to anoint the finalists from each party based on how they report and based on the deception they use.

Ron Paul will have this uphill battle to fight with Fox News. If they treated him fairly, you never know. With deceptive tactics to make sure Ron Paul looks bad to most of America, how can he have a chance?

Still, I most certainly believe in fighting the good fight.

4:12 shows the real result of 2011 with many more cheers, though no doubt with Romney getting almost as many votes as RP, there were some boos mixed in, but RP did much better from a crowd response standpoint in 2011, so Fox deceptively used the 2010 crowd response to make it look like RP did not have as much support based on the momentum he has gained from last year.

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We  have a dollar and a gold dollar.  The gold one goes for $1000 bucks.

 

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Whah?

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The battle for the conservative movement.

Interesting stuff from Jack Hunter.

Young conservatives and libertarians support Ron Paul by far over any other political figure on the right.

What I see are the last desperate, dying gasps of the neoconservative movement.

It may take a few more years, but it is on the way out. A fad whose time has come.

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Jack Hunter gets it Right On Egypt.

Neocons have no idea what to do about all these popular uprisings in the Middle East. They worry about a bad new regime, but how can they knock democratic revolutions?

My view is just stay out of it, outside of being diplomatic and trading with these nations. Trade keeps everything peaceful.

The U.S. and China are totally co-dependent economically. We import a lot of their goods and they own a ton of our debt. As long as we have strong economic ties, there will be no desire to truly alienate each other.

With America's support for Hussein sufficiently far enough in the past, in the early 2000s neoconservatives successfully crafted a "freedom" narrative in order to get the American people to allow them to get their way in Iraq. In his second inaugural address, President George W. Bush even pledged to end "tyranny around the world" as part of a "freedom agenda."

In regards to the recent turmoil in Egypt, this narrative has become a bit more complicated for neocons. The Jewish daily Forward noted, "After once uniting to support regime change in Iraq through an American military invasion, neoconservatives are now divided as they face the prospect of a regime change in Egypt driven by popular internal forces out of America's control."
------------
The primary difference between Iraq and Egypt is this: You can't give people democracy. They have to fight for it themselves, something the founders of our own republic knew all too well. This type of genuine, democratic revolution is exactly what's happening in Egypt today, and every neocon who now thumps his chest about the rise of an Egypt-based "caliphate" movement led by the Muslim Brotherhood probably knows he's being every bit as deceptive as when they were pitching freedom and democracy in Iraq. The hypocrisy is glaring. But there is a point to be made even amongst the mostly nonsensical, Islamophobic hyperbole: Real democracy in the Middle East will often result in a significant part of the population choosing precisely the type of Islamic state we supposedly want to discourage. This is no doubt as true in Egypt today as it has always been in Iraq.

The larger and more important question should be why should the United States even have to fear Islamic states? What has changed so drastically since the 1940s, '50s, and '60s when we were more worried about communists than Muslims? Has Islam become radical only recently? Has this ominous caliphate plan only recently been discovered? Or has our foreign policy in that part of the world significantly changed? For the past three decades it's hard to imagine how America could have been more involved in either Iraq or Egypt, or for that matter, most of the Middle East.

The same "democracy" we wanted to bestow upon Iraq is now being discouraged in Egypt by many of those who once were the most enthusiastic about spreading freedom. In the future, the neoconservatives should be more careful about what they wish for. They just might get it.

Hunter takes on another neocon kingpin here while looking at both the left and the right in regards to the Constitution.

The hypocrisy never ends in Washington.

=================

Brotherhood of Thieves ~ As we must account for every idle word, so must we account for every idle silence.

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politeia's picture
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How about this - a foreign policy driven by PEACE.

And what ever happened to the anti-war left?

I used to see the same two people with a table set up in front of the Bryn Mawr post office all the time when Bush was president, handing out pamphlets condemning the wars in the Middle East.

Have not seen them protesting the wars in the Middle East since Obama was elected.

And for those who think Republicans are in bed with corporations, Obama and the Democrats are no different.

And civil liberties? Why have you seen me post before that Obama is Bush on steroids?

This YouTube gives you an idea on how Ron Paul will differentiate himself from both Republicans and Democrats in the upcoming presidential election - and he will differentiate himself by simply saying the same things he has been saying for decades.

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Brotherhood of Thieves ~ As we must account for every idle word, so must we account for every idle silence.

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Hugh Gordon's picture
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The people at those tables were acolytes of Lyndon LaRouche.

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politeia's picture
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Wow, LaRouche supporters still around?

Surprised they stopped the anti-war protesting once Obama was elected, but then most LaRouche supporters were Democrats.

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Brotherhood of Thieves ~ As we must account for every idle word, so must we account for every idle silence.

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LexoTime5's picture
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Yes, we had the LaRouche supporters at the Narberth post office too back then. They handed out not only anti-war lit, but also stuff about the British royal family and drug smuggling, and various north African dictators. And it's true I have not seen them there since Obama was elected.  I have no idea why that would be, but Politeia's (and Ron Paul's) point is a very good one; the anti-war protesting seems to have dried up, despite the continuation of the wars.

I watched half of the RP video above, until the video seemed to veer into another subject - sorry, it's really long - but I liked what I heard from him up through that point.

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politeia's picture
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Sure there’s no inflation, and before you know it, we will be at war with the whole world, but we will never admit we are at war.

=================

Brotherhood of Thieves ~ As we must account for every idle word, so must we account for every idle silence.

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politeia's picture
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Got Liberty?

I certainly don’t see it with establishment Republicans or Democrats.

And where do you find the money to tide those over who are dependent upon government?

=================

Brotherhood of Thieves ~ As we must account for every idle word, so must we account for every idle silence.

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bubbahotep's picture
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You know, I thought I should give Rand Paul the benefit of the doubt, but I've reached the conclusion he is just plain loopy.  Read about how he thinks the Department of Energy is responsible for his toilets.

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