The legislatures of seventeen states have recently passed a bill calling for a constitutional convention that would be focused solely on the drafting of a balanced budget amendment to the Constitution.  Each of these bills explicitly states that it will be declared null and void if the Supreme Court rules that the convention cannot be limited to the drafting of a balanced budget amendment (BBA).

Next up is New Hampshire, where the bill has already passed the House.  Tomorrow, May 9, it will be taken up in the NH Senate (http://www.gencourt.state.nh.us/bill_status/quick_search.html — type in HCR 40).

No this would not mean budget cuts in time of recession, and no it’s not a mandate to leave spending untouched while raising taxes to cover unlimited wants;  there must have been a hundred of these bills proposed in the last two or three decades, and they’ve figured all those things out.  In 1997 an amendment came within a single vote of capturing 2/3 majorities in both houses of Congress, but the balanced budgets of the late 90s caused the passion to flare out.  Since then our debt has grown from 5.5 trillion to 15.5 trillion.  If interest rate were to rise anywhere near their highs of the last few decades we’d have to pay more than a trillion dollars a year in interest alone.  At that point a vicious spiral becomes almost inevitable.

A supermajority of American voters is already in favor of a BBA, and in recent months BBA bills have been filed in Washington with huge numbers of co-sponsors stepping forward from both sides of the aisle.

If you still have questions about the pros and cons of an amendment read this article, and then start writing letters to your representatives.  We’re only 3 or 4 years behind behind Greece, Portugal, and Spain, if investors take a pessimistic view, and we can’t look to Germany to bail us out.

Related posts:

1. Balanced Budget Amendment Pros and Cons
2. Balanced Budget Amendment Poll
3. Problems With a Balanced Budget Amendment?

And thy grandparents, and great-grandparents . . .

So often, we forget the sacrifices that have been made by those who came before us — those in our own families, and in so many other families — who gave so much of themselves to leave a better world for us who followed.

This author had grandparents born at the turn of the 20th century, over a hundred years ago, and a great-grandmother born just a dozen or so years after the Civil War; he had  a father and two uncles who fought in Europe and the Pacific, who helped overthrow tyranny and secure freedom for the world — freedom from totalitarian governments ruling close to a billion people, in the middle of the tumultuous twentieth century.

We owe an enormous debt to them, not just for the personal sacrifices they made, but for their sense of right and wrong that led them to believe in, and to do, the right thing.  It is a sense of right and wrong that they have tried to pass down to us.

I came of age in the mid-1960s, during the height of the Viet Nam War, and like so many of my contemporaries, I ended up in uniform, opposing what I believed to be a very political war, but loving my country, and the beliefs that have made it great, and the rights guaranteed in our Constitution — rights that cannot be taken away by a vote of the people.

My parents and grandparents taught us to be frugal and careful with what we earned, not because they didn’t want us to have good things in life, but because their lives had been forged, as children and young adults, in the furnace of the great depression.  Their lives were forged by scarcity; and they knew that to persevere, they needed to make wise decisions about spending.

Today, the business catchphrase is “smart money”; but to them, it was simply common sense.

“Live within your means”, we were told.  ”If you want something, save your allowance, save your paper route money, until you have enough to buy it with cash — it’ll be there, and if you still want it, buy it then.”

My mother understood well the psychology of saving: that I would be less likely to buy something if I had to save for six months before I could get it: because the effort and sacrifice of saving would then have an intrinsic value of its own, a value that would far exceed the perceived worth of whatever it was I “had to have”.

They knew  intuitively what we now explain with spreadsheets and  algorithms: that a person who saves, a person who spends wisely, will have at least as much over the course of a lifetime — and likely much, much more — than one who immediately spends everything he earns on things he wants but doesn’t need.

The wisdom of the ages comes to us from those who have gone before us.  We owe a debt of gratitude to those who have bequeathed this great nation to us.

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There is an enormous cost to taxpayers — and to the American economy, and to government — by having the Social Security system structured and administered the way it currently is.

Holding the Social Security Trust Fund in safe but low-yield U.S. Treasuries — “backed by the full faith and credit of the United States government” — is expensive relative to other options available.  It will cost taxpayers vastly more than it did to create the $2.5 trillion Social Security surplus in the first place.

1)  America’s Taxpayers Will Pay $2.5 Trillion Twice to Fund the $2.5 Trillion Surplus 

The trust fund was created from surplus FICA taxes above and beyond what was needed by the Social Security Administration to pay immediate monthly benefits.

How are the taxpayers paying twice?

Taxpayers pay the first time as FICA taxes levied on wages.  The surplus FICA revenue, by law, must be invested in special U.S. Treasury bonds.  Your FICA taxes go into the Social Security and Medicare trust funds, but they are immediately loaned to the federal government—which spends the money and promises to repay it at some far-future date.  A Treasury bond, after all, is a loan to the federal government, which only borrows when it needs money to cover a shortfall.  Nothing is actually saved for Social Security;  instead, the cash is immediately spent elsewhere, and all that remains in the trust fund vaults is an IOU saying that the government will some day pay the debt off—with cash raised from the taxpayers.

This has been occurring since 1935, when the Social Security system was set up.  Over the past 76 years, the surplus account has accumulated $2.5 trillion in IOUs issued by the Congress that carry the fine title of U.S. Treasury bonds.

(In 1969, the process was made more visible when Lyndon Johnson, Richard Nixon and the 1969 Congress created the Unified Budget, essentially acknowledging publicly what had been going on for the previous 34 years).

Taxpayers will pay $2.5 trillion a second time when the Social Security Administration goes to the U.S. Treasury and exchanges the Treasuries for cash to pay benefits.  The Treasury, in real time, will collect the money needed to redeem them from America’s taxpayers.

Thus, America’s taxpayers will pay $5 trillion to provide $2.5 trillion in benefits; some of the taxpayers will be different people, but many Americans will be paying their FICA taxes twice in their lifetimes, first as FICA payroll taxes, and later as income taxes to redeem the Treasuries.

2)  Taxpayers Will Pay the Interest on the Trust Fund

The federal government pays the Social Security Administration interest on the Trust Fund; and the interest rate is currently around 4.62%.

Translation: the taxpayer is paying the interest, because the government only has money that it collects, directly or indirectly, from taxpayers.

3)  Taxpayers Will Pay the Opportunity Cost

The foregone opportunity of the Trust Fund to earn a return on the stock market is enormous.

If we take the actual FICA surplus, year by year from 1937 to 2009, and calculate the market growth or loss, year by year, for the same years, we would now have a Social Security Trust Fund worth $3.02 trillion.

That $3.02 trillion is very close to the current size of the Trust Fund; as of the end of 2009, it was $2.54 trillion.  However, there is a significant difference.

Had the surplus been invested, the Trust Fund would be real assets in real companies; and it could still be drawn on as needed to pay Social Security benefits.

There is no reason why the returns under this proposed scenario could not be guaranteed by the federal government, the same way that they’re guaranteed today: as a promise of payment in the the event of market failure, with funds raised from future taxpayers.

The big difference between these two scenarios is that we know  the government will have to make huge future payments to the trust funds under the current system, while it’s unlikely that it would ever have to make any future payments on a gurantee to trust funds that were invested the same way all pension plans are now invested.

The benefit stream with the Social Security surplus invested in Wall Street would be two to three times larger than the monthly Social Security benefits currently offered, and would range from $2,000 to $6,000 per month, instead of the current few hundred dollars to $3,400 per month (this calculation is based on the payouts of the Alternate Plan, the alternative to Social Security that has been in place in three Texas counties since 1982, and which is invested in the market).

4)  Foregone Growth of the American Economy

That $2.5 trillion, had it been invested in stocks, mutual funds, and corporate bonds, would have flowed into the private sector to drive growth of the American economy, in the form of plant expansion, capital projects, product development, sales promotions and marketing plans, new hires, and pay raises and promotions and bonuses.

It would have driven the competitiveness of the American economy.

“But”, you may argue, “wouldn’t that put the government in the position of picking winners and losers?”

Well, the public employee pension funds are currently invested in the stock market, and they have fund managers who function exactly the way fund managers do at the brokerage houses: under the strict requirements of fiduciary responsibility.

CalPERS, the nation’s largest public employee pension fund at $230 billion, has around $80 billion in equities.  The Alternate Plan in Texas invests in the market as well.  Both pay monthly benefits to their retirees that far exceed the benefits paid by Social Security.

If the market is safe for public sector retirement funds, it should be equally safe for all Americans, and for the Social Security Trust Fund.

5)  Foregone Tax Revenue That Would Have Come from Economic Growth

A letter-writer to the Wall Street Journal stated, regarding the basis of a sound currency:

“A strong, growing economy is the only thing that backs the U.S. Dollar.”

Paraphrasing this slightly: a strong, growing economy is the only thing that backs the government’s tax base.

Absent a strong growing economy, the foundation for government taxation is weak, and the economy cannot fully support government programs, let alone growth of government.

Final Thoughts 

If we think of the Trust Fund as a retirement account into which we have invested $2.5 trillion for the past 60 to 75 years, and the fact that $2.5 trillion will have to be paid all over again, then it is no different from investing in the stock market for six or seven decades, losing everything, and having to start all over again.

The equivalent market scenario for investing the Social Security Trust Fund into U.S. Treasuries is a 100% market loss, and having to start over again at zero.

The hypothetical market loss is actually greater than 100%, if one also considers that taxpayers are paying the interest on the Trust Fund.

The hypothetical loss is two times that 100% market loss — if we value the Opportunity Cost at $3.02 trillion as the foregone value of the Trust Fund had it been invested in the market.

CalPERS has used 8% historically to project returns on their investments in the market; they lowered the rate a couple of years ago to 7.75%, and in early 2012 to 7.50%, to reflect current market conditions.  The federal government pays the Social Security Administration 4.62% interest on the Trust Fund.

One of these is paid by the market, and one is paid by taxpayers.

Using Einstein’s “Rule of 72″ (i.e., divide the interest rate or market return into 72 to get the years it will take for the account to double), a 7.50% return will double a person’s investment in 9.6 years; a 4.62% return will double a person’s investment in 15.6 years.

The Social Security Administration, the American taxpayer, the U.S. economy, and the federal government would all be better served if a significant portion of the Trust Fund were invested in the market — yes, into Wall Street — or handed to CalPERS to manage, than to sit in U.S. Treasuries.

It would, of course, be backed by the same government (read: taxpayer) guarantee in the event of a market failure, just as it is now.

In a worse case scenario — a total market collapse — it won’t be any worse than the 100% market-loss-equivalent that is enshrined in current law; and the taxpayer would be on the hook for a lot less than having to pay $2.5 trillion a second time for something that has already been paid for once.

There is a better way.

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Related posts:

1. How To Create Jobs
2. Jefferson Democrats and the 2012 Election
3. How to Fix the Economy

This snapshot of federal spending recently crossed my desk, and it is worth sharing.  It simply converts the federal numbers into an equivalent household budget.  The numbers are approximately correct for 2012, though they don’t have to match exactly to make the point.

Why the U.S. was downgraded:

• U.S. Tax revenue: $2,170,000,000,000

• Fed budget: $3,820,000,000,000

• New debt: $ 1,650,000,000,000

• National debt: $14,271,000,000,000

• Recent budget cuts: $ 38,500,000,000

Let’s now remove 8 zeros and pretend it’s a household budget:

• Annual family income: $21,700

• Money the family spent: $38,200

• New debt on the credit card: $16,500

• Outstanding balance on the credit card: $142,710

• Total budget cuts: $385

The example is excellent as far as it goes, but alas, here is the kicker: America’s unfunded liabilities — the promises of future benefits to its citizens, using the citizens’ own money — are currently listed at $117.4 trillion dollars (see U.S. Debt Clock).

Once again, let’s remove eight zeroes and see what we get for the equivalent future burden on a household budget.  You may want to be sitting down.

$1,174,330.

This is the household equivalent of the government’s unfunded liability largesse — promises of future spending on entitlements — and the burden it will impose on the children of a hypothetical family.

Nice gift to the kids, huh?

We’re doing exactly the same thing on a national level with entitlements, and we’re leaving an enormous burden to future, unborn generations.

Related posts:

1. How to Fix the Health Care Mess
2. Contagion and Eurosclerosis

The debt of Portugal has fallen in value so much that a buyer can now get a yield of 16% on long term, ten year bonds.  Portugal won’t have to actually pay 16% until it has to borrow again (most likely when an old bond issue matures and has to be replaced), but at rates like that you can be sure that the increased cost of borrowing will cause even more borrowing.  It’s a swift ticket to bankruptcy—or rather default, because nations don’t have to worry about going through a bankruptcy process.

Wall Street and the media have been obsessed with the idea that the panic that hit Greece and now Portugal will spread further, causing a spiral of higher interest rates, compounding debt, and severe austerity that plunges the entire world into recession.

That’s not going to happen—Europe is already in a recession, but the US economy has been getting stronger—and in the near term the continent’s leaders will continue to grasp for short term solutions and kick the can down the road.  This has nevertheless been a heavy blow to the European Welfare State Model, and it’s obvious that the nations which spent beyond the limits of affordability are headed for significant pain.  So it’s more than a little surprising that our media have made so little effort to draw parallels with our own debts and deficits.

As a bloc the euro zone is less indebted than the U.S., and its government deficit is lower.  And we run up our debts in the same ways.  According to Census data published by the Wall Street Journal, 48.5% of Americans live in households that receive some form of government benefit, up from 30% in 1983.  And we share Europe’s great future problem, which is that we’ve promised larger benefits than we will possibly be able to afford once the Baby Boomers have retired in numbers and stopped paying significant taxes.

We also have patronage jobs, special tax breaks, tax fraud, subsidies, Medicare fraud, red tape, bureaucracy . . . . As with the troubled countries of Europe, these issues cause deficits and debt, and they also create inefficiencies and disincentives hurt employment in ways that are not obvious—but which are very powerful.

The immediate concern for Europe is the need to reassure investors so that they’ll continue to lend money to governments and banks, and interest rates won’t rise.  Numerous countries have been flouting an EU mandate to keep budget deficits within 3% of GDP, so many observers are suggesting tighter limits—0.5% of GDP—that are enshrined in the constitutions of each nation.

Most Americans (74%, according to a July poll by CNN) and most congressmen and senators (328 from both parties, in recent votes) want to do the same thing here—but in a way that allows additional spending during recessions and wars.  You can be sure that Congress is going to open up those floodgates from time to time, but a balanced-budget amendment to the Constitution would nevertheless slow the growth of the nation’s debt.   In 1997 a similar bill came within a single vote of passing both houses, because our legislators knew that they had not balanced** a budget since 1960.

**The 1969 budget was “balanced” with the help of deceit;  that was the year they introduced the “unified budget” gimmick, which claims FICA receipts as if they are taxes.

Related posts:

1. Putting It in Perspective

Our unemployment rate is high, the stock market is struggling, and sluggish growth seems to stretch far into our future. It might not be easy to take a step back and feel appreciative for the progress we’ve made, and the progress we’ve helped bring to the rest of the world; yet it’s very clear that we’re living in a time of peace and extraordinary plenty.

Two hundred years ago the average life expectancy, worldwide, was just 26 years. The life of man was nasty, brutish, and short—and poor. Incomes, wealth, and life expectancies had remained frozen for a thousand years—in fact, they had advanced little since Roman times.

Yet change and progress were stirring. In the next 100 years the life span of the average American male nearly doubled, amidst all the improvement in nutrition, working conditions, and living standards that such a great leap implies. Property rights, free markets, free societies, and the rule of law were driving prosperity across Europe and North America.

The lives of Americans in 1912—a century ago—were nevertheless quite poor by the standards of today. Fewer than 10% of the homes had telephones, and only 14% had bathtubs. Automobiles were rarer than hens’ teeth, and most workers—men, women, and children—labored from dawn to dusk.

Today even our poorest citizens are healthier and wealthier. Many have automobiles, and most have mobile phones—in fact, those who don’t have cell phones can get them free, via a Universal Service Fund program that’s funded by a tax on your phone service. The only people who go hungry in America are those who have not connected with the federal food programs (SNAP, Child & Adult (CACFP), Women Infants & Children, Elderly Nutrition, etc.), or with state welfare programs. Or with soup kitchens and shelters, or the massive (and studiously ignored) outreach of churches nationwide.

This bounty may be of little comfort to those whose savings are in CDs at 1%, or those who were laid off in a downsizing or merger—and have been eating away at their savings for years as they find another job or launch a new business, without any help from public assistance. We’ve been there, done that, and it’s no fun. And yes, most Americans felt wealthier five years ago, and they look back on the technology bubble of 1999 as the best of times. But if you were lucky enough to enjoy the best times in the history of the world, do you really have cause for gloom? _______________________________________________________________________________________________

In 2012 the U.S. stock market will rise more than 25% _______________________________________________________________________________________________

We should all feel rueful about the way we partied in the last couple of decades, but as dwarfs sitting on the shoulders of giants we have greater capabilities than we’ve ever had. Not just the greatest in history, but we—right here—have the greatest technological, agricultural, and humanitarian capabilities on today’s planet. We enjoy unparalleled freedoms, as well as protection from dictators, despots, and invading armies.

Nowadays the successes of China, India, Southeast Asia, and Brazil often cause anxiety about job losses, but let’s not forget that we used to wonder how we could possibly help the huddled masses of Asia, Africa, and Latin America. According to the World Bank the average life expectancy for the entire globe—including places like Somalia and Darfur—now stands at 69.4 years! And the truth is that the United States played an important role, by helping other nations understand the prosperity that flows from free markets and the rule of law.

This isn’t just a time of prosperity. It’s also a time of world peace. Sure, there’s trouble in Afghanistan, and there’s reason to worry about Iran and North Korea. But have you seen the history of the 20th Century? Some of the centuries that preceded it were even worse; during the Thirty Years’ War (1618–1648) the male population of the German states was nearly cut in half.

In 2012 you’ll see a grudging acceptance that these are not, after all, the worst of times. The pervasive gloom of Wall Street will lift, as will the ridiculously-depressed prices of equities. We’re going on record with a prediction that in 2012 the U.S. stock market will rise more than 25%, and that parts of the world will do even better.

In the words of the philosopher Bobby McFerrin, Don’t Worry Be Happy. And spread that cheer to your friends and neighbors; we’ll all have a good year in 2012.

_________________________________________________________________________________________________

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The fear that Europe will drag the U.S. into a recession is ebbing, and it’s about time.  It’s likely that Europe is already in a recession, but we’re not—and there’s little reason why we should be, because our exports to the continent are only worth about 4% of our GDP.

So perhaps it’s now safe to point out the parallels between our problems and theirs.  Our debt isn’t as large (as a % of GDP) as that of the most-indebted European nations or Japan, but it’s higher than that of the most-responsible members of the EU.  And we share their great future problem, which is that we’ve all promised larger welfare benefits (Medicare, Medicaid, Social Security, etc, etc, etc) than we will possibly be able to afford once the Baby Boomers have retired in numbers.

It’s not just that we’re going to have a LOT more retirees.  We’re also going to have fewer workers;  the ‘Boomers earn a huge part of the nation’s paycheck, and few of them (us) have saved enough to generate any real tax revenue for Uncle Sam.

Put it another way.  We can fix Social Security with just a few changes (to the retirement age, the cost-of-living adjustments, and/or revenue collected), but the only thing that keeps the Medicare program afloat is the fact that there have been so few retirees in the system.  It’s now half a trillion dollars a year and growing like topsy, and when you put it together with other federal health programs the total is easily the largest federal spending category—and it will top a trillion dollars a  year in just a year or two.  Total federal tax revenue in 2011 was only $2.3 trillion . . .

When the program was created in 1965 few American lived past the age of 65, and Lyndon Johnson was able to sell it on a dubious forecast that 25 years later it would only cost $10 billion a year.  In that year Part A cost $67 billion, and since then it has multiplied many times over.

For more than 18 months the financial markets have been closely watching Greece, Portugal, Spain, Italy, and Ireland, worrying that their excessive debt would scare investors—who would then become unwilling to buy the bonds of those nations unless they paid enough interest to offset the risk.  You yourself might willing to accept just 1% on the CD of an FDIC-guaranteed bank, but how would you feel about lending money to Greece at 10%?

Interest rates on Greek bonds soared far higher.  If we, the United States, had to pay 10% on our debt we’d find ourselves paying out more than a trillion dollars a year in interest!  [Our total debt is now over $15 trillion, but we only have to pay interest on a bit more than $10 trillion; the rest of the debt is held by the Social Security and Medicare trust funds, which don't receive any actual cash interest.  It's just a bookkeeping entry;  a few more IOUs thrown onto a pile of worthless paper.]

Would a trillion-dollar interest tab matter?  It sure would—we’re currently paying a bit more than $200 billion in annual interest on our debt, so we’d have to come up with an additional $800 billion a year.  Instead of a deficit of $1.1 trillion in 2012 we’d have a deficit of $1.9 trillion.  Instead of jumping to $16 trillion a year from now our debt would almost reach $17 trillion, and larger debt would mean a larger interest payment.  It’s a vicious spiral upward, and nobody would be able to bail us out.

The ugly truth is that we can’t balance our budget in 2012.  You can’t cut spending by more than a trillion dollars, in one fell swoop, without massive layoffs and a ripple effect that runs through the entire economy.  We need to move very slowly and steadily toward a balanced budget, moving with such a convincing sense of purpose that investors will continue to confidently buy US Treasury bonds at low interest rates.

The obvious way to create that convincing sense of purpose is a balanced-budget amendment to the Constitution.

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The Plymouth Colony would have starved the first years without help from local Indians.  But something happened in 1623 that unleashed the Protestant Work Ethic, and by 1635 most of the little  towns within 50 miles of Boston had been established.  The New World economy had taken off!

You can find the whole Plymouth Colony story at: http://en.wikipedia.org/wiki/Plymouth_Colony
Here is the section on the Economy:

Economy

For its first two-and-a-half years, the economy of Plymouth Plantation took the form of a communal system. There was neither private property nor division of labor. Food was grown for the town and distributed equally, according to William Bradford in Of Plymouth Plantation:

“

The experience that was had in this common course and condition, tried sundry years and that amongst godly and sober men, may well evince the vanity of that conceit of Plato’s and other ancients applauded by some of later times; that the taking away of property and bringing in community into a commonwealth would make them happy and flourishing; as if they were wiser than God. For this community (so far as it was) was found to breed much confusion and discontent and retard much employment that would have been to their benefit and comfort.[151]

”

By 1623, facing starvation Plymouth Plantation’s leaders took another course. Upon allotting private land plots it is evident that productivity increased. Again, according to William Bradford in his account:

“

So they beganto think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still thus languish in misery. At length, after much debate of things, the Governor (with the advise of the chiefest among them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves; in all other things to go in the general way as before. And so assigned to every family a parcel of land, according to the proportion of the number, for that end, only for present use (but made no division for inheritance) and ranged all boys and youth under some family. This had very good success, for it made all hands industrious, so as much more corn was planted than otherwise would have been by any means the Governor or any other could use, and saved him a great deal of trouble, and gave far better content. The women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability; whom to have compelled would have been thought great tyranny and oppression.[151]

”

Plymouth Colony has been cited as an illustration of the benefits to productivity gained when comparing a communal system to that of a free market system. With the change in law to allow each laborer to keep the food he grew, productivity received an enormous boost, taking the colony out of starvation. Once again when land was given over to ownership by the working people, production increased significantly.^[152][153]

The highlights above are mine.

The Transcontinental Railroad was built from 1861 to 1869.  Between the EPA and the NLRB, do you think that railroad could even be built today?!  We need to unleash the American economy to restore Jobs and Growth to our Economy.  Sharing the wealth—the original communal system of the Pilgrims—government jobs, and a heavy burden of government regulation and expense will guarantee high unemployment for years to come.

Robert A. Armour

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In a Wall Street Journal piece entitled Obama and the Politics of Condescension, Karl Rove asks the question, “Do we place our trust in the federal government or the people?”

This question is not a new one.

At the founding of the republic, it  was central to the debate.

Alexander Hamilton wanted a strong federal government, and Jefferson believed in state’s rights.  Hamilton sought efficiency; Jefferson once said, “I am not a friend to a very energetic government.”

Hamilton feared anarchy and thought in terms of order; Jefferson feared tyranny and thought in terms of freedom (source: U.S. Department of State).

Jefferson and John Adams prevailed, and for whatever flaws we may have as a country, we are blessed with three of the most profound political documents ever put to paper: the Declaration, the Constitution, and the Bill of Rights.

The world saw its first democracy, with a government selected by the collective wisdom of its people, rather than by inheritance (a monarchy), or by might (a dictatorship).

It was a great experiment in self-government, and it has worked.

In modern parlance, this trust in the common people would be characterized as “the wisdom of crowds”, played out in a political arena.

The core issue is whether we want a government that is a public master, or, as the Framers envisioned, a public servant, “deriving its just powers from the consent of the governed.”

The issue of government vs citizen will be central to the 2012 election, and it should be to all elections.

Thomas Jefferson founded what is now the Democratic Party.

He had an abiding trust in the wisdom and inherent goodness of all people.

These beliefs are evident in the Declaration, and they are a tribute to him, his party, and the nation those beliefs gave rise to.

The issue before us is whether we continue his trust in the common people, or to continue to vest yet more power in government.

Related posts:

1. Whence We Came
2. How to Fix the Economy
3. How To Create Jobs