Machiavelli Would Love These Guys!

February 13, 2012

President Obama submitted to Congress his 2012 budget. The $3.8 trillion budget plan includes additional stimulus. Money for jobs, highways, bridges, schools and research. The plan also includes tax increases on the wealthy, corporations, banks, as well as energy companies.
Before I continue, please join me in establishing one truism. When a presidential candidate, republican or democrat, states that he is serious about cutting the budget deficit, understand that he is, in fact, not serious at all.
President George W. Bush ran on that pledge. He won. Twice. And then proceeded to spend the nation towards debt-blivion.
President Obama ran on the mantle that he would cut the deficit in half by the end of his first term. Hardly. This year's federal shortfall will exceed the trillion-dollar mark for the fourth straight year. The forecasted deficit is $1.33 trillion, representing 8.5% of the economy. Last September, the administration estimated a deficit of $956 billion. They missed by 28%.
If you were asked to provide a forecast for work, and you did so, confidently, and then proceeded to miss you forecast, grossly and in the wrong direction, three years in a row, you would be fired.
It matters not the descent, socio-economic class or geographic origins. Politicians are human. Humans are flawed. Politicians are flawed. Flawed on steroids. This does not make them bad humans. It simply means that the moniker, "good politician" is an oxymoron.
Power is a drug. Very addictive. The longer humans are in positions of power, the more power they enjoy. The more they have to lose. So, once in power, politicians will go to extremes to remain.
Machiavelli wrote of this more than 500 years ago. In his book, The Prince, written for Lorenzo de Medici, one of the most powerful men of that age, Machiavelli said that a good ruler will lie to, manipulate, betray and fight against anyone who stands in his way.
Way of what? Power.
Robert Byrd. Daniel Inouye. Strom Thurmond. Edward Kennedy. John Stennis. These five recent Senators (Inouye still serves) held onto their positions for 239 years, or an average of 48 years each. That's a lot of public service. And political relationships. And paybacks.
Politicians were not meant to serve for life. Princes, maybe. Not elected officials. It does not benefit the nation.
Politicians realize that elections are won on promises, but excuses come easier than results.
Our current and previous presidents both ran on a platform of shoring up the future for younger generations. Both have delivered crushing debt loads that will be passed to future generations.
This year's budget resembles the previous ten. Not balanced. Too much spending. Too much borrowing. Too many taxes.
Yet, with all of this proposed spending, we solve nothing. Erskine Bowles said as much last year.
Bowles, the Democratic co-chair of the president's fiscal commission, stated that the president's budget went "nowhere near where they will have to go to resolve our fiscal nightmare."
Where is all that money going?
Alarmingly, 70% of the federal government's budget goes to entitlement programs. Housing, food, income, student aid, and other various subsidies.
The Heritage Foundation just last week reported that Americans are more dependent upon the generosity of Uncle Same than we have ever been. One of five Americans, more than 67.3 million, relies on Washington for help.
Under the current administration, this trend of government dependence has risen like never before.
Government dependency was up 8.1% last year. The federal government spent more taxpayer dollars than ever before in 2011 on subsidizing Americans.
Consequently, the average individual relying on federal support "could receive benefits valued at $32,748, more than the nation's average disposable personal income," valued at $32,446.
Why work when you can make more in entitlements from Uncle Sam? That's motivational leadership!
Worse, we are on the doorstep of the largest retirement exodus the nation has ever seen. We will have fewer workers paying for more retirees. Simultaneously, the nation's entitlement roles are peaking.
This is why you must never confuse politics with leadership.
What if we established term limits of, say, 10 years. This might turn politicians into leaders. Cause them to govern for positive change. To leave a legacy. Not simply to get reelected.
Our politicians are governing within the short-term feedback loop endemic to our system: 1) Run for election; 2) get re-elected; 3) spend first half of term paying back those who put you there; 4) spend second half of term running for reelection; 5) repeat endlessly until you die or get voted out and become a lobbyist.
In business, you spend a lifetime building experience and capital, both monetary and intellectual. The longer you're around, the more effective you can be.
In politics, the longer you're around, the more people you owe.
When will someone submit a budget that gives our children the chance to keep what they earn? To contribute to the nation's needy, its elderly indigent, without subsidizing the cable television bill of their unemployed yet perfectly capable peers?
Washington remains long on promises, short on results. But few are the princes who choose to go home.
Local politicians become state politicians, who become federal politicians, who become lobbyists, who buy politicians. Machiavelli would love these guys.

Securities offered through Dempsey Lord Smith LLC – Dempsey Lord Smith LLC, Rome, GA Member FINRA / SIPC / MSRB.

Advisory Services offered through Dempsey Lord Smith, LLC, an SEC Registered Investment Advisor. Clearing through and accounts held at Charles Schwab & Co., Inc.

Dempsey Lord Smith, LLC nor Hyde Park Wealth Advisors LLC provides tax or legal advice and you should consult your accountant and/or attorney if considering an investment of this type. Hyde Park Wealth Advisors LLC is not controlled by or a subsidiary of Dempsey Lord Smith LLC. Investing in Alternative Investments come with a variety of risks that could result in a complete loss of principal investment.

Alternative Investments offered as private placement securities are offered only to qualified accredited investors via confidential private placement memorandum. Income and returns are not guaranteed and there are no assurances investments will meet their stated objectives.

© 2024 Hyde Park Wealth Advisors. All Rights Reserved