For the past five months each week has been a surprise, each week we see our federal government get larger and more invasive.  Are we on the right path?  This discussion is not about left and right, republican or democrat, this discussion should be about up and down.  Are our actions and the actions of our elected representatives elevating our society to the ultimate freedoms our founding fathers envisioned, or are we being dragged down under an ever more controlling government toward totalitarianism? 

            In the past few weeks we have witnessed government take control of our banking industry, our insurance industry, the automobile manufacturing industry, and the credit card industry.  Proposals have been made to artificially and intentionally greatly increase the cost of energy for the express purpose of making our current way of life unaffordable to the majority of Americans, thereby changing behaviors and giving the illusion that alternative energy sources are more affordable.  The president announced new draconian CAFÉ standards for all American manufactured automobiles.  This legislation serves to force the auto industry to limit the type of cars they make to very small, very dangerous econo-boxes that Americans would not otherwise purchase.  Once again taking away our ability to choose how we want to live our lives.  Now we are facing another assault on our health care system.  An assault that, if successful, will cost trillions of dollars and destroy the best health care system that currently exists anywhere.

            Currently there are 6 million people in this country collecting unemployment benefits.  While they are collecting those benefits, they are purchasing goods and services and paying their bills.  What will happen when those benefits run out?  As the benefits expire, fewer goods and services will be purchased, more homes will be foreclosed on, and more bankruptcies will be filed.  Meanwhile we are adding 600,000 new jobless Americans to that list each month.  Our economy is just in the beginning stages of spinning out of control.  As fewer people are spending fewer dollars, more and more layoffs will occur as the cycle feeds on itself.  Lately the media and economists have been trying to tell us that while the economy is still bad and getting worse, it is getting worse at a slower rate, so therefore things are getting better.  Our weekly jobless numbers remain dismal, unemployment rates for the nation and individual states are continuing to worsen, so why are we being told not to worry?  These economists point to the number of Americans collecting unemployment and how that trend is starting to flatten, implying that it means fewer Americans are unemployed.  Actually, we are seeing people that no longer qualify for unemployment fall out of this statistic. 

            The solution to our current plight will not be easy.  We as Americans must demand from our politicians that they stop spending our money wastefully.  We must demand that they stop nationalizing our industries.  As a nation, we must stop borrowing money from around the world, stop printing new money at unprecedented rates, and learn to live within our means.  Taxes must be lowered to allow people to keep what they earn so that we the people can have the ability to rejuvenate our economy. 

            Government does not create wealth.  By taking wealth from those who earn it and redistributing that wealth, we are reducing people’s and businesses ability to grow and create the wealth that is required to grow our economy.

            We are living in historic times.  In the past months we have been witness to the largest government takeover of private industry ever seen.  AIG, Citibank, GM, and Chrysler have all been taken over by our government.  To get a glimpse of what this will mean to our citizenry, we need look no further than Fannie Mae and Freddie Mac.

            Fannie Mae and Freddie Mac created the housing bubble that has led to one of the greatest losses of global wealth in history.  Rather than using standard risk management models to determine eligibility of a loan or assessing the ability of the potential borrower to pay back the loan, Fannie Mae and Freddie Mac were politicized and used to promote a social agenda whereby loans were given based upon minority status.  When the individual could not put any money down on the property, zero down loans were created.  If the payments were too high, short term adjustable rate mortgages and interest only loans were created.  In order to compete, other banks were encouraged and in some cases forced to offer similarly risky loans.  All of this easy credit led to excessive inflation in home values.  What we see now is that many of the people that were supposed to have been helped through the social agenda based loan policies are now the ones that have lost their homes, declared bankruptcy, and in many cases lost their jobs through the economic collapse caused by the housing bubble burst.

            To apply these same political processes to our financial, insurance, and manufacturing industries will be devastating to our nation, our freedoms, and our very way of life.  Even those companies that have been fiscally responsible will be affected.  As GM and Chrysler move forward, they will be forced by the government to produce alternative energy and sub-compact vehicles, vehicles that the majority of Americans have rejected through free choice.  Earning a profit will no longer be a prime motive for determining what vehicles are produced since the government now owns a majority stake in these companies.  Without a profit motive, these companies have no reason to improve services or seek innovation to produce better vehicles.  As the companies lose billions of dollars annually, the federal government will subsidize them in the same way is has subsidized Amtrak for the past 37 years.  Other auto manufactures will be unable to compete simply because they are not receiving government subsidies.  Just as Amtrak has prevented any other passenger rail service companies from being able to compete, GM and Chrysler will eventually spell the demise for automobile manufacturing in the U.S. 

            As I have written before, we can resolve these problems through conservative principles of limited government and the free market system.  I wrote months ago that both GM and Chrysler should have been allowed to enter bankruptcy protection instead of accepting bailout money.  Through the principles of allowing failure and rewarding success, we will reverse the ineptitudes of government that is epitomized by Amtrak, the Postal system, Medicare, Medicaid, Social Security, and the Bureau of Motor Vehicles.  There is nothing that the government does better, more efficiently, or more effectively than the private sector.  As our government continues to nationalize key industries, we lose the competitive drive, rugged Americanism, and entrepreneurship that has made this country the most successful in the world and made her the envy of all others.  Rather than apologize for our success, rather than make our states beholden to the federal government through acceptance of so called stimulus funds, our elected officials need to look toward the conservative values that allowed us to become the world’s greatest nation.

I have been amazed when listening to political speeches over the last 10 to 12 years, to hear how the emphasis has changed from that of freedom to security.  I understand our basic desire for security; we are more comfortable when we perceive our jobs, our income, as well as our physical being as being secure.  We may openly want security, but what we crave is freedom.  Security is the vehicle that has allowed socialism to gain footholds and to expand in governments around the world.  Socialism promises to provide a safety net, it promises that no one will fall through the cracks of life.  Socialism promises to level the playing field, to provide for all of our needs, that no one will go hungry, no one will be in need of medical care, no one will be in need of a place to live, and no one will fail.  Freedom is risky, it allows failure, and it promotes constant growth and change.  If you do not constantly grow and change, you may find yourself or your business falling behind.  Because freedom allows for failure, it also allows for success.  Our freedoms allow us to try, allow us to make mistakes, allow us to fail, and allow us to continue trying until we have reached our greatest potential.  As a free people, our success is only limited by our desire to achieve.  The lure of financial security and job security is one of the greatest attractions to unionism.  As we have witnessed over and over, the promises of increased pay, the guarantee of a job and promotion are really only perceived securities.  When a business begins to fail, all of those promises are either thrown out the window or the business collapses under the weight of these securities.  Either way, the promises evaporate.  Our current two party political system is fed by a desire for security.  We choose a party that we think will look out for our interests.  Once we have aligned with that party, we never hold the party accountable.  When it is time to vote, we rarely stray from our party loyalty, it is safer that way.  It is risky to vote outside our party lines because our vote may be “wasted”, or it may help to elect a person from the other party.  As voters, we don’t look to see what the individual stands for, we don’t want to see what their past actions have been, and we feel secure in voting along party lines.  That perceived security is a hollow promise, the parties themselves don’t look to see what the candidates stand for or what their past actions have been, the parties’ only concern is whether the candidate is electable.

            After 9/11 many citizens felt that one of the president’s primary jobs was to keep this country and its citizens safe.  It made everyone feel better about the world around them to know that there was someone responsible for their security.  It is not the president’s or any politician’s job to keep us safe.  The oath of office that they promise to uphold says they will protect the constitution from all enemies, foreign and domestic.  It is not the office of the president or any other politician that protects us; it is our freedoms that are guaranteed to us by our constitution and given to us by God that keep us safe.  Our security, real security, is provided to us by our freedoms.  Our government, just like the union bosses, cannot provide true security.  They can and do make promises that sound like they will keep us safe.  They will use the earnings that they take from us to create more jobs, to provide universal health care, to stop global warming and climate change, to eliminate guns and violence, and to end all wars.  Just like the union bosses, they cannot deliver on those promises.  When our economy has collapsed, when our currency has become worthless, and when the people no longer trust their government, all of those promises will also collapse and become worthless.

            Elections have consequences, we have elected our representatives and they are going about the business of running our country.  Just because the election is over does not mean that our responsibilities as citizens are finished.  We as voters and citizens need to turn the volume down, stop listening to what our representatives are telling us and start looking at what they are doing.  Are they expanding our freedoms, allowing us to provide for our own security through those freedoms, or are they taking away our freedoms and an opportunity for true security under the guise of government provided security.  As we then approach another election campaign season, we must decide if we are going to vote for freedom or if we are going to vote for the empty promises of perceived security. 

When the price for a barrel of oil was nearing $150 and setting new records on a nearly daily basis, we heard a public outcry for congress to investigate oil speculators. Some of our citizens felt it somehow unfair that those who make their living taking risk in speculating the oil market were earning a profit at the apparent expense of consumers. Now that oil prices have subsided dramatically, no one seems to see the need to investigate the speculators now. As I said this past summer, rather than blame the speculators, we should pay attention to what they are telling us so that we as a nation can make informed decisions regarding our energy plan. The message the speculators are now sending has never been more important.

Why have oil prices dropped to nearly one fourth of their value in just a few short months? The equation I gave last summer has not changed. Speculators buy and sell oil futures based upon anticipated future demand and forecast supply. Clearly in the last six months the forecast supply has not been dramatically increased, therefore the anticipated future demand has been greatly decreased. Inflating our tires, getting tune-ups, and parking our SUVs are not responsible for this decreased demand. What has changed is the anticipated demand in developing nations. This demand has decreased so much so that even when OPEC met and agreed to decrease production levels, the price of oil continued to decrease unabated.

Essentially, the speculators believe that the global recession has stunted growth and development to the point that even at current prices, developing nations will be unable to afford oil. It is no coincidence that as oil prices were hitting record highs, food prices were also reaching record highs. Just as the price of oil has plummeted, so has the price of commodities to farmers although consumers have not seen the level of relief in food prices as we have in gasoline. This is driven by the same economic predictions and scenario, that nations will not have money to purchase food let alone oil in the very near future.

When prices continue to drop despite reduced production of commodities, it paints a very bleak picture for not just our economy, but for the global economy as well.

Aside from the Biennium Budget, one of the hottest issues in our State House is the Pay Day Lending industry and how to close the apparent loop hole they have found. Personally, I cannot understand why this is such an issue. Opponents of these loans state interest rates of over 350% as the prime reason to shut them down and claim that these are predatory loans. A $100 two week loan will cost $15, which opponents claim is excessive and predatory. Yet, if it were not for these institutions being available to make these short term loans and a person wrote a check that subsequently bounced, the bank will charge them a $30 fee, the business that they wrote the check to will charge them a $25 fee, and they still owe the original $100. Which is worse, paying the $15 interest to a Pay Day lender or the $55 penalty fees for bouncing a check? No one is going to mortgage a home through a Pay Day lender, but this industry provides a needed service at a reasonable price that is not available anywhere else.

If the Legislature is successful in its bid to eliminate the Pay Day loan industry, where will the people who have been using their services go to borrow money? Banks and Credit Unions will not make these short term loans so the individuals that have been utilizing these short term loans will now be left out in the cold. They will not be able to purchase parts to repair their car to get to work so now they lose their jobs. I am sure that they will be thankful that the Legislature was looking out for their best interest as they lose their job and walk to the unemployment office.

            On both the state and federal level the current focus is on the economy and how to stimulate its growth.  As the details of both plans become known, it becomes apparent that these plans are really little more than thinly veiled plans to grow the size of government, increase our dependence on government, and further remove our economy from capitalism towards socialism.  In fact, whether we look at either the federal or state plan, there is very little in either plan that will actually stimulate the economy.

            As President Obama tries to pressure the Senate to quickly pass the stimulus plan before the public discovers the truth, he has tried to minimize the outcry regarding the cost and amount of spending by saying that the very basis of a stimulus plan is spending.  While it is true that an effective stimulus plan will involve some spending, not all spending will actually stimulate the economy or create jobs.  Japan tried to spend its way out of a very similar situation in the 90’s.  Japan’s problems started much the same as ours, with a mortgage bubble where property values were elevated above sustainable levels.  Japan spent trillions of dollars over 10 years trying to support property values and create jobs with no real success.  The same will happen here.  We are spending billions of dollars and in the end the only thing we will have accomplished is accumulating billions of dollars of additional debt or create massive inflation.

            Both the president and the senate majority leader have said that this stimulus bill will create 4 million jobs in the next 2 years.  They fail to mention how many additional jobs will be lost because of this bill.  As government moves corporate America from capitalism toward socialism and dictates what products industries are allowed to produce, there will be massive job losses in the industries that government has determined should go away, such as the coal and petroleum industries, conventional electrical power companies, conventional automobile manufacturing, and the airline industry.  At a cost of nearly 800 billion dollars, that equates to a $200,000 cost for every job they hope to create.  If interest is included, the cost to create one job balloons to nearly $400,000.  I fail to see how this is cost effective and I think it is very optimistic to assume that 4 million additional jobs will be created in the next 4 years much less in the next 2.

            The whole goal of a state or federal stimulus bill in theory is to create jobs.  Government does not and can not create jobs.  Businesses create jobs, therefore the most effective way to create jobs and stimulate the economy is to allow businesses to be successful and encourage growth here within our borders by reducing the corporate tax rate and eliminating the restrictions that are choking small business growth.  This approach is needed in Ohio as well as at the federal level.  Very few of the jobs that left Ohio went overseas, most were relocated to other, more business friendly states like Texas and Tennessee.  By reducing the state and federal corporate tax rates, we will allow businesses to reinvest in themselves, creating a need for additional employees, which will revitalize our communities and in the end increase potential tax revenues.

As many Americans rightfully express their displeasure with congress for exponentially growing the size of government through bailouts and interference of the free market, we need only to examine government’s role in funding our universities to understand the blueprint for this relationship. 

Our founding fathers understood the importance of an educated populace, realizing that was essential for the survival of the republic.  To that end, government involvement was vital in establishing our system of higher education.  This was a noble and just use of public monies at that time, however, since then our society and our universities have grown beyond this need as universities have become essentially private businesses rather than social entities.  As a result of government involvement, our universities have become increasingly costly and inefficient.  The cost of a college education has dramatically risen despite the billions of tax dollars Ohioans have contributed.  Our university officials defend seven figure salaries for the administrators and coaches because they provide an essential service and bring revenue to the university.  They compare the president to a corporate CEO and justify professor’s salaries because of a need to compete with other universities to get the best talent.  These are all metrics of a private industry business model not of a government entity.  University enrollment is limited by classroom and housing space available, so the numerous qualified applicants must be culled in some manner.  Like any other business, if demand exceeds supply, either supply must be increased or the price must be increased to balance supply and demand.  Why do universities charge so much for a college degree?  Because they can; college administrators are essentially auctioning off college admissions by steadily increasing tuition in an effort to balance supply and demand.  Until applications for enrollment decrease, the price of a college degree will only increase regardless of the amount of tax dollars given.  Instead of making a college degree more affordable, our taxes are merely contributing to the inefficiencies of our universities, much the same as our tax dollars will perpetuate the inefficiencies of the automobile and other industries.

Many pro-government individuals think that the government can override the basic laws of supply and demand.  Just as they ineffectively try to reduce the cost of college, they believe that government can and should prop up failing industries.  We have seen hundreds of billions of our dollars committed to the banking industry, with no apparent positive results.  The latest bailout attempt is to the auto industry.  No one wants to see anyone lose their job; however, the billions of dollars being requested by the auto manufacturers will not save them.  The airline industry went through much the same situation just a few years ago.  The basic problems with the airlines, as with the auto manufacturers, are the legacy costs and the ability to compete with non-legacy companies within that industry.  Aloha, Frontier, US Airways, America West, and ATA all asked for and received infusions of government money.  Other airlines, such as United Airlines, applied but were denied.  As a result, United filed for bankruptcy, reorganized, and became more competitive.  Those carriers that received the government backed “loans”, did not change how they operated and did not become more competitive.  Aloha and ATA dissolved, Frontier is currently in bankruptcy, US Airways went in and out of bankruptcy and only survived by a merger with America West; a merger that was necessary to save both companies.  The important point is that even with a government infusion of cash, the basic laws of the free market will always prevail.  For the auto industry to survive, they must produce a product that the consumer wants to buy and offer that product at a price that the consumer is willing to pay.  There are many strings attached to the proposed bailout money, one of which is that government will dictate what type of vehicles the manufactures will produce.  Essentially government will be designing our automobiles rather than allowing the consumer to dictate the types of vehicles they want to buy.  No matter how many billions of dollars our government provides to the auto industry, if they fail to produce a vehicle that consumers are willing to buy, they will still fail. 

Some refer to the bailout of Chrysler in the eighties as a symbol of success and justification for the current bailout.  The fact that Chrysler not only repaid the government loan with interest, but paid it off early would seem to provide some reassurance for supporting another industry bailout.  However, had the government not bailed out Chrysler in the eighties, the industry may not be in this situation now.  Had Chrysler become leaner and more competitive through reorganization, it would have forced GM and Ford to become more efficient as well, leaving them better positioned for the current economy.

The most effective and practical course of action for the auto industry is bankruptcy protection.  This will allow the manufacturers to reduce long term costs, retool and resize the company to become more efficient and competitive.  The end result will be a stronger auto industry that benefits all Americans.

            The election is over, the dust has settled and most of the campaign signs have been harvested.  While the results of my campaign were less than what I had hoped for, I feel I ran a good campaign.  Looking back there is very little that I would change and I have no regrets about the campaign that I ran.  I want to congratulate both Jeff and Wanda for good campaigns and best wishes for Jeff over the next two years.  The hard work is just beginning and I wish him the best of luck in that endeavor.

            I want to take this opportunity to thank all of those who helped me during this campaign.  There have been so many people that have contributed their time, energy, and money to this campaign by collecting signatures, putting out signs, handing out leaflets, telling friends and neighbors, and knocking on doors.  To each of you I sincerely thank you.  I want to especially thank my wife Liz for her assistance and tolerance, and my campaign treasurer and mother-in-law Jane for all of her support and assistance.  Without them, I could never have attempted this endeavor.

            To those who followed my web site, thank you for your comments and support.  I will keep this website active and will continue to write posts as events take place and issues arise.  I do not expect to write as often as I have during the campaign, but I will address issues that affect us on a state and federal level.

            Thank you all, and God Bless,

               Mark Smith

            How to properly fund our schools has been a question we have been struggling to answer for years.  Options range from having the state completely fund our schools to having parents pay for the education of their children.  Providing a public education has been an important part of American culture since the founding of this country.  Our forefathers knew that an educated population was essential for the country to be successful.  The Ohio constitution says that the legislature will provide for an adequate education.  This does not mean that the state will completely fund that education, but will provide the means for that education; whether it comes from the state, allowing the local community to collect taxes, or a combination of the two.  Currently, the state provides $5,700 per student to provide for that education, with the remaining money needed coming from the local community.  No matter the equation, the bottom line is that our schools are funded completely by tax dollars; all we are really arguing about is the collection method.  With that in mind, the real question to me is how we fund our schools with the least impact on tax payers.  As I wrote in my previous post, the more money we accept from big government, the more regulations and restrictions we will have placed upon us.  It is not that we are not providing enough money to our schools; it is how those dollars are being spent.  Our local schools have so many mandates placed upon them by the government that our local educators have limited control over education and spending.  These mandates were designed to address issues in large schools located in our largest cities and do not necessarily apply to our smaller schools.  The cost of implementing those mandates consumes a larger percentage of our smaller school’s budgets and in many cases is simply not cost effective. 

            Rather than turn to government to solve our problems, I propose that we resolve this issue where it occurs, at the local level.  In my judgment, we need to reduce the mandates placed on our schools and allow our local officials more control over our schools.  We elect our local school board members and we hire our superintendents and principals; we do so because we think that they can do the job.  I think it is time we let them do that job.  Our schools are representative of our communities.  Our local educators know the morals and values of our communities.  They need the control to be able to determine what to teach and how to teach it, they need the control to determine where best to apply our tax dollars to most efficiently and effectively educate our students.

            Predominately, we generate our local funding from property taxes which is wrong for both the tax payers and the schools.  As tax payers, we don’t pay our bills with our property value; we live off of our income.  Those that are retired and living on a fixed income face rising inflation eating into their income putting them in dire financial straits.  Property taxes also put our schools on a fixed income.  Regardless of whether property values rise or if the number of students in the district significantly rise, the school essentially receives the same amount of revenue from a property tax.  Just as inflation eats into our income, higher utility bills, higher medical insurance premiums, and other elevated costs eat into our schools’ income.  A much better method of collecting local taxes is through an earned income tax.  It is better for tax payers because it does not tax those that are living on their retirement income.  If a tax payer finds their income reduced through layoff, downsizing, outsourcing, or having to take a lower paying job, their tax liability is reduced accordingly.  As the economy improves and prevailing wages rise, revenue to our schools also rises and provides a hedge against inflation, preventing the need to put additional tax levies on the ballot.  Schools that have adopted permanent income taxes to fund their schools have essentially eliminated the need to ask for additional funding.

            By giving our school officials control to determine how best to educate our children and how to spend our precious resources efficiently and effectively and by utilizing an earned income tax; we can improve our children’s education and do it with fewer tax dollars.

“There is no such thing as a free lunch”; “You can’t get something for nothing”. We have all heard and recited these phrases many times, these words may have never been truer than today. Whether we are talking about individuals, schools, small businesses, or major corporations, whenever the government offers money in the form of welfare, subsidies, or bailouts, there is a price to pay. This price is steep and it is paid by us all. Our social spending, the war on poverty and the New Deal, has cost this nation billions of taxpayer dollars with nothing to show for it. If poverty were simply a situation of having no money, we would have eradicated poverty years ago. Agriculture subsidies come with regulations that restrict what farming practices farmers can use. It limits what they can grow and where they can grow it. Our administrators have lost local control of our schools since accepting increased federal and state funds, exponentially increasing the cost to operate our schools. Individually, when we accept government payments there are also restrictions and expectations placed upon us. State and federally funded universal health care will come with the expectation of modified behaviors; tobacco products, fast food, and foods considered unhealthy will all be heavily taxed, restricted and in some instances even outlawed. Risky behaviors will be restricted and more regulations will be enacted, all for “our own good”. Helmets will be required for motorcycle riders, all passengers in an automobile or bus will be required to use seatbelts, gun ownership and even carrying a pocket knife will be restricted and banned. These advancements in regulation upon the citizenry have already occurred in Great Britain since adopting Universal Health Care.

Our current “economic crisis” is another prime example of paying dearly for a “free lunch” as government tries to inject itself into the free market. Capitalism, lack of regulation, or oversight is not to blame for our current situation. Our current problems started with the New Deal but were greatly exacerbated over ten years ago with the creation of Freddie Mac and Fannie Mae. These are government run agencies that determined success not by merit or real earnings, but by a social agenda for the purpose of giving loans to individuals that could not qualify for traditional loans and were high risk for repayment of those loans. This type of subversion of the free capitalist market skewed the market, artificially elevating home and stock values. Home owners as well as investors saw their portfolios grow seemingly overnight because of this “free lunch”. What we are now facing is nothing more than a necessary correction of these markets. Unfortunately, so many financial institutions, businesses, and individuals are so heavily leveraged that they cannot survive these devaluations and are becoming financially insolvent. As this happens, banks don’t know who next will default on a loan or declare bankruptcy; therefore banks have tightened the flow of money and are limiting loans to other banks, businesses, and individuals. Even responsible businesses and individuals cannot borrow money no matter how good their credit rating is. Now, the same government that thought injecting itself into the banking industry was a good idea wants to apply even greater controls over all aspects of not only the financial industry, but to all businesses and individuals. Instead of having to live through this “bitter pill” for several months, our government wants to extend this misery for several years. The Great Depression was brought about by a very similar type of government intervention and it lingered for ten years because of government interference. Government intrusion will not prevent the correction; in trying to control and soften the blow of the correction, government will simply cause the effects to be felt for a much longer period of time and costing us all even more money in the long run.

In the event of this bailout, there will be no accountability. The market will not be cleansed of those entities that utilized bad business practices; those entities will still exist and will continue to apply the same bad business principles that put them in this very predicament. In my judgment, we need to allow the marketplace to determine the winners and losers; we need to allow the losers to fade into the history books while allowing the winners to grow and newcomers to the market to be allowed to compete. Those businesses that apply sound business practices should be allowed to succeed and not be held down by the losers that are being artificially supported by an intrusive government at the taxpayers’ expense. The apparent economy of the 1990’s may have been a wonderful feast, but as we taxpayers will soon find out, there is no free lunch.