Tesla is a bonfire of the vanities

From David Stockman, a former congressman, budget director under the Reagan administration, and partner of private-equity firm Blackstone Group. Today, Stockman is an outspoken opponent of the current monetary policy. He argues that Tesla and its sky-high valuation are a product of a money-printing Federal Reserve.

 He wrote an essay for our friends at Casey Research. Excerpts from the essay below…

The Wall Street casino is now festooned with giant deadweight losses waiting to happen. But perhaps none is more egregious than Tesla – a crony capitalist con job that has long been insolvent and has survived only by dint of prodigious taxpayer subsidies and billions of free money from the Fed’s Wall Street casino…So raptured were the day traders and gamblers that in the short span of 33 months between early 2012 and September 2014, they ramped up Tesla’s market cap from $2.5 billion to a peak of $35 billion.

 Stockman notes Tesla’s inability to make a profit…

Since 2007, [Tesla] has booked cumulative sales of just $6.1 billion, and that ain’t much in autoland; it amounts to about one week of sales by Toyota and two weeks by Ford. Its cumulative bottom line has been a net loss of $1.4 billion, and the losses are not shrinking – having totaled nearly $300 million for 2014 alone.More significantly, during its entire seven years as a public filer, Tesla has failed to generate any net operating cash flow (OCF) at all and has, in fact, posted red ink of $500 million on the OCF line. During the same seven-year span ending in Q4 of 2014, its [capital expenditures] amounted to a cumulative $1.8 billion.

So go figure. Combining OCF and cap-ex, you get a balance sheet hemorrhage of nearly $2.4 billion. The real question, therefore, is not why Tesla was worth $35 billion, but why it wasn’t bankrupt long ago?

 Stockman says that Tesla only exists because it got a $500 million bailout from the U.S. government… and it’s taking advantage of low interest rates and the Fed’s money manipulation to raise more and more capital (like the startups Gurley discussed above).

 But can you blame investors for shifting their capital into these types of companies? When governments debase currencies, the people lose faith in their money. They spend recklessly. They gamble. How would you characterize Fidelity investing in Silicon Valley startups anything other than gambling?

You Cannot Govern Leadership

individualism

While small business owners are putting up their houses and their life savings to survive, to cash flow their business, to hire employees, President Obama was and still is, greasing the palms of his political donors in the name of greentech failures, spending billions of our taxpayer dollars.

The alarming failure of big government was never more evident than when President Obama publicly and carelessly joked about a trillion dollars (stimulus (taxpayer) money) wasted on “Shovel-Ready Was Not As Shovel-Ready As We Expected.”  Where was the red flag then?  Where is the red flag now?

The only hope I see for this country is individual responsibility, and leadership that creates prosperity, not big government. You cannot govern leadership.   Today individual responsibility, leadership, and American exceptionalism are too often political talking points and empty words. When individual leadership fails, or fails to materialize, it creates dependency.

Leonardo da Vinci said it 480 years ago and he said it in Italian. Here is the clearest translation:  “People of accomplishment rarely sit back and let things happen to them. They go out and happen to things.”

I don’t do what you’re passionate about, but be passionate about what you do.  Don’t follow your passion.  Let your passion follow you.  That’s leadership.

As a small business owner after 25 years it has been my experience, the most important life decisions you make, have to be made on your own.  I built my business and leadership is key.

Others will pontificate as to what a leader is, what a leader must do and how a leader must act.  I don’t have time for all that and neither do you.  The best way to find out if you are a leader is to deal with life’s biggest challenges when it comes to crunch time.

Decide on your own and act accordingly.  You’ll no doubt get plenty of advice, but no one is going to know better than you, what to do.  You are better qualified than anyone or anything to make the decisions that affect you personally and those who depend on you.

There’s a disturbing trend in our day-to-day lives towards dependency on others, big institutions, big labor and big government.  Sweat equity has been replaced by entitlement equity.  People measure success based on what they can get, not what they can give.  

A major new study by Harvard economist Raj Chetty, however, shows things haven’t changed all that much. “Children entering the labor market today have the same chances of moving up in the income distribution relative to their parents as children born in the 1970s,” it finds.  “That doesn’t mean politicians can’t improve people’s chances of rising. It’s just that the best way they can do so is by getting out of the way.”  The Foundry

The problem is the more you lean on the government, the more your life depends on government.  You are governed by more  laws, more regulations and more public policy today than ever before.  Who you become, what you do, and how you do it, is shaped by public opinion and the mainstream media.

In this new era influenced by mass media and public opinion, big government is their divined solution to all your problems.  American exceptionalism, entrepreneurship and the multitude of small business success stories that built a thriving post WWII economy, are too often ignored, discounted and discouraged with crippling regulation and  laws that are the new normal.

What if a typical family spent like government?

What if a typical family spent like government?

Individualism and leadership are sorely needed.  People, not big government, can make a difference.  You and I need to step up to the plate.  Our country’s in peril as is our next generation.  Take on the career politicians who have created roadblocks to personal responsibility and leadership.  Our country is on the line. Vote them out in 2014 and 2016.

Career politicians passing laws that control our lives severely curtail the entrepreneurial spirit and small business startups, the little engine that could, that should and does grow the economy.   Consider the cost of healthcare has virtually doubled for small businesses in the past 5 years.  

Entrepreneurs are the lifeblood of free enterprise. Their heart is beating for their next customer, for their fellow employees and their families.  Their soul is intact.  They epitomize what comprises the backbone of our country, small business.  In their shadows are the real leaders, the chief cooks and bottle washers; the real risk takers that stand behind their champions, small business owners.  Small business owners are essential to the future success of the US economy.

Entrepreneurs are not the only leaders.  Leaders are people I see when I come to work before dawn.  I see them after dusk, when darkness settles.  They are resourceful.  They don’t think twice.  If you say something to them about the long hours they keep, they will readily commiserate with you, complain if you will, but there is a sense of pride in their voice.  There is a smile on their face.  These hard working people who are the heart and soul of the US economy.

In an atmosphere where people lean more on government, blame others and institutions for their circumstance, we need more leaders. Whether you are a parent, employee, small business owner or CEO of a multi-billion dollar corporation; people depend on you for guidance.  You are accountable for the success or failure of others.  You have to make decisions that affect other people for better or for worse. 

In business or in your personal life, when the time comes, no one will make the important decisions for you.  Don’t get me wrong.  You will get plenty of advice.  “If I were you…” “You should…”  “You could…” “You might…” Later on, after the decision has been made, you will summarily receive the same words, only in a different context.  “If it were me…” “I would have…”  I could have…”  “I would have… Draw on your own experience.  Make your own decisions.

The most important decisions you can make, are made by you alone.  That’s leadership.  You can change the world, change you can believe in.

Rock My World Innovations – Part III – Driverless Cars – Stuff We Can Live With

Driverless car

Driverless car

Technology waits for no man.  Technology will solve many problems  politicians refuse to solve, such as energy independence.

What if we could eliminate DUI’s?  No more accidents?  No more collision insurance?  No more speeding tickets?  No more traffic cops?  No more traffic jams and erase handicaps, too?  PLAY SHORT VIDEO

What if we save the billions with a “B” the DOT is spending on high speed rail?  Politics aside, what if we spend our billions more wisely on potentially more ubiquitous technology, like driverless cars?   What if driverless cars were allowed 1-2 HOV lanes on a perpetual traffic jam like the notorious LA freeway system?

What if we send a driverless car to pick you up for work?  What if the system of freeway Park and Ride’s was expanded to use driverless cars at the same rates per seat as other mass transit?  What if what we do for bikes in the inner city, like Divvy bikes, we do for cars?

One idea Google has been studying is how its vehicles could become part of robo-taxi systems in which a fleet of self-driving cars would pick up passengers and work commuters on demand, according to people familiar with the matter. Google believes that such systems could potentially reduce the need for people to own cars and reduce accidents. Google Designing Its Own Self-Driving Car, Considers ‘Robo Taxi’ 

We know politicians.  Money is burning a hole in their pocket.  If they are going to spend taxpayer dollars on infrastructure, would our dollars go further if driverless car makers were offered responsible loan guarantees and driverless car buyers were offered the same subsidies we afford to other green initiatives?

Electric cars and gas-electric-hybrid models currently for sale in the U.S. have captured just 3% of total sales through the first eight months of this year. The Toyota Prius line accounts for more than half of the hybrid sales. Electric cars such as the Leaf account for barely a 10th of the market. About 1 in 10 of today’s new-vehicle owners say they will consider an electric the next time they buy a car, says Strategic Vision.

driverless intersection

VIDEO – Driverless Car Intersection

Watch the VIDEO of a Driverless car intersection.  Technology advances rapidly. Consider in a 2004 desert test the Google driverless car went 8 miles.  In 2010 it went 140,000 miles.  They used the staggering amounts of data collected for Google Maps and Google Streets. View to provide as much information as possible about the roads their cars were traveling. Their vehicles also collected huge volumes of real-time data using video, radar, and LIDAR (light detection and ranging) gear mounted on the car; these data were fed into software that takes into account the rules of the road, the presence, trajectory, and likely identity of all objects in the vicinity, driving conditions, and so on. This software controls the car and probably provides better awareness, vigilance, and reaction times than any human driver could. The Google vehicles’ only accident came when the driverless car was rear-ended by a car driven by a human driver. Google’s is now looking to build their own driverless cars, has a fleet of Toyota Prius’s, that exist today and have traveled over a half million miles without an accident.

We already have the technology to automatically parallel park cars, from Toyota Prius, Ford Escape and VW Tiguan. New technologies also include early warning systems to warn drivers if they are following to close.

 “Giving automobiles auto-piloting features—up to and including completely hands-free, eyes-closed operation with trusting souls aboard—is the Space Race of global auto makers, and you are the monkey in the capsule. Last month Nissan and Renault chief Carlos Ghosn promised that Nissan would bring affordable autonomous cars to the public by 2020. Mercedes-Benz already markets some of its driver-assist technologies as “semiautonomous”: automatic lane keeping (positioning the car between the lines during brief periods of hands-off operation); and Stop & Go Pilot, an optics-and-radar-based cruise control that can see traffic ahead and adjust speed in heavy traffic.” Excerpt from the Wall Street Journal September 2013

UPDATE: Fully self-driving cars expected by 2030, says forecast

The future is now if we stop playing politics and start employing innovation, entrepreneurship and the technology at hand.  See Part II PCs are dead and Part I on Smart Phones.

Save Small Business from the Fiscal Cliff – Letter to US Legislators from the NFIB

capitolAs a small-business owner, I urge you to act now to prevent the tax increases that will impact small businesses if action isn’t taken to avoid going over the Fiscal Cliff.

Several tax rates that affect small business are set to expire at the end of this year. Some of the changes that will impact small business include:

● Individual income tax rates would rise; the 15 percent bracket would become the lowest tax rate. The 25, 28, 33 and 35 percent brackets would rise to 28, 31, 36 and 39.6 percent

● The estate tax rate would increase from 35 percent to 55 percent, and the exemption would decrease to $1 million from $5 million

● The capital gains rate would increase to 20 percent from 15 percent for top earners and rise to 10 percent from zero for those with lower incomes

● Dividends would be taxed as ordinary income rather than capital gains

● The Section 179 expensing limit will fall back to $25,000 and real property will no longer be included

● The start-up deduction for businesses will be reduced from $10,000 to $5,000

● An estimated 31 million additional taxpayers would be required to pay the AMT

This adds up to an almost $500 billion tax increase for 2013 alone. This is a major concern for small business owners like me, since I do not know what my tax liability will be next year. The uncertainty this creates is already having an impact on my ability to make plans to grow my business or add jobs.

Most small businesses are organized as pass-through entities, where the business owner reports their business’s income on their individual tax returns. Allowing the current tax rates to expire will increase the taxes that small businesses pay, directly impacting the ability of small-business owners to invest money back into their businesses.

Raising taxes on small businesses, especially in the current economic environment, hurts our ability to grow and create jobs. I encourage you to give small-business owners the certainty we desperately need by extending all the current tax rates across the board and fighting to avoid the Fiscal Cliff.

Message delivered to:
Senator Bill Nelson
U.S. Senate
716 Hart Senate Office Building
Washington DC 205100001
Fax: (202) 228-2183 via fax

Message delivered to:
Senator Marco Rubio
U.S. Senate
317 Hart Senate Office Building
Washington DC 205100001
Fax: (202) 228-0285 via fax

Message delivered to:
Representative Gus Michael Bilirakis
U.S. House of Representatives
407 Cannon House Office Building
Washington DC 205150001
Fax: (202) 225-4085 via fax

The Endangered Species, Entrepreneurs, a.k.a. Small Business Owners

President Obama is disingenuous when he says he is championing small business and the middle class.  Most small business owners are Sole Proprietors, Limited Liability Corps (LLCs) or Sub S Corps.  I own a Sub S Corp.  President Obama knows the challenges I face.  He is counting on you, the voter, to lump small business owners like me into his campaign to denigrate the high income earners in this country.

What he doesn’t want you to know is small business people, like me, often take a lesser salary, but often earn more than his definition of   “rich” because I have to pay taxes on the combined total of my salary and my business earnings.   Both are considered ordinary income.  By ordinary income, I mean income you and I pay taxes on after pre-tax expenses and deductions, like anyone else earning 1099 or W-2 income.

Keep in mind the risk to a small business owner.  If my business loses money, my salary and my business is in jeopardy.  It is a constant challenge to a small business to earn enough money to employ people, to grow and still earn a salary, in that order.  Contrast that with government subsidized businesses like GE and Solyndra.  Imagine if President Obama had the vision to subsidize small businesses to the tune of Solyndra or GE.  Take Solyndra’s $500 million in taxpayer dollars and give it to 500 small businesses, each with 20 employees or the equivalent of 1,000 employees.  Take my company’s track record over the past 2 years and small businesses would have increased employment by 40%.  I have a neighbor down the street who owns a small business, who increased his small business employment by 3-400 percent, without a government subsidy.

I run a small business, going on 25 years.  I pay taxes on my salary as an employee of my business and on the income my small business earns, both as ordinary income.  For many years, my business didn’t earn income.  For many years, my salary was well below the poverty line.  There were many years I was eligible for government assistance and I refused to take it.

How do you put a price on all the sacrifices a small business owner makes?  How do you quantify the years of no or little income you live with while supporting your business and fellow employees.  You pay their salary, you pay suppliers, you continue to pay them while you wait to get paid by your customers.  How do you quantify the debt you assume, including 2nd mortgages, credit cards, personal and bank loans.  How do you quantify the risks you take only to emerge from that debt as a job creator.  Only to be told, “You didn’t build that…,” the government built that.”  You’re branded greedy, uncaring if you are a Christian who believes in the sanctity of life and racist?  Like Mitt Romney I believe a women should have a choice to abort a pregnancy in the case of rape or incest, yet I’m extreme!?

My business is classified as an S Corp.  Today my income tax rate on ordinary income due to the income my small business earns, in an Obama administration, in the next four years, if he is reelected, will be much higher, 35 – 44.5%.   Today it’s 28%.  From that point forward you can make the argument there are tax breaks, subsidies, deductions for both personal and business income.

Argue the advantages and disadvantages until the cows come home.  The bottom line is the effective tax rate.  The effective tax rate for most small businesses will increase from 28% to at least 35% .  That’s huge.  Even more significant, more important and what President Obama doesn’t want you to know is most small businesses reinvest the income they earn from their business back into their business on sales and marketing programs and personnel and consequently accounts receivable to grow.  This practice creates jobs in all segments of the business.  In my case, I reinvested one-half (1/2) my ordinary income in jobs and other current and performing assets, increasing employment (salaries by over 40 percent) in 2012 YTD alone.

If you are the CEO of GE and Obama’s schmoozer-in-chief, your salary, bonuses and investment income is taxed as personal income.  There’s a good bet the CEO of GE paid little or no taxes on millions of dollars in income, certainly not at the same rate myself or other small business people paid.  His company, GE paid no taxes in 2011.  GE’s income was offset by losses, subsidies, tax breaks and expenses, claims I would wager could easily be overturned and taxes, interest and penalties would be significant.  The problem is GE has always had their hand in the government’s pocket.  There’s no secret there’s a love fest going on today between the Obama administration and GE.

What the Obama administration doesn’t want you to know about small business tax rates, is we pay taxes on ordinary income both on our salaries and on the money our business makes.  As a rule of thumb, a small business owner will take one-half (1/2) of their income as salary and they will reinvest the other one-half (½) of their small business income back into their business.  The small business investment I’m talking about isn’t about capital investments in equipment, furniture and other fixed assets.  The investment I’m talking about is in operating income, including people, sales and marketing, accounts receivable which is the fuel the economy needs to grow.  Operating income comes from small business revenues taxed as ordinary income.

In fact, even large corporations in America pay much higher corporate tax rates than most other countries.  Our higher corporate tax rates are supported by the Obama Administration.   A Romney administration would propose to lower corporate tax rates to be more competitive with other countries we compete with for business.  The irony is Obama touts green energy and competing for high tech business but he will do nothing to lower the unfair advantage international competition has because their tax rates are much lower.

Here are the facts…

On taxes, President Barack Obama wants to raise “the top rate to 44.8 percent.”

http://www.politifact.com/truth-o-meter/statements/2011/may/18/paul-ryan/paul-ryan-says-barack-obama-wants-top-tax-rate-448/

Here’s a potential solution – Fairtax

FairTax - FairTax.org

Who Counts? Not Small Business…

How is our government counting jobs? 

According to Political Calculations, since 2009 under the Obama administration, through December 2011, we are losing private sector jobs in industries we consider the heart of America. 

In Transportation and Warehousing from 2009 through 2011 we have lost 769,000 (46%) jobs; in Manufacturing, 329,000 jobs (20%); and in all other civilian jobs the loss is 565,000 (34%). 

You can only draw one conclusion, if we are seeing an uptick in jobs, it is government created jobs using taxpayer dollars.  Your money.  In other words, its all about politics and getting re-elected.

Government getting in the way, is happening at all levels of government.  Isn’t it our loss if a small business loses an employee and Time Warner’s gain if they can count one or is there’s more to the story?  

An article in the Tampa Bay Times March 12, 2012, When it comes to recruiting businesses with taxpayer funds, Florida should be pickier, Robert Trigaux, Times Business Columnist states Time Warner received $3,000,000 to bring 500 jobs to Hillsborough County.  Not exactly.

Unfortunately, for one small business and the rest of the State’s taxpayers, Time Warner and the State’s jobs program is tapping into existing state jobs, not new out-of-state jobs.  Time Warner’s recruiters are calling in-state employees repeatedly recruiting them to leave their in-state employer, in this case, a small business in Pinellas County, to take a similar job for more money in Hillsborough County on the taxpayers dime. 

A high value software developer recently left his job at an in-state small business in Pinellas County, to work for Time Warner in Hillsborough County.  A small business in Pinellas recruited him 8 months ago from Buffalo, NY.  The cost to recruit and employ him, easily exceeded $10K, considering moving expenses and training costs.  This small business did not receive any state, county or local funds.  Time Warner should not receive credit for a new hire who is an existing worker from the State of Florida.  As a small business they employ 37 FTEs with average annual wages well exceeding $60K.  

The small business in Pinellas grew from approximately 25 to 33 plus FTEs in 2011 alone.   That’s a 32% increase in employment in one year.  Where else do you get that kind of return on employment?  Not with big businesses like Time Warner.  The small business in Pinellas expect to hire 5 – 10 additional FTEs in 2012.  They have a great benefits package and a casual work environment.  Still, it is hard to compete with large corporations, in particular, if the corporation is receiving millions of dollars in State money, to hire in-state employees.

Finally, there’s even the question of county government giving big business an unfair advantage over a small business right in their own backyard.  This story appeared in The Tampa Bay Times recently concerning Hillsborough’s Bass Pro Shops receiving $15 million in State and County funds to open shop next door to a local small business, Boaters World, offering many of the same products and services. 

Where’s the business logic in that and why does a government bureaucrat get to make decisions affecting private enterprise?  Outrageous!

Paul Ryan for President

Paul Ryan

“America Deserves a Choice”

Congressman Paul Ryan of Wisconsin

Conservative Political Action Convention – Washington, D.C.

8:30 PM ET – February 9, 2012

___________________

Text from Paul Ryan’s speech:

“It’s getting late, so I’ll get right to the point: We only have nine months to defeat Barack Obama – nine months to reject his agenda of debt, doubt, and decline.

And while defeating this President is necessary to getting America back on track, it is hardly sufficient.

“Paul Ryan is a very serious thinker and obviously a guy who is bold and ultimately recognizes you can’t leave Medicare the way it is because it’s going to go bankrupt,” said Sen. Marco Rubio (R-Fla.). “I’m glad there are people out there thinking about it.”

Put simply, Americans deserve a choice – and it is our responsibility to offer them one. They deserve an opportunity, not just to divert from the President’s path to decline, but to affirm a reform agenda that restores our bedrock of founding principles.

Now is the time to promote American exceptionalism, remove barriers to upward mobility for those in need, and put the nation back on a path to renewed prosperity for all.

Look, the Obama presidency has been a disappointing failure. He should have taken steps immediately to restore confidence in the American economy.

Instead, he sidetracked the economy to pursue a debt-fueled ideological agenda that squandered the trust of the American people.

Yes, he inherited a tough situation, rooted in decades of bad policies supported by Democrats and Republicans alike. But this President and his administration made a bad situation far worse.

His interventions into the private sector were not just wrong in themselves. They were marred by political favoritism and discredited economic theories.

And his idea of Wall Street reform was to provide more protection and preferential treatment for big banks, and to empower the same regulators who didn’t see the last crisis coming.

He sold us a massive stimulus bill as a way to keep unemployment from ever rising above 8 percent.

Instead, it added hundreds of billions of dollars to the national debt and planted the seeds for an outbreak of crony capitalism, as job losses continued to mount.

His health-care overhaul essentially transferred control over one-sixth of the economy to unaccountable bureaucrats in Washington. This created a bleak outlook for the quality of care for American families.

And his support for imposing harmful energy taxes in the middle of a recession, it made us wonder: If these are the kinds of job-destroying policies he would push in a weak economy, how would he govern if he had jobs to spare?

To top it off, he has failed to offer a credible plan for lifting the crushing burden of debt that is stifling job creation today and threatening the next generation with a diminished future.

So the results are clear: Unemployment remains above 8 percent. Job creation remains stagnant, the recovery remains sluggish, and major obstacles to opportunity – well, they’ve only grown larger for millions of Americans.

A clear majority of Americans feels like our nation is in a state of decline, and trust in government is at an all-time low. That’s no surprise, since the size of government is at an all-time high.

Even if next November is no more than a referendum on the President’s economic performance, his failed policies will spell defeat for him and his party.

*****

But you and I are here because we know there’s so much more to it than that. We know that there is more at stake. We know that this election cannot be just a referendum on President Obama’s failed leadership.

Americans deserve a choice – a choice between two dramatically different visions for our country’s future. As conservatives, we owe Americans that choice.

Look, I know there are people in this town who are terrified at the prospect of an election with real alternative visions at stake. “Make it a referendum. Win by default,” they say. Just oppose – we can win that way. Don’t propose bold ideas – that’s too risky.

I’ll admit, the easy way is always tempting. But my friends, if that’s all we stand for, then what are we doing at here CPAC – the place where so many giants of our movement came to advance their boldest ideas?

The next President will face fiscal and economic challenges that are huge… almost unprecedented. He can’t resolve these challenges if he wins by default. He needs a mandate – not just to displace Barack Obama, but to preserve and strengthen the very Idea of America.

It will not be enough to repeal the President’s disastrous health-care law. We must solve the problem in health care by curbing out-of-control costs that erode paychecks for working families and push quality coverage out of reach for millions of Americans.

It will not be enough to stop the administration’s war against proven sources of American-made energy. We must build the case for developing energy here at home, to create jobs and lower the price of energy in this country.

It will not be enough to stop Washington’s reckless spending spree, which has spread cronyism and corporate welfare. We must bring the bureaucracy to heel and restore the rule of law where it was replaced by the whims of those in power.

And it will not be enough to condemn the President’s attempt to pit one group of Americans against another.

Instead, we must promote upward mobility, starting with solutions that speak to our broken education system, broken immigration policy, and broken safety-net programs that foster dependency instead of helping people get back on their feet.

In other words, a bold reform agenda is our moral obligation. We have an obligation to provide the American people with a clear path that gets our country back on track.

If we make the case effectively and win this November, then we will have the moral authority to enact the kind of fundamental reforms America has not seen since Ronald Reagan’s first year.

*****

That’s the moral case for going bold. But there is also a strong political case for going bold.

The times call for leaders who understand the depth of the problems we face, and who offer far-reaching reforms equal to the challenges. In 1980, Ronald Reagan offered supply-side economics at home and a rollback of Soviet Communism abroad.

The challenges this time? They’re different. But the moment calls for the same kind of boldness.

Everybody knows this is politically risky territory. Republicans have their battle scars on entitlement reform. That’s why some argue that we should downplay bold agendas and simply wage a campaign focused solely on the President and his party.

I firmly disagree. Boldness and clarity offer the greatest opportunity to create a winning coalition. We will not only win the next election – we have a unique opportunity to sweep and remake the political landscape.

Of course we will highlight the President’s failed agenda. But Americans deserve to choose an alternative agenda – one that aligns with our needs. One we can rally behind.

One of our movement’s great accomplishments this past year was to unify conservatives around just such an agenda.

We began the year by advancing the most ambitious budget ever put forward in Congress – a comprehensive and principled plan to lift the debt and free the nation from the constraints of ever-expanding government.

Our budget won near-unanimous support from Republicans in both the House and the Senate, thanks to principled leadership and dozens of energized freshmen committed to this high cause. If that doesn’t bear witness to the power and influence of the conservative movement, I don’t know what can.

For all of the overblown talk about conservative divisions, our movement has achieved astonishing unity, not only on the destination we want to reach, but also on the specific path to get there.

We have transformed the debate in Washington over our nation’s fiscal future.

While President Obama shirks his responsibility to advance solutions to our fiscal challenges, he can no longer hide from the merciless math of the balance sheet. Conservatives have made certain of that.

We have pressured the President to put forward a number of deficit-reduction proposals – and while none has offered a credible solution to our fiscal crisis, each one has revealed a little bit more about what the President would do if he were forced to end the deficits.

It wouldn’t be pretty. His proposals have three things in common: they load massive tax increases on small businesses and hardworking families, they require bureaucratic rationing in government health care programs, and they hollow out our national security.

“I’ll be honest, small business was hoping to see some change in President Obama’s budget, but the status quo of the last four years was all we got,” said Dan Danner, CEO of the National Federation of Independent Business. “While small-business owners were once again looking to Washington to address their biggest concerns, President Obama is looking to small business to pay for his policies; they cannot afford to do it anymore.

“The health-care reform law is going to start taking more money away from small-business owners by taxing them for trying to do the right thing by providing health-care coverage to their employees, and President Obama is doing nothing to lessen this burden.

“Further, the threat of higher taxes is weighing heavy on the minds of small-business owners. They are trying to plan ahead, and as many are individual filers, their success could be their detriment if individual income tax rates increase. But President Obama is only concerned with corporate tax reform. Instead of reforming our broken unemployment insurance program that weighs on the minds and ledgers of small firm owners, his only solution is to raise unemployment taxes. The President needs to understand: Small business is not the ATM for our country’s fiscal crisis.

“Small-business owners understand that they cannot spend more than they take in; President Obama needs to take a page out of the small-business handbook and stop the digging because our country cannot get any deeper into debt.  Taxing small business is not the solution to the debt debacle.

“It’s great to see that the President thinks more small-business owners should be incentivized to open up shop, but the policies that he’s committed to passing only drive-up the cost of doing business and prevent small businesses from keeping their doors open.”

Every time we force the President and his party’s leaders to get specific on how they would solve our fiscal challenges, they show us an agenda that does great harm to our economic security, our health security, and our national security.

So our strategy for changing the conversation last year was not just a policy success – it was a political success as well.

2011 was a year of tremendous accomplishment. But conservatives are frustrated that we weren’t able to do more. Well, count me at the head of that line.

But what stands in our way is not division within our movement. It’s a President who is stuck on a failed agenda and Senate Democrats whose partisan leaders have not produced a budget in over 1,000 days.

As conservatives, let us stay unified. Let’s bank every dollar of savings we can get between now and November.

But let’s keep our eyes on the big event – the choice America must make between opportunity, prosperity, and growth… or debt, doubt, and decline.

Let’s work together to build a great coalition, based on the principles and beliefs that make America great.

Let’s lead this coalition by applying our timeless principles to the challenges of today, with reforms that get our economy into high gear, repair our safety net, and strengthen our health and retirement security programs.

And let’s turn this coalition into a governing majority by advancing these reforms when it matters most – in the midst of a critical election year.

*****

The President and his party’s leaders have no stomach for this kind of coalition. They have already chosen to isolate themselves from the growing bipartisan consensus for reform.

They simply cannot compromise on their agenda of higher taxes, more bureaucracy, and managed decline. They are too deeply wedded to an ideology that holds that our rights come from government, not from nature and nature’s God.

For an example of what this means in practice, look no further than the recent conflict between the President’s health care law and our religious freedom.

This, as the President likes to say, is a “teachable moment.”

This is what we get when the President applies his progressive philosophy that views “rights,” not as inalienable gifts from our creator, but more like revocable privileges from our government.

In this view, rights are not universal or timeless – they must change and evolve in the name of progress.

And who defines “progress”? Well, whoever happens to be in power at the time.

That’s how we get to where we are today – a situation where the government can supposedly invent a new “right” that trumps our constitutional right to observe our faith in freedom.

You see, if government is no longer the protector of your natural rights, but the creator of new rights, then government wins and freedom loses wherever the two collide.

This ideological agenda is largely responsible for the President’s dismal results. Frankly, his policies, his ideology, and his vision are a rejection of the American Idea.

Of course, he says his recipe is as American as apple pie, but under his management, that pie’s been getting smaller and smaller. Over six million Americans have fallen into poverty since the President took office.

So the choice we face is a referendum of sorts – but the referendum is on the principles that make up the American Idea: free enterprise and economic liberty; limited government and spending restraint; traditional family and community values; and a strong national defense.

America deserves a choice – a chance to affirm these principles of American exceptionalism. And if we do not define the choice, then the President and his party’s leaders will define it for us.

The President himself is framing this election as a stark choice between two conflicting visions. Recently he said that, “The very core of what this country stands for is on the line – the notion that we’re all in this together, that we look out for one another – that’s at stake in this election.”

“We’re all in this together” versus “You’re on your own” – that’s how the President is defining this choice.

“We’re all in this together” – it’s a powerful and appropriate phrase for describing the best in our nation’s history. It speaks to our affinity for family, community, and the religious institutions through which we really do look out for one another.

But the reality is that the President’s rhetoric has always conflicted with the President’s agenda. The policy agenda he has promoted weakens these very institutions. It stifles their vitality and substitutes federal power in their place.

He says, “We’re all in this together” – but his re-election strategy is to divide Americans, to foster envy and resentment, and to push programs that entrench dependency and grow government.

This is not who we are. Americans believe in a few simple principles. We believe in a Constitution of limited powers. Washington has broad authority to establish the conditions of freedom and secure individual rights, but not to intrude on those activities best left to the states and the people.

We believe that the principal responsibility of the federal government is to guarantee the safety and security of its citizens.

The federal government should safeguard free enterprise, not rig the rules in favor of the politically connected. Fraud should be punished and fair play rewarded, so that every American can choose his or her own vocation and earn the rewards of success.

Health and retirement programs should guarantee real security, not empty promises.

Warren Buffet

Redistributive policies have failed the poor for decades, so let’s replace these failures with an economy that grows and a safety net that works for a new century.

Let’s have real, innovative reforms such as school choice and job training that gives skills and hope to the poor to reach higher rungs on the ladder of opportunity.

The President’s formulation is strange. For him, this belief in a limited, effective government translates into “you’re on your own” – a Hobbesian state of nature where the strong survive and the weak are pushed off the cliff… and I mean literally, at least in one ad the Left is running against our budget.

According to this view, the only alternative to this cruel society is to give enlightened bureaucrats in Washington more power to control our lives and determine our destinies.

This misplaced faith in a paternalistic government may be sincere – but I cannot imagine a vision of America more cynical.

A government that aspires to equal outcomes undermines the commitment to equal opportunity that is at the heart of the American Idea. As Lincoln said, the purpose of government should be “to clear the paths of laudable pursuit for all,” so that all may have the same opportunity to rise.

When times are tough – when businesses are closing and workers are losing their jobs – that’s when this commitment to equal opportunity is called into question.

That’s when the temptation arises to exploit fear and envy. And at this very moment, some in Washington are using the politics of class division to divert attention from their own policy failures.

As these debates rage on, let us carefully consider the wisdom of the Founders, whose high achievement was to make America the greatest and freest nation on earth.

They spoke about equality, but they had the wisdom to ask, what kind of equality should government promote and protect?

Should it encourage upward mobility and strong economic growth for all people?

Or should it divide up a shrinking pie into ever-smaller slices – as long as the slivers are equal?

I believe these approaches are completely opposed to one another, and the best approach is clear: We must always promote equal opportunity by reducing barriers to growth. We must never seek to impose equal outcomes by erecting barriers to success.

Sowing social unrest and class envy – that makes America weaker, not stronger.

Pitting one group against another only distracts us from the true sources of inequity in this country: corporate welfare that enriches the powerful, and empty promises that betray the powerless.

The only class warfare that threatens America comes from a class of bureaucrats and crony capitalists rising above society – calling the shots, rigging the rules, and securing their places of privilege at our expense.

My friends, America deserves a choice – and if it is an honest choice between these two visions, well, then we win, they lose”

*****

Yes, the challenge before us is daunting. The President and his allies will do all in their power to try to make our philosophy of freedom seem radical.

But I believe the President and his party’s leaders are profoundly mistaken.

They are growing increasingly isolated from the American mainstream. They just don’t understand that Americans are seeking political leaders whose solutions are reassuring precisely because they are bold.

The President’s partisans are underestimating the ability of Americans to do basic math. They don’t realize that the sheer magnitude of our challenges has shifted the center of gravity under their feet, putting them at a disadvantage. The history of our own movement shows that we can win these fights – if we are willing to fight them.

As constitutional conservatives, let’s offer Americans the choice they deserve. This is the moment we were made for. It is time to prove that the Founders got it right, both for centuries past and for centuries to come.

Let’s contrast the President’s path to decline with our own path that lifts the debt, promotes prosperity, and restores the greatness of the American Idea.

Let’s stay united. Let’s advance sensible reform where common ground can be reached. But where the President pushes his extremism, let’s make clear how we will do things differently as soon as we take back the Senate and the White House.

If we do that, then we can win this election with a mandate to last a generation – to save this country we love.

Now is the time. Now is the time for choosing our destiny.

Thank you.”  Paul Ryan

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