The Naked Socialist

by Paul B Skousen

  As America moved into the baby-boomer era, the government was no longer a manager of the post-war growth spurt of a rapidly growing nation. It had become the financial savior and instigator of all things “progressive.” The presidents who came along during this period not only wanted to expand their executive power into building an empire, but they discovered they could do it with relative ease. The checks and balances that should have stopped presidential expansion of power had largely been neutralized.

  PRESIDENT: John F. Kennedy (served 1961-1963)

  LEGACY: New Frontier and unfinished business

  STORY: Kennedy’s expansion of government continued to socialize the nation, but with some surprisingly conservative actions that subsequent democrats failed to embrace. His record includes:

  Increased minimum wage to $1.25, “which is still much too low,” Kennedy said, and expanded its coverage to 3.5 million more workers “which is still too little.”623

  Increased Social Security benefits to those who could retire by age 62.

  Extended unemployment benefits to 3 million workers.

  Granted Additional millions for public assistance to hundreds of thousands of children of unemployed fathers.

  Increased Social Security payments and federal funds to help farmers and home builders.

  Food Stamps: In 1961, Kennedy’s first executive order was to initiate a food stamp pilot program to help distribute food to the needy. The idea had been passed around for a long time, but Kennedy was the first to finally implement it. In just one generation, it snowballed into a $75 billion program that, as of this writing, supports more than 48,000,000 Americans624—that’s 1 out of every 7.

  Kennedy’s “bully pulpit” power was demonstrated when the major steel companies, caught in a wage dispute with unions, agreed to give workers a 2.5 percent raise. Kennedy was happy. But then the companies turned around and raised prices on steel by 3.5 percent to pay for it. Kennedy was furious and unleashed a nationwide blitz in Congress and the press, even turning loose the FBI to interview steel company executives. The Wall Street Journal castigated Kennedy, saying he acted “by naked power, by threats, by agents of the state security police.”625 His bully pulpit tactic worked against the free market and the steel companies caved in and reduced their prices. Despite those actions, Kennedy took some positive steps to reduce federal power over the country.

  Tax Cut: He proposed an $11 billion tax reduction bill to stimulate the economy. “Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased—not a reduced—flow of revenues to the federal government.”626

  Took Power From the Federal Reserve: He signed Executive Order 11110 that gave the Treasury authority to issue silver certificates and to coin silver dollars. This removed from the Federal Reserve some of its control over American currency and returned at least that much control back to Congress.627

  Lower Tax Rates: Kennedy proposed lowering income tax rates from an inexcusably high of 91 percent down to 65 percent, and corporate taxes from 52 percent to 47 percent. “The final and best means of strengthening demand among consumers and business,” Kennedy said, “is to reduce the burden on private income and the deterrents to private initiative which are imposed by our present tax system; and this administration pledged itself last summer to an across-the-board, top-to-bottom cut in personal and corporate income taxes to be enacted and become effective in 1963.”628

  Decrease Spending: Kennedy proposed spending cuts and removing hurdles to grow the economy. “In short, to increase demand and lift the economy,” Kennedy said, “the federal government’s most useful role is not to rush into a program of excessive increases in public expenditures, but to expand the incentives and opportunities for private expenditures.”629PRESIDENT: Lyndon Johnson (served 1963-1969)

  LEGACY: Perpetuated New Deal with “Great Society”

  STORY: Johnson’s expansion of government and injection of socialism did more to prove the negative consequences of socialism in America than anyone since FDR.

  Vietnam War: In 1964, Johnson rammed through Congress the Gulf of Tonkin Resolution that gave him broad powers to “take all necessary steps, including the use of armed force”630 to stop aggression in Vietnam. It gave Johnson authorization to use conventional military force to wage war that had not been constitutionally authorized. He micro-managed the war, even selecting bombing targets, to play a political chess game of wits that eventually took 58,000 American lives.

  Civil Rights Act of 1964: Despite its good intentions of racial equality, the fatal flaw in Johnson’s Act was that it replaced “equal rights” with “equal outcome.” Forcing equal outcome produced an ugly process called quotas—the percentage of blacks at the workplace and in schools had to be in the same proportion as to what existed in the surrounding population, regardless of skills or achievement. Johnson’s Act led to forced busing, forced housing, reverse discrimination, and the violation of constitutional protections to negotiate contracts and control property.

  The issue has never become free from doubt and debate. With case after case, the Supreme Court forced a situation that would have fared much better had it evolved naturally without government force. Improved racial harmony has grown in spite of the Civil Rights Act, not because of it.631

  War on Poverty, 1964: Johnson’s efforts to take from the “haves” and give to the “have-nots” with his Economic Opportunity Act of 1964, among others, exploded into a monster that today eats almost half of America’s total annual production. In 1964, welfare spending was around $40 billion. Today it exceeds a trillion dollars—a 13-fold increase even after adjusting for inflation.632 The “war” failed to contain costs.

  In 1964, children born to unwed mothers was at 10 percent. By 2010, it was 41 percent.633 The “war” failed to heal this and other foundational perpetuations of poverty in America.

  Welfare for 2012: President Obama’s 2012 budget for welfare exceeded $1.5 trillion (Social Security—$754.5 billion; Medicare—$484.3 billion; Medicaid—$274.5 billion)—about 41 percent of the total budget.634 Johnson’s socialistic “war” failed to stem the snowballing effect of welfare growth.

  Since the 1960s, the U.S. has spent more than $16 trillion on welfare, and President Obama proposed another $10.3 trillion for the decade of 2009-2018. Poverty under socialism is here to stay.

  Johnson’s war on poverty was a colossal failure. The whole fabric of society was polluted beyond repair, and millions of lives were ruined because of the entitlement mentality. His program made things worse, for lack of—

  Decreased Spending: Johnson’s programs did not roll back welfare spending or offer fixes and solutions.

  Work Requirement: His programs did not ask for so many hours of work in exchange for so much assistance.

  Loan Option: He did not offer aid in the form of loans. Instead, the checks were generously doled out—no strings attached.

  Correct Incentives: He offered more welfare for each baby born out of wedlock, but did not similarly try to encourage marriage as a means of stemming unintended pregnancies and to support the family with an income.

  Immigration Control: Johnson didn’t restrict immigration to those with higher education who could bring marketable value to the country instead of instant dependency.

  Medicare and Medicaid, 1965: From 1776 until 1965, most Americans did not need to depend on the federal government for health care. The exceptions were those in the military or employed by the government. Johnson changed that in 1965. Medicare became a nationwide health-care program paid for by income taxes. It was set up to help the elderly receive health care, to kick in at retirement with Social Security benefits.

  Medicaid was a welfare program set up to help the poor and disabled. Because it matched a state’s health-care expenses it inadvertently created an incentive for states to spend more on the
poor. Medicaid pays doctors much less than other insurances, so few physicians can afford to accept Medicaid patients.

  These two programs are the natural outcome of a culture so inoculated against the aspirations of freedom that its people became dependent on the government for survival. Wherever such dependency becomes the accepted norm, the dependent feel trapped and will always vote for the candidates who will assure the continuation of their welfare support.

  This kind of system is automatically doomed to failure. The needs of the consumers will always outgrow the capacity of the producers—it is a basic law of economics that is usually ignored.

  PRESIDENT: Richard M. Nixon (served 1969-1974)

  LEGACY: Inflated regulatory controls

  STORY: Nixon expanded the reach of federal agencies more deeply into business and commerce than any president since World War II. When he resigned in 1975, the Federal Register—the record of new regulations for businesses—had doubled in size, becoming that much more of a drag that slowed America’s expansion and prosperity.

  EPA: Nixon’s 1970 Environmental Protection Agency Act started small but next to the IRS, became the worst example of Soviet-style central planning in existence today. In the name of environmental protection, the EPA enforces direct violation of constitutionally protected states’ rights and personal freedoms to acquire, develop, and dispose of property. Billions in private projects and jobs have been voided by the EPA, and that same form of control has been expanding globally. Versions of the EPA are uniting advocates through the U.N. to put U.S. freedoms under the jurisdiction of a single ruling international body.

  Clean Air Act (1970), Clean Water Act (1972) imposed federal control over state-level air and water quality issues. States were obligated to request federal approval for their plans to meet federal guidelines. States had to show compliance and enforcement of those programs. Since then, the Supreme Court has upheld the EPA’s authority to regulate greenhouse gas emissions, and thereby intrude into additional states’ rights issues.

  OSHA: In 1970, Nixon formed the Occupational Safety and Health Administration with power to impose safety regulations on almost every commerce activity in America. While safety in the workplace and safe food is everyone’s goal, this level of regulatory power at the federal level has grown into a tyrannical law-making body that extracts untold billions from business and industry for compliance. No-knock inspection power, forcing companies to pay for home improvements so at-home employees have a “safe” work environment, fining companies for breaking rules they don’t even know exist, and adding to a tower of regulations that today form a pile of laws that stands 17 feet high are realities of the king-like controls this agency has over Americans. States are better suited to handle those issues on their local levels.

  Nationalized Railroads: In 1970, Nixon put the cost for rescuing the failing passenger railroads on the backs of taxpayers. His new National Railroad Passenger Corporation was a safety net that was supposed to rescue the railroads from financial collapse. Private rail owners doubted it would work, but were happy to reap profits where profits could be made and let the taxpayers cover the losses.

  Wage and Price Controls: Nixon’s unprecedented peacetime wage and price freeze was supported by many as a reasonable way to stop raging inflation. Nixon imposed a freeze in 1971 and again in 1973. Neither attempt solved anything. The strategy was a monumental failure, and only made things worse.

  No More Gold: In 1971, Nixon announced the dollar could no longer be converted to gold. U.S. currency would henceforth be fiat money, or money backed by nothing. Today, the gold-less U.S. dollar is deified as an omnipotent paper of faith.

  National Health Care: Nixon attempted to introduce various forms of national health care. He proposed that these programs be paid for with tax dollars invested in various forms, or through government partnerships with state or private insurance. His vision for national health care didn’t go anywhere.PRESIDENT: Jimmy Carter (served 1977-1981)

  LEGACY: A thrifty socialist who just wanted peace

  STORY: Carter’s turn at the Oval Office came during a tumultuous period of high inflation, a recession, and an energy crisis. In the midst of these, Carter took significant steps toward reining in government spending and issuing new regulations.

  Deregulation: Carter moved positively to reduce the government’s hand in the open market. He deregulated the airline industry (Airline Deregulation Act, 1978), trucking (Motor Carrier Act, 1980), rail (Staggers Rail Act, 1980), finance industries (Depository Institutions Deregulation and Monetary Control Act, 1980), and took stabs at deregulating oil, gas, and communications—among others.635

  Pork Barrel Reduction: Several of Carter’s efforts to reduce spending were rebuffed by his own party which controlled both houses at the time. He tried to scrap several water projects but was overturned. He issued a “hit list” of 19 projects that he deemed wasteful “pork-barrel” expenses, and vowed to veto any legislation supporting them. Congress hated him for it and turned against him.

  National Parks: In 1978, Carter grew impatient with the failure of Congress to pass his Alaska National Interest Lands Conservation Act (1980) that would cut off 103 million acres from economic development. Carter used the Antiquities Act to justify an executive order that locked up the land as a national monument—in gross violation of Alaska’s state right and the rights of others seeking mineral, gas and oil extraction rights.

  HEW: Carter’s new Department of Health, Education and Welfare (1978) was a multi-billion-dollar regulatory agency with the nondescript purpose of protecting the health, well-being and safety of Americans. In 30 years its annual budget has grown to $75 billion, and today employs 67,000 government workers.

  Department of Education:636 Carter’s education program was separated from HEW to become its own cabinet-level position in 1979. Its purpose was to enforce federal laws in local schools, and otherwise dispense money to schools and students—all of this in direct violation of Article 1.8, the 10th Amendment, and others. Today, the Department of Education has a budget exceeding $70 billion. President George W. Bush’s No Child Left Behind Act was the first to piggyback into local state-controlled curricula and standards by way of Carter’s federal agency. In 2009, President Obama initiated “Race to the Top” incentives for states to adopt Common Core.

  Foreign Affairs: Carter helped negotiate a peace treaty between Egypt and Israel in 1978 (The Camp David Accords), and normalized relations with China, but then he gave away an expensive and strategic American waterway critical for U.S. military and cargo ships—the Panama Canal. The 48-mile trench cost U.S. taxpayers $375 million to build (about $9 billion in 2014 dollars). For national security reasons, not to mention regular maintenance and upkeep, the canal should have remained U.S. property.

  Energy Crisis: A reduction in oil imports from the Middle East created long lines at gas stations and exorbitant prices. Carter gave his famous “malaise speech” to draw attention to over-consumption by Americans, and said the impact of OPEC’s production cutbacks was made worse by Americans’ sloppy use of energy resources. Side note to baby boomers: Carter did not instigate the 55 mph regulation to save gas—that was an Act signed by Nixon on January 2, 1974.637PRESIDENT: Ronald Reagan (served 1981-1989)

  LEGACY: Conservative Constitutionalist who won Cold War

  STORY: Reagan was the first in a long time to attempt to turn the country back to its fundamental roots. His so-called “Reaganomics” called for lowering taxes to stimulate the economy. He survived an assassination attempt, and brought a new level of respectful dignity to the executive office, mixed with self-effacing humor that endeared him to foreign leaders and tens of millions around the world.

  Reagan was tough, smart, better read than most people realized, and exhibited leadership principles that caught most critics off guard. He is remembered for igniting prosperity that carried into future administrations, salvaging and energizing Ame
rican morale, and reducing their dependence on the government. He crushed the Soviet empire with a spending program that dug a deep deficit but ended decades more of exorbitant spending.

  As Governor: Reagan launched his two terms as California’s governor (1967-1975) by intending to shrink welfare rolls—“to send the welfare bums back to work.”638 He froze government hiring and balanced the budget by raising taxes. He clamped down hard on campus riots, particularly at Berkeley where he sent 2,200 state National Guard troops for two weeks to stop student rioting. A mistake he regretted was signing the legislature’s pro-abortion act. He said later he should have vetoed it. Reagan maintained a strong pro-life position from that time forward. He was also pro-capital punishment, anti-welfare, and in favor of shrinking the government and lowering taxes.

  Air Traffic Controllers’ Strike: As president in 1981, the air traffic controllers—all federal employees—went on strike. Reagan told them if they didn’t return to work in 48 hours he would fire them. They refused, and on August 5, 1981, Reagan fired all 11,345 union members. David Schultz wrote in the Encyclopedia of Public Administration and Public Policy (2004) that Reagan’s actions “not only demonstrated a clear resolve by the president to take control of the bureaucracy, but it also sent a clear message to the private sector that unions no longer needed to be feared.”

  Reduced Taxes, Spurred Prosperity: Firing up the economy was one of Reagan’s priorities. He lowered the top tax bracket from 70 percent to 50 percent so the rich could create more jobs, and the lowest bracket from 14 percent to 11 percent. Inflation decreased and 16 million new jobs were created.

  Trickle-down: Reagan’s labors to reduce the size of government included freezing the minimum wage at $3.35 an hour, and cutting federal dollars to local governments for welfare programs by 60 percent. The impact was more money invested and rising employment.