The Coming Economic Recovery (and how progressives can mess it up)

With all the negative news we are bombarded with on the economy it’s a wonder that we haven’t all just thrown in the towel, moved to the woods and begin preparing for the coming apocalypse. Although unemployment is hovering near 10%, the dollar is down against the world’s major currencies, our deficit and debt are at an all time high, and the housing market continues to flounder, there is actually some good news about the economy.

As a financial advisor, the first place I look is the stock market. As you may know, the stock market tends to be “forward looking” – meaning that it’s usually an indicator of where the economy is headed rather than where it is been. It is not a predictor; rather it reacts to a set of concrete data and variables without emotion. The Dow Jones Industrial Average (the price weighted average of 30 heavily traded stocks) opened the year at 8776.39. As of today, it is at 9731.25, a nearly 1000 point gain and a 3261 point gain off of its November, 2008 low of 6469.95. That is good news. Wealth is being built.

Two other important indicators are the Institute for Supply Management (ISM) Non-Manufacturing Sector Index (health care, utilities, construction, retail, etc.) and the ISM Manufacturing Index. Both sectors of the economy showed growth in September. This is good news. Economist Larry Kudlow does this story much more justice than I can, so I encourage you to read his thoughts here (http://bit.ly/avLt9).

I raise these points for this reason: the American economy is unbelievably resilient! While economic news has been less than stellar, we are far from a third world economy. We remain the largest economy in the world and that statistic is not even close (http://bit.ly/2UWG3U). Our economy is on the road to recovery, but it will be a bumpy ride.

Having said that, do not let anyone tell you that the “stimulus plan” is the reason for the modest recovery we are experiencing and will experience. The vast majority of stimulus dollars have not been spent and many of those dollars that have been spent have gone to “projects” that won’t stimulate anything but the growth of government (www.recovery.com). The reason our economy is slowly recovering is because of natural business cycles that occur, the hard work of the American people, and most importantly, free market capitalism. It is the latter that has increasingly come under attack, and if the liberal progressives have their way, these attacks and subsequent action will either stall this recovery or send us into another recession.

Nancy Pelosi, Barney Frank, Brian Baird, and other liberal progressives in Congress are proposing legislation that, if enacted, will destroy the modest recovery that has begun. If so-called Cap and Trade legislation becomes law, it will be devastating to America’s manufacturing sector. Which means it will effectively end any chance of bringing quality, family-wage jobs to Southwest Washington – a part of the country that has a nearly 15% unemployment rate.

Furthermore, all indications are that Pelosi and company are going to let the Bush tax cuts expire. This will serve as a massive tax hike on the American people and will take much needed job creating capital out of the economy. This will occur at a time when we need more capital for job creation. Capital gains taxes (which I believe are a tax on success and smart planning) will increase from 15% to 25%. And marginal tax rates (our income taxes) will increase across the board. So much for not raising taxes on the middle class.

Finally, the “health care reform” legislation that is being proposed will increase our ever expanding deficit ($1.4 trillion to end this fiscal year). Future generations are being saddled with massive deficits and unsustainable debt for a bill that won’t solve the problem of reducing health care costs and improving access. Of note, the Baucus bill being proposed in the Senate will leave 25 million people uninsured according to the most recent CBO scoring.

Friends, our current economic woes are not the result of too little spending; instead, they are the result of too little economic growth. The best way to reduce the unemployment rate is obvious – create more jobs. The best way to accomplish this is by reducing the tax rates on American businesses and let them invest and grow. (See: Kennedy tax cuts, Reagan tax cuts, GWB tax cuts). Time and time again it has been proven that reduced tax rates lead to increased revenues to the federal treasury. Yet big government proponents like Baird and Pelosi continue to experiment with the same policies that drove our country into economic purgatory during the miserable Presidency of Jimmy Carter.

We must – all of us – hold our elected officials accountable. Remind them that every dime they take from our pocket and use to add or expand unnecessary government programs is an assault on our liberty. Do not let anyone tell you that you’re greedy because you want to keep your own money, instead of watch the government waste it.

We know that it is our responsibility to provide for our families and take care of our communities. And quite frankly, we are capable of doing that without government intervention by means of redistribution of wealth.

I am running for Congress because I am tired of the failed policies and rhetoric of liberal progressives who are slowly (actually more quickly this year) subverting the American way of life. I will be a new voice for people who still believe in the greatness of America and our people; a voice for all Americans, present and future, who choose to control their own destiny and who believe, as I do, that our best days lie ahead. www.castilloforcongress.com

You Must Buy Health Insurance

I had the pleasure of meeting Congressman Joe Wilson on the afternoon of September 10th. This was before he became somewhat notorious for “breaking decorum” during President Obama’s speech to a joint session of Congress. Although I don’t condone what Congressman Wilson did, I think his reaction during the speech expressed the frustration that millions of American’s share.

Many of us feel we are without a voice. We feel that our members of Congress are not at all concerned about our rejection of the massive government intrusion in our lives represented in the health care legislation, cap and trade, etc. We are not, however, without means.

I saw first hand the tens of thousands of people that marched on Washington, DC on September 12th. These people were by no means “radical extremists”; rather they were everyday people who felt the need to do something to take back their country from the true radicals who represent them in government.

One of the extreme elements of President Obama’s speech was his call to require all Americans to have health insurance. This mandate should concern everyone. The President, and Democrats in Congress, wants to force you to buy health insurance for you and your family. Never mind whether or not the proposal is constitutional (doubtful), evidence shows that a mandate to purchase health insurance consistently drives up the cost of insurance for everyone (http://tinyurl.com/mkj2tr). Most concerning, however, is that government believes they can better take care of you and your family than you can.

Thousands of Americans marched on Washington to protest the growth of government, its intrusion in our daily lives, and the huge debt burden that ever expanding government is placing on our children, grandchildren, nieces, and nephews. I am not confident that we were heard. I fear that this government is arrogant and out of touch and will foist mandated insurance, mandated green buildings, mandated public service, etc., upon all of us.

It is time for a new voice. I am running for Congress in Washington’s 3rd Congressional District because I refuse to let this government remake America in such a way that we won’t recognize it when my 3 year old son is my age. I am running to ensure that the freedoms and individual liberty espoused in our Constitution are not forgotten.

I would love to get your thoughts on this blog. Email me at info@castilloforcongress.com and let me know whether or not you are concerned about mandated health insurance. If you want to help my campaign, go to http://www.castilloforcongress.com/ to volunteer and donate. Finally, forward this post to all of your friends and get them involved in returning America to the values and ideals that have made us great.

A Trillion Here, A Trillion There

It is being reported that the federal budget deficit for this year will top $1.6 Trillion and will be upwards of $9 Trillion in the next ten years (http://www.bloomberg.com/apps/news?pid=20601068&sid=amFOw06qxb.o). These are astoundingly huge numbers and are difficult to even comprehend.

The budget deficit describes the difference between the amount that is being collected in taxes and the amount that is being spent by Congress. What we have with these deficit projections is record spending with the check being picked up (eventually) by our children, grandchildren, nieces, and nephews. To put things in perspective, imagine you decided to go on a spending binge, buying everything your heart desired regardless of cost, with the catch being that all of your debt would be paid by your future heirs. Would you be comfortable doing this to your children? I don't think any responsible individual would, but that is exactly what Nancy Pelosi, Brian Baird, and other liberal progressives in Congress are doing.

To be fair, President Obama did inherit a deficit of $482 billion -- $170 billion of this is the direct result of the first "stimulus" that was passed (Obama voted for it while in the Senate). As a result, in eight short months, liberals have expanded the deficit nearly five fold. Over this same period, unemployment has risen from approximately 5% to 9.4% with projections that it will be double-digits early next year. To compound the situation, the Democrat-controlled Congress has passed a tax increase, the House has passed the so-called Cap and Trade legislation that will hamper economic growth, and now they are considering adding $2 Trillion to the deficit by taking over health care. I don't know about you, but I sometimes feel like I live in bizarro world where up is down and spending more money is actually viewed as "controlling costs".

As a financial advisor, I constantly work with clients to determine how best to manage their money and plan for their future. If a client comes to me with a debt level that is unsustainable, we first look at ways to reduce the debt. If that same client went to this government, they would be told to spend more. Our government is making decisions that will have a detrimental affect on our future, and that of future generations of Americans. However, as Americans we have a say in our destiny and that means we still have the ability to build a bright future.

First, we need to renew the call for a balanced budget amendment. Every state and local government in the nation must balance their budgets, there is no reason why the federal government should not do the same. One of the remarkable things about passing a Balanced Budget Amendment to the Constitution would be that every state in the union would be debating the merits, and the decision would ultimately rest in the hands of "we the people" in individual states.

Second, John F. Kennedy was profound when he said "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." It has been proven time and time again that a reduction in the marginal tax rates stimulate economic growth - Kennedy proved it, Reagan proved it, George W. Bush proved it, and Democrats in Congress owe it to the American people to do it.

Third, we must reduce or eliminate the capital gains tax. Again, history is on the side of tax cutters. Revenues to the government have increased when the capital gains tax was reduced (http://www.nationalreview.com/balance/balance050101.shtml). Moreover, the complete elimination of capital gains taxes would spur investment, job growth, and research by giving business owners, executives, and individual investors more capital to inject into the economy, expand businesses, and invest in new equipment and technology.

Finally, the Congress should seriously explore putting a cap on spending (e.g. the rate of core inflation (http://www.investopedia.com/terms/c/coreinflation.asp) plus population growth). As economist Stephen Moore has pointed out "a cap would reduce aggregate outlays through 2019 by $750 billion and by 2030 by $3 trillion" (source: WSJ 8/6/09). Furthermore, it would force Congress to end the practice of earmarks and would require our leaders to make the tough decisions that we send them to Congress to make.

We live in challenging and remarkable times. We are not, however, facing insurmountable problems. The American people (not our government) have shown the way to prosperity in the past and the same holds true for our future. I am looking forward to being a new voice for you in Washington, DC. Someone who upholds the values of individual liberty, responsibility, and self-reliance -- values that this country was founded on.

It is time for Congress to hear our one, strong voice. Join me as I fight to ensure that all of our voices our heard. www.castilloforcongress.com/donate.asp

Americans Deserve To Know What's Happening to Their Nation's Defenses

Democrats in Congress, in concert with the Obama administration, have been attempting to rush through legislation that will fundamentally change America. As you might expect with legislation of this magnitude, the vast majority of Americans are focused on these major pieces of legislation. However, we must not forget what Nancy Pelosi and Brian Baird are doing to our nation's defenses.

In today’s changing security environment, America faces many different types of threats. North Korea regularly fires missiles in the direction of the West Coast while our soldiers fight against insurgents in Iraq and Afghanistan. We should never become numb to these threats and conflicts, and we must never let down our guard; we should always remember that without a strong national defense, we simply will not survive as a free nation.

It is the duty of every generation – both civilians and those in uniform – to uphold our nation’s liberties and to see to its defense. As a civilian that once proudly served my country in the U.S. Navy, I am constantly reminded of our duty to stay informed, make our voice heard in government, and vote.

With that in mind, I am deeply concerned with what’s happening in Washington with regard to our nation’s defenses. Why? Because Democrats are recklessly cutting our defense budget in a time of war.

The President’s 2010 defense budget request is for $534 billion. And while some might simply look at President Bush’s 2009 budget of $515 billion and conclude that Obama is asking for an increase, they should look more closely. If war supplemental spending for both Presidents are added, we find that the 2010 Obama budget totals $30 billion less than President Bush’s overall 2009 budget of $647 billion. A $30 billion cut in a time of war!

And these spending cuts won’t come from government efficiencies or eliminating waste. In fact, President Obama and Democrats in Congress are degrading the current military advantages we enjoy over land, at sea, and in the air by cutting capabilities.

For instance, cuts to the F-18 Super Hornet are endangering the capabilities of our naval forces by creating a dangerous fighter aircraft shortfall. Multi-purpose F-35 fighters have run into significant delays, and won’t be delivered until 2015 at the earliest. Meanwhile, the administration and Democrats in Congress have failed to purchase enough proven F-18 Super Hornets to make up for a gaping fighter jet shortfall of at least 200 aircraft – four aircraft carriers worth.

While the argument is that the Hornet will be replaced with the carrier version of the new F-35 Joint Strike Fighter, the truth is that the F-35 is not a replacement, but a compliment to the F-18. Democrats could easily solve the problem by purchasing more F-18’s now, but they have stubbornly refused.

In addition, the Democratic-dominated Congress has just eliminated the most dominating fighter ever produced, the F-22 Raptor. Again, the excuse for cutting the F-22 is that the Air Force version of the F-35 Joint Strike Fighter will be coming online. Again, the F-35 is not a replacement for the far more capable F-22, but a compliment to it and it is more than two years behind schedule. With Russia and China taking an adversarial stance against the United States, siding with countries like Iran and the aforementioned North Korea that are threatening American interests, does it make sense to eliminate the one aircraft that is capable of penetrating the most sophisticated air defenses?

Our missile defenses are also on the chopping block, with ground-based anti-ballistic missile systems being cut just as they are showing the most promise. With North Korea threatening Hawaii and the West Coast by testing nuclear bombs as well as ballistic missiles with ranges of 4,000 miles, does this make sense?

As a veteran of the United States Navy, I remember well the mission: defeat any threats to the continued free use of the high seas by the United States. This high mission requires constant vigilance, at peace or at war. Staying on the cutting edge of military capability on land, sea and air is the best way to deter our adversaries from aggressive action against America and her allies. Is this not worth our generation’s time and treasure as we fulfill our duty to protect our nation’s freedom?

I need your help to be a voice in Congress for a strong national defense. Visit www.castilloforcongress.com and donate today!

Honoring Those You Serve

It has been a truly interesting and incredibly revealing week in Washington’s 3rd Congressional District. Not only has our current member of Congress, Brian Baird, compared constituents protesting against government run health care to “brown shirts” and “Nazis”, the Wall Street Journal is now reporting that Baird took a trip to the Great Barrier Reef that cost taxpayers $103,000 (this does not include the cost of the military aircraft)http://online.wsj.com/article/SB124967502810515267.html.

This trip is being reported on the heels of another story in the Journal that detailed Baird’s “scientific discovery” trip to the Galapagos Islands. It has now become clear why Baird, Nancy Pelosi, and Democrats in Congress spent $500 Million in taxpayer dollars to buy more airplanes for their travel.

Baird’s trips and his recent comments underscore the level of arrogance and hypocrisy that plagues this Congress. By comparing constituents who disagree with you to Nazis who are creating a “environment that gave us Timothy McVeigh”, you are not only dismissing and diminishing the very real concerns that the American populace have, but you are also attempting to set yourself above the very people you serve rather than serving among them.

Robert K. Greenleaf states in his book Servant Leadership that “too many who presume to lead do not see more clearly, and in defense of their inadequacy, they all the more strongly argue that the ‘system’ must be preserved…”. We are seeing Greenleaf’s words play out in the current Congress. Our leaders believe they know better and do not want to be bothered with “petty” desires of we the little people. That is not leadership. Leadership is a willingness to engage with those with whom you might disagree, not to belittle and demonize those people. Leadership is a willingness to serve and, through that service, elevate others who also wish to lead.

I have dedicated a large portion of my life to public service, whether during my time in the United States Navy, or serving as a Deputy Assistant Secretary at the Department of Veterans Affairs under President Bush. In every instance, I had the opportunity to not only lead, but also work for leaders who truly cared about people. I saw, first hand, the level of hate filled vitriol that was spewed at President Bush during his eight years in office, and I was amazed at his ability to remain calm and thoughtful in the face of outright hostility. It’s quite ironic that our Democrat members of Congress could learn something from the way President Bush carried himself in the face of adversity.

I am looking forward to being a new leader, and new voice for the people of Washington’s 3rd Congressional District. We have a true opportunity to restore humility, fiscal sanity, and empathy to the Congress. I am looking forward to the journey, and a vigorous debate with Brian Baird over who can best serve the people of Southwest Washington. I hope you will join me on this journey.

http://www.castilloforcongress.com/

An American Solution

Liberal leaders in Congress have decided that they know better than doctors, nurses, and other health practitioners with regard to ‘reforming’ our healthcare system. Never mind that America’s system of healthcare delivery remains the envy of the world – Harry Reid, Nancy Pelosi and friends think they know better than professionals who have dedicated their lives to protecting and improving our health. The Mayo Clinic – widely held as the preeminent healthcare provider in our nation – has publicly denounced this government takeover of healthcare.

All Americans want a system that helps reduce costs and provides coverage to those currently without insurance. As mothers, fathers and grandparents we all know the importance of access to quality medical care. However, the vast majority of us are unwilling to relinquish authority over our medical decisions to a government bureaucrat. In the face of spending billions in bank bailouts, and an auto industry takeover, we are not prepared to give up an additional 16% of the American economy to government control.

The answer does not lie in more government – along the lines of Canada, the UK or other European Socialist models. America does not copy or envy. American’s innovate. Our healthcare system, like our system of government – is not perfect – but it remains the best in the world. Instead of trying to fit a square peg into a round hole, Congress should adopt some common sense reforms to address the problems of cost and accessibility.

The President and Congress should:

1) Expand and promote Health Savings Accounts, which allow the individual to control their own healthcare dollars – NOT the government.

2) Allow Association Health Plans. This would allow small businesses and like-minded trade associations to pool together in purchasing their health insurance, thereby driving down costs and insuring more people.

3) Allow people to purchase health insurance like they purchase auto insurance. Right now, you cannot purchase a plan in Texas if you live in Washington even if the Texas plan better suits the needs of your family and is less expensive.

4) Reduce payroll taxes. Most Americans get their health insurance through their employer. Rather than raise taxes on small businesses – the backbone of our economy – to pay for a government run program, let’s incentivize business to provide insurance coverage by lowering their rates, or by providing tax credits.

I believe Americans will always rise to the challenge. We can meet the challenge of providing accessible, affordable healthcare to all Americans without resorting to failed ideas fraught with danger and inefficiencies. We can meet this challenge without leveraging the future of our children, grandchildren, nieces, and nephews against trillions of dollars in debt. We can find American solutions, rooted in the ideals and values that made this country great.

www.castilloforcongress.com/donate

Tortured Public Policy

In the face of double-digit unemployment and right on the heals of unprecedented bank bailouts, a government takeover of the American auto industry and burdening future generations with trillions of dollars in debt with bogus stimulus spending, the American taxpayer is hit square in the pocketbook with the largest tax increase in our history. While it may be sold to us in the noblest of forms as the cure to climate change, the Waxman-Markey ‘cap and trade’ bill is nothing more than a massive energy tax. These taxes won’t come straight out of your check like Social Security, Medicare or income tax, but we will all pay them through sharply increased utility bills. Don’t take my word for it, click on this link and hear what President Obama said about his plan on the campaign trail last year.
http://www.youtube.com/watch?v=ydqg7ThZB04

There could not be a worse time to push this environmental extremism on our already hurting economy. Proponents say this will bring about new ‘green’ jobs; however, they are sadly mistaken. They will succeed in doing nothing more than pushing more jobs across the border and overseas – in particular, manufacturing jobs. This blatant social engineering has hung an albatross around the neck of America in regards to free trade. Think about it, energy costs are included in everything we buy, sell and do.

Where does this end? Well, unfortunately, I will barely be able to finish this blog before the liberal agents of change in the other Washington ask us all to turn our attention to healthcare reform. The question is, can we afford anymore ‘change’? (What’s a trillion or two amongst friends, right?)

The speed at which this is occurring is astounding. It’s almost as if every time we get our head above water for a breath and chance to survey the situation, down under the water we go again. It is somewhat like simulated drowning to confuse the public and get them to do whatever the government wants. Hey, didn’t we just outlaw that a few months ago?

Provide for the common defense

With so many Americans suffering in the midst of this "great recession", it has been very easy for the media and politicians to gloss over the very real threats that exist to our national security.



North Korea continues to rattle its saber and the Chinese appear completely unwilling to engage in efforts to suppress North Korean aggression. President Obama has stated that Iran has the "right" to develop its nuclear program for domestic energy. Meanwhile, Iran continues to deny access to the very international inspectors who are working to ensure that Iran's nuclear program is not weaponized. We are blind to Iranian intentions. Militant Islamists continue their march through Pakistan toward the seat of its government. Each of these situations pose a threat to the United States.

The primary role of our Government is to protect the people of the United States. Everything else is secondary to that responsibility. While North Korea tests long range missiles and Iran marches toward a nuclear bomb, the President and the Nancy Pelosi led Congress are cutting funding for missile defense. While Pakistan teeters on the edge of becoming a radical Islamist nuclear power, the President and Democrats in Congress are decimating the defense budget.



Governor Mitt Romney stated "I do not believe that the cause of freedom ended with the close of the last century, nor that America can afford complacency in its defense. America is still the hope of the world. We must confront clearly and courageously the threats to freedom, and we must resolutely sustain the capabilities we need to protect our security and sustain the cause of liberty." I couldn't agree more.



Our country remains the beacon of hope and freedom in the world. We must continue to be vigilant. Although we all hope for a peaceful world, hope is not an effective defense against tyrants, totalitarians, and militants who despise our way of life. As a nation, we must make our national security a top priority. After all, if our enemies succeed in carrying out their intentions for our country, nothing else will matter.

Welcome!

Welcome to David Castillo's Commentary & Insights, covering issues and policies affecting Washington State's 3rd Congressional District.