The Largest Ponzi Scheme in History

Your government is operating a brazen Ponzi scheme that would make even Bernie Madoff blush. Yet no Congressman will ever face prosecution. No federal bureaucrat will ever go to jail. And the current administration denies taxpayers are being scammed.

What's this scandalous fraud? Social Security. Americans have been duped into believing the money deducted from their paychecks for Social Security benefits are being deposited in a trust fund for safekeeping until they retire. It is a bald-faced lie perpetuated by the current administration.

Payroll deductions are funneled to the Social Security trust fund. However, Congress has regularly raided the fund to spend your retirement income on government largess. As a result, it is currently insolvent. If Social Security were an investment fund, the Securities and Exchange Commission would have shut it down for fraud.

How did this happen? Congress has "borrowed" from the fund for decades. When it takes Social Security dollars, it deposits a government IOU in the account. These are nothing more than useless pieces of paper that promise the government will pay back the money when you retire.

For years, the Social Security payroll deductions were more than the dollars paid out to beneficiaries. As the ratio between workers and retirees has shrunk, the situation has reversed. The government is now paying out more money than it receives through payroll deductions.

Social Security reached a tipping point last year. It ran a $37 billion deficit. The government had to borrow money to make up the difference. The money did not come from the federal budget. Because of the huge federal deficit, Social Security is actually being financed by China, Japan, Saudi Arabia and other countries that purchase our debt.

The Congressional Budget Office projects that Social Security will run a $45 billion deficit this year. Every year hereafter the red ink will gush. By 2021, the CBO estimates the deficit will balloon to $118 billion. Simply put, the Social Security fund does not have the money to meet its financial obligations.

Unfortunately, the problem will only grow worse. If nothing is done to fix Social Security, the system's trustees estimate that benefits will have to be cut by 22 percent in 2037 and more each succeeding year. These are dire predictions that have daunting consequences for Americans if Washington continues to keep its head in the sand.

Yet, here was President Obama's own budget director Jacob Lew tugging on the wool that covers Americans' eyes. He recently wrote in USA Today that the Social Security Trust fund is "solvent until 2037." Lew apparently doesn't understand the definition of the word "solvent."

Here's what makes Lew's assurances so sinister. As budget director under President Clinton, this same Lew explained in 2000 that the Social Security trust fund "balances" were nothing more than a "bookkeeping" device. In his own words: "They do not consist of real economic assets that can be drawn down in the future to fund benefits."

Lew's weasel words mean that there is no money sitting in some vault ready to be paid out. The fund is bankrupt. Each year it depends on the payroll deductions to meet current obligations. Now the obligations exceed the income.

It is time to end the lies about Social Security. President Obama and Congress need to admit the obvious and tackle the issue by raising the retirement age for future beneficiaries and changing the indexing formula that pegs benefit increases to inflation. Just those two fixes will go a long way to restoring solvency.

However, don't hold your breath waiting for that to happen. President Obama wants to use protecting Social Security entitlements as a linchpin in his 2012 election campaign. That's why he trotted out Jacob Lew to lay the groundwork with his ridiculous claim about solvency.

Bernie Madoff must be shaking his head in disbelief. He sits in prison for a scheme that bilked people out of billions of dollars. Meanwhile, the Congressmen and women who stole trillions of dollars from your Social Security trust will never face jail time.

Letters from O.H. Bama

Dear Secretary of Defense Gates:

As your commander-in-cheese, it is my duty to spell out the specific mission in Libya for our brave young men and women that have been sent in harm's way. Therefore, let me be absolutely crystal clear about the outcome. I call this the O.H. Bama Doctrine.

Colonel Gadhafi, a dictator with a bad case of acne and a funny hat, must go. That is Job One. However, if he decides to stay, then our duty is to prevent the murder of civilians. But we should only drop bombs to stop the slaughter of innocents. No ground troops. If that doesn't work, we should dither and procastenate. And remember, this is not a war. Killing dictators and their armed forces is a civil way to register our displeasure with Gadhafi. As a reminder, this mission is subject to change, depending on polling data and news coverage.

Excuse me for being so direct with my expectations. It is necessary because Gadhafi refuses to be swayed by my soaring rhetoric urging him to get out of Dodge or wherever he resides. Speaking of nut jobs, please disregard anything Secretary of State Hilliary Clinton utters on this subject. Obviously, all those years explaining Bill's womanizing has left a serious disconnect between her tongue and the truth.

I know you recommended that I get approval from Congress before launching this action. But that suggestion is soooooo George Bush. I am way too busy to trot over to Capitol Hill to explain what Americans are doing in Libya. I have Final Four brackets to manage, golf courses to test and other pressing issues, like visiting Brazil.

Speaker of the House John Boehner will have to haul the French or the Germans or whomever is in charge of this non-war to Congress to explain our involvement. This is their little conflict. I am just going along to show the Muslin world that America is a kinder, gentler nation with me in charge. Think of those bombs as a friendly reminder that America is tolerant of all religions.

Now, I know some folks are insisting that I return that Nobel Peace Prize because of this misunderstanding with Gadhafi. How tacky! You can love peace and still bomb the hell out of a small, insignificant country. There is nothing hypocritical about that.

By the way, next time you see our beloved Vice President "Plugs" Biden could you please explain what a no-fly zone is? After he heard about the Libyan campaign, he rushed into the Oval Office, flapping his arms and clicking his heels. "You have my full support on this decision," he schmoozed. He then dropped his pants and pointed to his underwear. "See, no fly!" he exclaimed.

I know its scary thinking Old Plugs is next in line for the presidency, but be patient with him. He personally saved 3 million jobs, you know.

Your favorite Sorta War Time President,

O.H. Bama

Sprint: the ugly duckling seeking a suitor

With the announcement of AT&T's purchase of T-Mobile, the nation's third largest wireless carrier Sprint was left stranded again at the merger altar. Despite frantic proposals, the company has failed to woo a marriage partner.

Sprint CEO Dan Hesse took out his frustrations on AT&T, claiming the consolidation would give the merged firms too much economic power in the mobile market. "I have concerns it would stifle innovation," Hesse whined in a speech.

Most observers think Hesse doth protest too much. Sprint would like nothing better than to arrange for a corporate marriage that would increase its market share. In fact, the word on the street is that Sprint did more than just flirt with T-Mobile, hoping to land a deal of its own.

When Sprint's overtures were rejected, Hesse began acting like the jilted lover, stamping his feet in disapproval of the AT&T and T-Mobile marriage. Apparently, his failure to negotiate a deal for Sprint precludes other wireless firms from acting in their self-interests.

Perhaps, Hesse should spend less time appearing in Sprint's snooze-inducing television commercials and more attention fixing his firm's performance. The Overland Park, Kansas, based wireless company carded a stunning $595 million operating loss last year as it struggled to increase its market share.

Most of the company's growth in 2010 was prepay customers, less lucrative than post-paid subscribers on monthly rate plans. At the end of the year, Sprint had 49.9 million wireless subscribers, of which 12.3 million were pre-pay customers, according to the company. That means these bottom feeders represent nearly one-quarter of the company's subscriber base.

Unfortunately, Sprint's cost structure is hamstrung because it operates two incompatible wireless networks. This is a legacy of its ill advised 2005 purchase of Nextel, which operated a walkie-talkie mobile network. To call the $6.5 billion merger a failure would be too kind. It was an unmitigated disaster.

Sprint overpaid for a technology that was being fast becoming obsolete by the emergence of feature rich phones. At the time of the merger, Nextel was the third largest wireless company and Sprint was a solid fourth. Six years after the merger, Sprint is mired in third place, stuck between giants AT&T and Verizon and a host of bit players at the low end.

Unfortunately, Sprint has learned nothing from its past corporate pratfalls. The company is pursuing WiMax as its technology choice on its speedier 4G network in an uneasy partnership with Clearwire. Meanwhile, most of the wireless world has adopted a competing technology standard, Long Term Evolution (LTE). This will make any combination with another wireless player more difficult because the network synergies will be missing.

Another head-scratcher has been Sprint's all-you-can-eat data plan, which allows customers to gobble as much bandwidth as they like for one monthly rate. Meanwhile, AT&T offers tiered-pricing plans for data and Verizon is expected to soon follow suit. With bandwidth such a precious commodity in wireless, it makes no economic sense to essentially give it way.

For all the reasons cited above, Dan Hesse's urgent pleas for undoing the AT&T-T-Mobile deal should fall on deaf ears. Hesse and his predecessors at Sprint are to blame for the company's precipitous decline. Worrying about a deal that has not even been finalized would seem to be a waste of time, given all Sprint's issues that require management's immediate attention.

Hesse would be advised to quit playing the role of the rejected bride. Instead, he should figure out how to put some lipstick on his mistake-prone pig of a company in hopes of attracting a wireless marriage proposal.

Microsoft: From leader to laggard

That once great American monolith, Microsoft, is looking more each year like a corporation living off its former reputation for innovation and growth. The Redmond, Washington, software icon keeps stumbling while its competitors lap the slow-footed corporate Gulliver.

This is a business colossus that regularly racked up average revenue growth of 36 percent through the 1990's as it dominated the manufacturing and licensing of computing software. Those days have faded along with the its market share. In its latest fiscal year, Microsoft struggled to increase revenues by a single digit, delivering only eight percent growth.

While Microsoft rebounded last year with Windows 7, not much else has gone right for the firm. It has found it nearly impossible to stretch beyond its legacy business to take advantage of the growth in the Internet and related web services.

As just one example, the firm's search engine Bing has chalked up $560 million in losses, despite its marketing agreement with Yahoo. Their deal was supposed to boost both firm's fortunes in the battle with Goggle. However, the 10-year agreement seems to be sapping the company's energy and its cash horde.

In its latest quarterly earnings report, Microsoft highlighted its sole product winner outside its software: Xbox games and subscriptions. That division posted a 55 percent revenue gain.

Other departments in the company did not fare as well, including the golden goose, Windows operating systems. Revenues were down 30 percent. That should sound alarm bells for shareholders, although the company tried to tamp down disappointment by pawning off the poor results on an adjustment for Windows 7 upgrade coupons. Whatever.

Microsoft missed the music boom with Zune, which was trounced by Apple's Ipod. While Apple boldly pushed into mobile phones and operating systems, Microsoft couldn't make up its mind how to enter the market. In today's sizzling tablet computer segment, Microsoft has no entry and no prospects. What makes this so damning is the company was first to market a tablet PC in 2001, yet bungled the features, design and marketing.

In the Internet browser wars, Microsoft is the current market leader with its Explorer, but its share has been slowly eroded over the years. Mozilla's Firefox is in second place and gaining ground. Goggle's Chrome and Apple's Safari are threatening to become bigger players. Microsoft's lead is in jeopardy.

Of course, Microsoft's mother of all failures was its much ballyhooed Vista product. Hailed as a breakthrough operating system, Vista bombed in the market. The poorly conceived system was a glitch nightmare that was delivered three years late. After a lukewarm market reception, Vista morphed into Windows 7.

Failure hasn't stopped Microsoft from chasing markets in hopes of catching up with the competition. With much fanfare, Microsoft recently signaled that it has set its sights on becoming the premier developer of apps for smartphones. The giggles on Wall Street surely could be heard all the way in Redmond.

Apple currently has a stranglehold on the app market with a 82.7 percent global share. Research In Motion (RIM) is a distant second with 7.7 percent share. Microsoft's market share doesn't even rise to a single percentage point.

With CEO Steve Ballmer steering the Microsoft ship, this has become an all too familiar theme. The bigger the promise the larger the disappointment. Under Ballmer, uneven execution, marketing malaise and lack of innovation have tarnished its reputation.

Microsoft is a once great company that has mortgaged its future with one costly blunder after another. Perhaps, as Apple did, it is time for Microsoft to recall its founder to restore its lustre. Now that he is no longer the world's richest man, Bill Gates might find drawing a chief executive's paycheck will help both he and Microsoft regain their No. 1 status.

Social Media Scoops Network TV Coverage

In the midst of the tumultuous unrest in Egypt, millions of people around the world turned to social media to follow the fast moving news developments. They tracked the unfolding drama on a host of Internet sites offering often dramatic original coverage not found in traditional news media.

Social media also played a key role in fueling the simmering revolt. As one Cairo activist recounted, "We use Facebook to schedule the protests, Twitter to coordinate, and YouTube to tell the world."

This same theme has been repeated in recent weeks as budding revolutions have sprung up throughout the Middle East. Not too many years ago, the mainstream news media, particularly U. S. network television, would have dominated coverage of the events because of its immediacy and pervasiveness.

However, mainstream television has lost most of its edge in those two critical areas. Social media is far more accessible, a blending of technology and human interaction, that stretches as far as the reach of the Internet's global tentacles.

The range of social media is only eclipsed by its burgeoning mass appeal. Social media usage increased a staggering 100 percent in 2010. As one measure of this tidal wave, social media now accounts for 22 percent of the time people spend online and its growing.

As far as immediacy, social networking has virtually millions of news correspondents armed with mobile phones and video cameras who are disseminating photos, news and commentary instantaneously as events unfold. Even with all its millions of dollars in high-tech equipment and human resources, the bloated network television news bureaus are often scooped by social media.

For instance, during the Egyptian crisis, the hidebound news organizations often ran amateur video of protests or quoted commentary posted on Twitter because their own camera people and correspondents could not keep pace with the fast breaking events. Walter Cronkite must be doing somersaults in his grave.

The bureaucratic organizations of network television outlets hamstring their ability to move as quickly as breaking events. In contrast to the traditional media's centralized production and dissemination model, social media's decentralization allows it to reach the masses faster with fresher content.

Yet most in the mainstream media look down their pointy noses at social media. The network news moguls sniff and scold social media for being unprofessional, inaccurate, biased and dishonest. The problem is those same things have been documented about today's mainstream media.

Reporters and editors in recent years have been fired at the New York Times, Washington Post and USA Today for duping readers with fabricated stories. Network television has been prone to the same kind of shabby reporting, but usually glosses over its mistakes rather than offering a public airing of its dirty laundry.

If you need further proof of social media's rise as a news source, the devastating earthquake and tsunami in Japan provide clear evidence. Some of the most compelling video footage that has surfaced was captured on mobile phones by ordinary citizens, running rings around that country's vibrant television news industry.

The future looks even brighter for social media. Internet forums, web blogs, interactive networks, podcasts and other forms of social media are multiplying daily. In stark contrast, the lumbering American television networks are shrinking as they reduce force, lower operating costs and trim the amount of air time devoted to news.

As a result, the gap between social media and mainstream media will continue to widen. That means millions more people will increasingly rely on social media, such as Facebook, Twitter, YouTube, My Space and others, for their news. If current trends continue, it will doom television network news to irrelevance.

Factoids That You Can Use

Public employee unions have unleashed a flurry of protests to parry efforts by some states to restrict collective bargaining in an attempt to close yawning deficits. While the union bosses are focused on this front, states and municipalities continue to erode the union's power by reducing payrolls, which will have a more profound impact. For example, in February government payrolls shrunk by 30,000 people, including 12,000 state workers and 18,000 local government employees. States and localities have shaved an astounding 459,000 government jobs since public employment peaked in 2008. Those kind of steep reductions will reduce the total amount of dues paid by workers, crimping the union's ability to dole out millions of dollars in campaign contributions to their shills in the Democratic Party. Not surprisingly, while states and cities are trimming payrolls, the federal government is going in the opposite direction. Since the recession began, the feds have added 99,000 people.

American Foreign Policy Naivete

From Egypt to Tunisia and across the Middle East, uprisings that have toppled authoritarian governments have been cheered by the Obama Administration as a sign that democracy is taking root in that area of the world.

This assessment by the President and Secretary of State Hillary Clinton tragically underscores their own naivete as well as the failure of the administration's foreign policy to deal with reality.

Here is a reality check for the President and Secretary Clinton. There are only two real democracies in the Middle East. One is Israel. The other is Iraq, where thousands of U.S. troops still maintain a presence to protect this fragile democracy.

If history is any lesson, when authoritarian governments are toppled in the Middle East, after a brief flirtation with democracy the power vacuum is quickly filled by often worst despots. Exhibit A is Iran. When the Shah of Iran was disposed in 1978 by the Iranian Revolution, a new Islamic form of government was ushered in. With the election of Mahmoud Ahmadinejad in 2005, Iran has withdrawn from the world and imposed increasingly harsh restrictions on free expression and dissent.

A far worse example of Mideast unrest gone haywire is what's happened in Lebanon. After the same kind of popular demonstrations several years ago, Lebanon leader Saad Hariri was forced to form a coalition government with the terrorist group, Hezbollah. That uneasy power sharing agreement ended in January when Hezbollah seized power and ousted Hariri.

The current protests sweeping the Middle East are no coincidence, despite the president's claims to the contrary. He and his policy makers believe the wave of unrest has been the result of a domino effect that began in Egypt and has awakened democratic populists in other countries. Those who subscribe to this theory surely also believe in the Tooth Fairy.

There are sinister forces at work behind the scenes. For example, there is no question the Muslim Brotherhood was at the least a player in the campaign to topple Hosni Mubarak in Egypt. In Yemen, protest are continuing against pro-American president Ali Abdul, who has battled Muslim rebels intent on removing him from office. No question Hamas and Hezbollah have both been surreptitiously organizing throughout the Middle East, including in countries now rocked with turmoil.

What these groups have in common is they want to establish a Muslim theocracy in their countries, governed by religious leaders, who do not recognize Israel's right to exist. That is the government template Iran uses today.

Therefore, it is naive at best to suggest that democracy is on the minds of those taking part in opposition protests. The flag-waving people in the streets may want something they call freedom, but it is not an open and robust democracy modeled after the United States.

Beyond the naivete, the Obama Administration has also shown it is ill prepared to deal with fast-breaking world events. The President dallied once protests heated up in Egypt. He couldn't make up his mind which side he supported until the inevitable outcome became apparent. Then he switched sides and left Mubarak dangling.

By comparison, the president refused to back the popular uprising in Iran in 2009. Back then he called on parities to resolve their issues through political debate, dooming the opposition's reform campaign to certain death. Apparently, Obama prefers Ahamadinejad to Mubarak.

Throughout the Middle East, the administration has also sent an unintended message to our allies. Our friends cannot count on the president's backing. Decades worth of military support and generous foreign aid will dry up at the first sign of trouble.

This cut and run strategy may seem appropriate to liberal policy makers because in most cases our Middle East allies have been sheiks or dictators who abuse their power. However, other U.S. supporters in the region will notice that our allegiance counts for next to nothing. Why should our allies risk backing the U.S. when they know that we will take our guns and money and flee at the first sign of protest?

We can't have it both ways. Backing undemocratic regimes makes the U.S. appear too willing to compromise our values. But far worse is running away from our allies, no matter how shabby. This strategy will leave our country friendless in a world increasingly populated by enemies who want to destroy us.

Don't Be Fooled By Jobless Numbers

Once again the mainstream media is trumpeting jobless numbers that show the economy picked up steam last month, making Democrats practically giddy. However, as with previous figures released by the Labor Department, the data falls woefully short of painting a true picture of the nation's employment.

In the latest figures, the bureau pegged unemployment at 8.9 percent in February. That was down from 9.0 percent in January and marked the most favorable reading since April of 2009. Democrats and their surrogates on Wall Street and in academia pointed to the numbers as proof the economy is roaring back.

White House economist Austan Goolsbee had the audacity to claim the government authored jobs report offered proof that President Obama's policies were working to revive the moribund economy.

Not so fast. As this scribe has pointed out before, the government's Labor Department uses outdated methodology to calculate its monthly numbers. This skews the data rendering it practically useless in determining the real unemployment situation.

The independent Gallup polling organization's unemployment data offers a more sobering assessment of the nation's economy. The pollster's data pegged unemployment at 10 percent in mid-February. (Note: Gallup figures for the end of February have not been released.) Gallup's January unemployment number was 9.8 percent. Clearly, unemployment is not improving as the government contends.

But that's not even the worst news. Underemployment has soared to a whopping 19.6 percent. This statistic combines unemployment with the number of part-time workers who want full-time employment.

In its report on the economy, Gallup had this somber warning. "Jobs remain the key to getting the U.S. economy moving, and mid-February underemployment results suggest little or no progress is being made in that regard," the report concluded.

Even the Labor Department's monthly summary contained troubling news. Buried in the otherwise glowing account was this nugget: the participation rate in the labor force is stuck at its lowest point since the mid-1980's.For those unfamiliar with the participation rate, this key barometer measures the percentage of adults who have jobs or are seeking them. In February, the bureau estimated the labor force participation rate was 64.2 percent.

There is another way to look at this number. In the current economy, about 25.8 percent of adults are either not working or not trying to find a job. Even the President's hand-picked economist Goolsbee would find it difficult to gloss over this finding.

It is time for the administration to level with Americans on the economy. Despite trillions in bailouts, stimulus spending and worthless earmarks, the American economic engine remains stalled.

Obama-nomics have been an utter failure. If America is to regain its economic footing, Republicans must chart a new course designed to rev-up the engine of prosperity, which will lead to real job growth.

Budget Battle: Dems Set Traps

With each continuing federal budget resolution, the Democrats and Republicans are inching closer to an unavoidable political Armageddon that will determine how serious both sides are about slicing the balooning national deficit.

Democrats are spoiling for a showdown that will result in the Republicans forcing a government shutdown. Nothing would please Democrats more. They believe the move would backfire on Republicans, leading to a public outcry that would compel the opposition to scrap its efforts to shave billions from the federal budget.

Democrats have history on their side. The last time this happened under President Clinton the Republicans took a beating in the media, which forced an epic retreat while handing the Democrats a political victory.

In any budget showdown, the Democrats hold the magic bullet. As a result of a budget impasse, the administration gets to pick and choose which federal programs will be suspended or slow-tracked until a budget agreement is reached. Under Clinton, the list included national parks, veteran benefits' payments and Social Security checks. Democrats were determined to select the most popular programs and turn off the spigot to deal maximum pain across the body politic.

Even as this is written, Democrats are laying the groundwork for a budget standoff. One Democrat after another has been trotted out to the lapdog media to complain about Draconian budget cuts that will hamper the (non-existent) economic recovery. Included in their statements has been the implicit warning that Republicans want government to grind to a halt to punish America's downtrodden and dependent.

As expected, media reporting of this issue has been one-sided. Story after story has appeared quoting so-called experts about how the cuts will gut clearly beneficial programs. The latest is media coverage on the Republicans' planned cuts in scientific research, which Democrats purport will undermine economic recovery. This falsely assumes the current budget level is appropriate, which the media has no interest in examining.

However, the media has left out one important fact in this budget debate over billions of dollars in government programs. The current standoff would not even be possible, if the overwhelmingly Democrat controlled Congress would have done its job and approved a 2011 budget last year. It was a colossal failure in leadership on the part of Speaker Nancy Pelosi and President Obama. However, the media would never point out the obvious because it remains solid in the Democratic camp.

The dirty little secret is that Democrats wanted no part of approving a budget last year. With voter anger boiling over mounting deficits, Pelosi and Obama dared not unveil a budget that continued the massive spending binge. The pair wanted to get past the elections before showing their cards on the budget. Their strategy obviously backfired because the Democrats suffered huge losses in the mid-term elections despite punting the budget issue into 2011.

Democrats should be made to pay for their shameless political maneuver. Republicans should begin highlighting the Democrats' failure to do its job last year has created this budget mess. There would be no prospect of a government shutdown without the complicity of Democrats. GOP leaders have to underscore that point in every utterance on the budget, placing clear blame at the collective feet of Pelosi and Obama.

In addition, Republicans should be prepared to face a favorite Democrat budget ploy of hauling poor people, handicapped and seniors before the television cameras to weep on cue over planned GOP budget cuts. Its coming as soon as the Republicans shape their final budget.

To beat the Democrats to the punch, the GOP should begin hosting forums of small business people, economists and middle class citizens, highlighting how the current deficits are undercutting the economic recovery. They must get out ahead of this issue because the media will fall in line with Democrats once they unleash their publicity campaign.

Democrats have one other trick up their silk suit sleeves. President Obama has avoided sending a budget to Congress because he wants Republicans to be the first to make a run at cutting entitlement programs. Even the president's own bi-partisan deficit reduction panel recommended slashing the entitlements.

However, expect the president to develop amnesia on this one. Once the GOP does the heavy lifting and begins trimming entitlements such as Social Security, the President will squeal that the cuts will hurt seniors. This will allow him to make saving entitlements a theme of his reelection campaign.

That's why Republicans should insist that the President weigh in on entitlements before the final budget vote. Otherwise, he will get a pass on an issue sure to inflame voter passions on both sides of the debate.

Republicans must avoid the Democrat's clever traps and get this right. Nothing less than the economic security of the country depends on it.