Chapter 15: Bailouts, Stimulus Spending, and Bailouts

8/2/2019 Chapter 15: Bailouts, Stimulus Spending, and Bailouts

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Prosperity and Charity for America

A t R bi PhD

COMMON SENSE

in 2012


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Liberty and Justice for All

Dr. Robinson is one of the mostgied scientists I have ever met. Martin Kamen Fermi Prizeand Discoverer of Carbon 14

Dr. Robinson is known to me as a careful, competent, and well-informed scientist Edward Teller Defense Scientist

Arthur Robinson has the respect of a very signicant portion of thescientic community. Frederic Seitz Former President of theU.S. National Academy of Sciences

I strongly endorse Art Robinson for election to the U.S. Congress. Inthe 15 years I have known Art, I have found him to be an outstandingscientist, a man of uncompromising integrity. Arts depth of knowledgeof the economic, scientic, energy, and industrial challenges that face

our nation is unparalleled. Men of his ability are urgently needed inWashington. Steve Forbes Publisher and Entrepreneur

In my experience with space ight, I have come to know many menof excellence. Art Robinson is the best can-do guy I know. Hes whatwe need in Washington, and I think Oregon voters should elect ArtRobinson. Hes a treasure. Scott Carpenter Mercury Astronaut

Art Robinsons philosophy is that the government is far too intrusive inour lives. He understands we have to stop the spending in Washington,the growth of the national debt, and allow the Constitution tofunction. I strongly recommend the 4th congressional district ofOregon put Art Robinson in the Congress of the United States. Harrison Schmitt Apollo Astronaut and former U.S. Senator

Robinson is a pathological nut-job. Peter DeFazio Career Politician and Arts Opponent

Our nation has a bright future, but the politicians in

Congress are doing a poor job, endangering our Jobs;the National Budget; Social Security; Education; the

Environment; Medical Care; and Economic Prosperity.

Lets replace them by electing citizens with common

sense. Art Robinson has the abilities we need in Congress.


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BAILOUTS, STIMULUS SPENDING, AND DEFICITS 161

15BAILOUTS, STIMULUS SPENDING,

AND DEFICITS

Te Congress shall have Power o lay and collectaxes, Duties, Imposts and Excises, to pay the Debtsand provide for the common Defence and generalWelfare of the United States; but all Duties, Impostsand Excises shall be uniform throughout the United

States; o borrow Money on the credit of the UnitedStates; . . . Article I, Section 8, Parts 1,2

Bailouts, stimulus spending, and defcit spend-ing all involve congressional spending o money thatCongress takes rom those who earned it.

Tis money is spent to subsidize enterpriseschosen by Congress and its bureaucrats and riends.

Te taking and political spending o this moneyis ethically wrong. Moreover, this money has beenspent so unwisely that it has actually hurt oureconomy and destroyed jobs.

Te earnings o the American people should

remain in their hands, so they can spend in commonsense ways that increase prosperity and create jobs.


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162 COMMON SENSE

Congress is in charge o taxing, spending, and borrow-ing. It cannot escape this responsibility. But what about us-ing public unds to bail out ailed banks? And its not justbanks. Many businesses want subsidies. Aer the subsidiesprove to be too little, they want bailouts.

Lobbyists are the primary acilitators o bailouts,subsidies, and special avors. Jack Abramos bookCapitalPunishment,

56written aer he served time in prison or do-

ing the same things that are still going on in Washingtontoday, describes the system that lobbyists use to get avorsrom Congress. Tis is a pervasively corrupt culture inwhich congressional votes are bought and sold or per-sonal perks, traded votes, and campaign cash. Tis cultureresults rom careers in politics. It should end.

Big Business Bailouts

Bailouts work, i you are the person getting the bailout.Te question is this: Do bailouts work or the taxpayerswho have to come up with the money to pay or bailouts?

In the debate over the $787 billion bailout package thepublic was overwhelmingly opposed.

Te public had no say in the matter. Te politiciansdidnt care what the public thought was the right thing todo. Te politicians took this approach: We are going to doexactly what we want to irrespective o what our constitu-ents want us to do because we think this is the best thingor us personally right now. And so they did.

Aer Obama took oce, my opponent, CongressmanDeFazio bragged about his support or stimulus programsand voted yes on ve bailout, stimulus, and debt increasemeasures. On one o the measures, his only no vote, he


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voted yes once and then no once he voted no onthat one because it gave less money than he wanted or thespecial interests that und his campaigns and it loweredtaxes.

11He now says that he voted no on stimulus.

Who Is Responsible?

So, the lobbyists ask Congress or things they should

not receive, and Congress provides these things to themin exchange or campaign contributions and other perks.Who is the most to blame, Congress or the lobbyists andtheir clients? Lobbyists do not take an oath o oce.

Congress is, by ar, the most to blame. It is Congress thathas been entrusted by voters with the money and powero government. It is congressmen who misuse this trust

to serve their sel interests. Tere will always be people,institutions, corporations, banks, and others who ask orthings they should not receive. It is the job o Congress tosay, No.

Aer I am elected to Congress and a lobbyist comesto my oce to make an inappropriate request, I will justpolitely turn him away.

Aer a ew such sessions, the word will get around.Lobbyists will stop coming to my oce. We will have moretime or the peoples honest business.

I you look over contributions to my campaign in2010

5,6and contributions to my opponents campaign,

5,6

you will see that all o my support came rom the contri-

butions o private individuals and that the largest part omy opponents support came rom lobbyists, corporations,and other special interest sources. DeFazio is a typicalcongressman in this regard (please see the earlier chapter


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164 COMMON SENSE

on Campaign Finance). He improperly gives our moneyand governmental power to the clients o lobbyists, andthey reward him with campaign contributions. His avorsare to special interests that do most or all o their businessoutside Oregon.

Now, DeFazio calls or higher taxes to pay or thestimulus, bailout, and decit spending programs that hesupported.

He is certainly not independent as Oregon as heclaims. He is up to his ears in debt to the lobbyists.

axpayers Pay, Government Skims

Bailout and stimulus programs are not air and, more-over, do not work. Under these programs, governmentspends money that it takes now or later rom the pri-

vate sector. Private economic activity thereore shrinks byan amount equal to increased government unded activityplus the costs o government.

Bailout and stimulus activities are like taking a lot owater out o a swimming pool at one end, spilling some,and pouring the rest in the other end. Te level o the waterdoes not rise. Te level economic activity actually alls

by the amount lost to government waste and ineciency.Ten there are the special-interest payments called

earmarks. An earmark is a grant o money to someproject in a congressmans district. It does not require a

I contend that or a nation to try to taxitsel into prosperity is like a man standingin a bucket and trying to li himsel up by thehandle. Winston Churchill


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separate law o its own. It is attached to a bill that may havelittle or nothing to do with the project.

Earmarks and requested earmarks are used by in-cumbent congressmen to buy votes by taking money romall o the people and giving it to a select ew.

Requested earmarks are especially interesting. Onlya very small percentage o the requested earmarks are ac-tually unded, but voters or whom a congressman makes

such requests (requests that are easily granted, sincethey cost nothing) hoping that theirs will be among theunded give him their support at election time.

Stimulus, bailout, pork barrel, and earmark appropria-tions are used to award taxpayer money to special interestsin return or political avors. Te current Congressmanrom Oregon District 4 receives large amounts o cam-

paign cash rom such businesses and special interests.5,6Most people know little about this process. Te recipi-

ents surely do. Te recipients think, Its ree money romWashington. How do people expect these projects to benanced? Tere are three principal ways:

1. axation,which destroys private jobs

2. Borrowing, which raises debt and destroys jobs

3. Money printing, which destroys savings and jobs

axes on the Poor

Politicians are insisting that any new taxes will allonly on the rich. Tey have been saying this or about acentury. Te income tax began in 1913, but a unny thing


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166 COMMON SENSE

happened on the road to wealth redistribution since 1913.Te rich are still rich. Te great equality has not come topass not in the United States, and not anywhere else,either.

Here we are in 2012. I Congress could or wanted toreally eliminate inequality, it would have done it in 1970or 1930. It hasnt. In act, the inequality has increased. Teprosperity o all income groups has increased with techno-

logical advance, but not because o Congress.axing the rich to pay or the needs o the poor hasbeen a popular promise or over 70 years. It is like LyndonJohnsons war on poverty. Poverty is still around, isnt it?Yet in 1964, he promised to deeat poverty.

29

Were still waiting.In order to pay higher taxes, taxpayers must sell shares

o their ownership o productive capital. As a result othese sales, there is less capital than beore taxes were im-posed even on the rich. Actually, these taxes are imposedon just about everybody. No only do they destroy jobs,but they are passed on to the public in higher costs o thethings they buy.

Te rich do not keep their money as piles o currencyunder their beds. Teir wealth is invested in stocks, bonds,and other productive assets. Te rich provide the capitalnecessary to build, maintain, and operate many o thebusinesses and industries that und jobs or Americans.I there is less capital, then there are ewer jobs and busi-nesses must raise their prices.

Do we want able-bodied workers on welare or work-ing? I preer the latter. So do they.

Because politicians are generally unsuited to the wiseuse o money, a substantial part o government revenue is


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wasted, so there is a net loss o jobs especially jobs orpoor and middle class workers. I le in private hands, thatmoney would have supported more jobs.

Te government can still borrow rom abroad, al-though oreign countries are increasingly surly about this.Tey suspect that the money borrowed already will neverbe repaid.

Do we want the Chinese and other oreigners to ownlots o our governments debt?

30Do we want Chinese o-

cials to dictate policy to our leaders, on threat o dumpingthese U.S. government IOUs?

Higher taxes, borrowing costs, and money printing allcause prices to rise. Price rises are ar more harmul to thepoor and middle class because their ewer dollars are moreprecious to them. Te result is ewer jobs and higher prices,urther impoverishing poor and middle class Americans.

Property is the ruit o labor . . . propertyis desirable . . . is a positive good in the world.Tat some should be rich shows that others maybecome rich, and hence is encouragement to in-dustry and enterprise. Let not him who is house-less pull down the house o another; but let himlabor diligently and build one or himsel, thus

by example assuring his own shall be sae romviolence when built.Abraham Lincoln


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168 COMMON SENSE

Big Spending, Big Defcits

Decit-spending in Washington is putting the nationalbudget in the red by about $1.3 trillion dollars per year.American voters avor a balanced budget.

Does congressman DeFazio vote to reduce expen-ditures and balance the budget? No. Instead, at taxpayerexpense, he sends fiers to voters saying that he supports aBalanced Budget Amendment to the Constitution

31 and

then he votes or more decit spending.He knows that, even i such an Amendment is passed,the amendment process will require many years until longaer he has le Congress. He also knows that Congressalready oen ignores the Constitution. While a BalancedBudget Amendment, i careully written, would be useul,it will surely not be passed in time to aect budgeting dur-

ing the 2013-2014 congressional session.Te ederal budget must be balanced, but it should

not be balanced by imposing additional burdens on thebacks o American workers. And, it should not be urtherunbalanced by vast political slush unds represented asstimulus and bailout programs. Neither should thebudget be balanced by lowering payments to those whodepend upon Social Security and other critical programs.(Please see the Chapter on Balanced Budget and axation.)

Government Grants

We all have our stories about the ill eects o gov-

ernment grants. In my world o science, there are manystories. Since the ederal government has taken over mostacademic research in the United States, even our best sci-entists are now orced to rely primarily on ederal grants.


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Tis has ollowed a amiliar pattern. Americans alreadyhad the nest scientic research system in the world. It wasunded largely by private money. Te government taxedaway the private money and moved in to und scienticresearch itsel. Now government brags that, without itsunding, scientic research would not take place.

Government unding causes research to be infuencedby bureaucrats and research trends to be directed politi-

cally instead o by the best eorts o independent scientists.Moreover, the scramble or grant unding resembles toa great extent the scramble or other unds rom Congress,an increasingly dishonest and unethical activity that is nothealthy or science, which must be based on truth.

Scientists are better o i their work is unded byprivate enterprise and by private contributions, as was

generally the case prior to World War II. At the OregonInstitute o Science and Medicine, my colleagues and I donot apply or government grants. We are entirely undedby individual private contributions.

Aer the war, seeing the success o the ManhattanProject, many scientists thought more such unding mightmake possible great advances. Tis, with ew exceptions,has not turned out to be the case.

Surely, one can point to many scientic discoveriesthat have since been made with unding rom governmentgrants because government has coopted almost all nonin-dustrial research unding.

Research is now so heavily dependent on government

unding that changing back to private support would be along process. So, any changes must be careully done.

Te problem is that Congress has essentially bankrupt-ed the ederal government. Tis has plunged our nation


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170 COMMON SENSE

into a series o nancial crises, with no end in sight. So,one day soon, our scientists may wake up to nd that theyhave no unds at all.

When I was a young scientist in the 1960s, most aca-demic scientists were very conservative. Tis is the com-mon sense attitude o people in science. Now, however,academic science has been largely dependent on govern-ment money or 50 years. So, most academic scientists are

now liberal and they are in a very precarious position.I the academics are wise, they will start voting ormore conservative congressmen because, i the nancialmess in Washington is not soon xed, their checks romWashington may abruptly stop coming.

Here is an example in which government grants almostimproved your medical care, but then impeded it.

Beginning in 1968 and extending through 1978, mycolleagues and I, including Linus Pauling, invented a eldo research called metabolic proling which holds enor-mous potential to improve both preventive and diagnosticmedicine. Tis work was ahead o its time, so we had tobuild almost all o our own apparatus and utilize methodsthat were very dicult. Te immediate practical use o ourdiscoveries in medicine was impeded by this diculty.

One day in 1971, a scientist rom Stanord ResearchInstitute, Dr. Bill Aberth, visited our laboratory at Stanordand told me that he and his colleagues had invented a newway to ionize molecular mixtures, which should make pos-sible the rst practical molecular ion mass spectrometer.

He wondered i I knew o a use or such a machine thatwould justiy unding to build it.

A molecular ion mass spectrometer ionizes, separates,and measures the amounts o substances in a sample,


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without breaking the molecules. It is a very ast and eco-nomical means o measuring the amounts o substances incomplicated mixtures.

I suggested that we use Bills machine as a metabolicproling device. It would be much aster, more economi-cal, and perhaps ar better than the methods we were thenusing. It might be so much better that our work could be oimmediate use in practical medical applications.

Unortunately, Linus and I were then still unded pri-marily by government grants, so that was the only sourcewe could turn to or this money. Fortunately, however,there was an excellent scientist at the National Instituteso Health, Dr. Robert S. Melville, who arranged or us toreceive the necessary government grant.

All went well. Bill built a superb spectrometer. But

then diculties developed with Bills superior at StanordResearch Institute, Michael Anbar. Anbar wanted to dis-honestly take credit or our medical project, so he ruledthat we could not run samples on Bills device, which waslocated at SRI. Bob Melville intervened, however, so wewere able to run 200 samples.

Tese samples tested the mass spectrometers capabil-ity to diagnose breast cancer, multiple sclerosis, musculardystrophy, and several other things. I designed the experi-ment with tasks that were so easy I knew it would succeed,but also with more dicult and more important examples.

Aer the samples were run, Laurelee and I spentabout two months calculating the results. It took this long

because the experiment completely ailed. We knew thiscouldnt be true, but there it was. Our 200,000 data pointswere no more valuable than random numbers.

Although we worked very hard, there was just no


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172 COMMON SENSE

inormation in the data. So, we abandoned the method. Iwas most surprised when Dr. Melville arranged generousunding or our later work on other research. Te earlierailure had wasted a lot o money.

Years passed; work on proling at the Institute ended;and we were working in Oregon. Dr. Melville, who hadnow retired rom government, invited me to dinner at theCosmos Club in Washington, D.C.

Aer dinner, when we were in his car, he hesitated;did not start the engine; and then, on that dark street inWashington, he told me a remarkable story. He preaced

this by saying he considered it the only black mark againsthis career in Washington (where he had done excellentwork).

He told me that, a little while aer our 200-sample

Laurelee Robinson Works with Her PDP-11

Computer in the Linus Pauling Institute


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experiment ailed, he received a letter rom Michael Anbaradmitting that he had secretly entered the laboratory andscrambled the labels on our 200 samples, thus destroyingthe experiment.

Further, Anbars letter contained a code or unscram-bling the samples. At about that time, Anbar had submitteda research paper using the spectrometer or a medical pro-ling experiment. He apparently wanted to slow us down,

so that his work (pirating ours) reached the literature rst.Anbar acted very unethically. Scientists are people.Tere are more sad instances o their ethical ailures thanyou might imagine. But he did write to Melville intendinglater to mitigate the damage. Neither o them, however,anticipated our government.

Dr. Melville said that, since the event was highly un-

usual, Anbars letter was orwarded to his superiors, and,rom there, it went to the very top o the National Insti-tutes o Health bureaucracy. And, the bureaucrats ruled intheir own sel interests. Frightened that the incident mightrefect poorly on them, they ordered Melville to destroyAnbars letter and not tell us why our experiment ailed.

Did you destroy the letter? I, o course, immediatelyasked. He replied that he might still have it. A year later, athis home, Bob Melville handed me a copy o Anbars letter,including the code to unscramble the samples.

So, did we then unscramble the data and nally learnthe results o the experiment? No, we couldnt. Tereinlies another tale. An individual at the Pauling Institute

had apparently intentionally destroyed all o the 250 mag-netic tapes, many disk drive records, and 15 le cabinetso printed data rom the entire 10 years o our work onmetabolic proling. Besides the mass spectrometry data,


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174 COMMON SENSE

also destroyed were metabolic proles o 1,000 newborninants in which we discovered distinct types o individu-als with potentially preventable health problems.

Several eorts were made in later years to investigatethis in the hopes that some data still remained, but an ad-ministrative employee, with the help o lawyers, thwartedthose eorts. He still works at the Pauling Institute at OSUtoday.

At present, in our research on metabolic proling, weuse exclusively a molecular ion mass spectrometer. Tisspectrometer is so advanced rom the earlier model that Ireer to it as a miracle in a box. I am certain this technol-ogy will eventually make a great contribution to medicine.

Te mass spectrometer we now use has a newer andbetter method o molecular ionization than the one that

Bill Aberth and his colleagues invented. A Nobel Prize wasgiven or its invention.

Had Bills work not been lost in this remarkable serieso events, Bill Aberth might have shared a Nobel Prize.Tere is no doubt that, had the experiment not ailed, wewould have devoted a major eort to improving Bills tech-nique. Who knows how ar we would have progressed?

Tese events caused a great a setback or research onthe use o molecular ion mass spectrometry in medicine.Actions have consequences. Had mass spectrometricmetabolic proling developed as it should, it could havesaved Laurelees lie in 1988, by getting her to surgery intime, and the lives o countless other people.

She died o a sudden illness that proling could easilyhave detected and immediate surgery mitigated.

Motivations o those who carry out medical researchrange rom prots and prestige to a simple desire to help


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people. However they are motivated, people make moreprogress when they are ree to make their own decisions.

Experts who risk their own time or capital are goingto make better decisions than politicians, who generallyknow nothing about science and medicine, or politicizedscientists who, rather than carry out actual work, join withpoliticians in rationing unds to better scientists.

It is ar less likely that a non-government unded

medical scientist would have caused or tolerated the secretdestruction o experimental research that Aberth and Iand our colleagues suered in this instance.

Decit spending, bailouts, and stimulus spendingshould not be authorized by Congress. Congress shouldconne its spending within its income and stay out o theprivate sector, except where constitutional authorization

exists or it to intervene and common sense suggests thatit should do so.

Tere are many current government spending pro-grams that are unwise. Te most important o these shouldbe phased out slowly enough to avoid unnecessary dicul-ties and to allow time or the development o alternativesupport.


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Chapter 15: Bailouts, Stimulus Spending, and Bailouts