But this is the type of math Washington uses to mask the incriminating truth about the unrepentant plundering of the American people. The truth is that frightening rhetoric about default and full faith in the credit of the United States being carelessly thrown around to ram through a bigger budget than ever in spite of stagnant revenues. If your family’s income did not change year over year, would it be wise financial management to accelerate spending so you would feel richer? That is what our government is doing, with one side merely suggesting a different list of purchases than the other.

In reality, bringing our fiscal house into order is not that complicated or excruciatingly painful at all. If we simply kept spending at current levels, by their definition of cuts that would save nearly $400 billion in the next few years, versus the $25 billion the Budget Control Act claims to cut. It would only take us five years to cut $1 trillion in Washington math just by holding the line on spending. That is hardly austere or catastrophic.

A balanced budget is similarly simple and within reach if Washington had just a tiny amount of fiscal common sense. Our revenues currently stand at approximately $2.2 trillion a year and are likely to remain stagnant as the recession continues. Our outlays are $3.7 trillion and projected to grow every year. Yet we only have to go back to 2004 for federal outlays of $2.2 trillion, and the government was far from small that year. If we simply referred to that year’s spending levels, which would hardly do us fear, we would have a balanced budget right now. If we held the line on spending and the economy actually did grow as estimated, the budget would balance on its own by 2015 with no cuts whatsoever.

We pay 35% more for our military today than we did 10 years ago for the exact same capabilities. The same could be said for the rest of the government. Why has our budget doubled in 10 years? This country doesn’t have double the population or double the land area or double anything that would require the federal government to grow by such an obscene amount.

In Washington terms a simple freeze in spending would be a much bigger cut than any plan being discussed. If politicians simply cannot bear to implement actual cuts to actual spending, just freezing the budget would give the economy the best chance to catch its breath, recover and grow.

These remarks were delivered to the Save America Foundation Convention in Tampa, Florida, on Saturday, March 19, 2011.

“Against the insidious wiles of foreign influence, (I conjure you to believe me fellow citizens,), the jealousy of a free people ought to be constantly awake; since history and experience prove that foreign influence is one of the most baneful foes of Republican Government.

“Why quit our own to stand upon foreign ground? Why, by interweaving our destiny with that of any part of Europe, entangle our peace and prosperity in the toils of European Ambition, Rivalship, Interest, Humour or Caprice?”

These famous words of George Washington’s Farewell Message to America strike us today with remarkable precision and force. Our First President warned us against foreign influence and foreign entanglements — yet Americans have forgotten that message.

We have allowed ourselves to be stationed in military bases all over the world. We have endless entanglements dating back decades. We are in crushing debt in part because of it and seem to be in a state of perpetual war.

As Sun Tzu warned: “There is no instance of a nation benefitting from prolonged warfare.”

The security of our nation is threatened by this debt we now owe to foreigners. Our children now face what was warned against in the farewell address of President Dwight D. Eisenhower:

“We cannot mortgage the material assets of our grandchildren without asking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.

This was as he warned us of two dangers to society: control of America by a “military industrial complex” and of public policy being held captive by a “Scientific and technological elite”. He warned

“The prospect of domination of the nation’s scholars by Federal employment, project allocations, and the power of money is ever present — and is gravely to be regarded.”

Yet here we stand.

- a bankrupt America with our children losing political and spiritual heritage to foreign entities.

-subject to the whims of a United Nations Security Council that appears to regard the U.S. Military as its personal ready response police force.

-Captive to a scientific and technological elite that control our domestic and foreign policy agenda.

-a deeply entrenched military industrial complex that is endangering our liberties and our democracy.

- A series of Presidents that have committed to unconstitutional acts of war in Korea, Vietnam, Iraq and now Libya.

- A Congress that disregards its responsibility to the nation to declare war rarely and soberly — recognizing the deep financial impact on our citizens, dangers to our country and the many losses of liberty by individual Americans that accompany such a declaration.

Our founders established in the very constitution –the bedrock of our country — that only Congress should declare war. But now this is seen as anachronistic, inconvenient and somehow trite.

Well, here is something that our founders knew that our elected leaders have forgotten: Entering into War is supposed to be inconvenient. It is supposed to be difficult. It should require national unity and a solid economic footing. It should consider the actual effect on Americans and the real American interests at stake.

No such declaration will be forthcoming. America fired its first missiles (114) at air defense system in Libya today (3/19/2011) — an act of war at the behest of an unelected, unaccountable council of 15 leaders of mostly foreign governments. People who do not have the consent of the governed in America. Made of many foreign entities who seek an end to America and who are delighting in the continued over-extension of our country — at its continued descent into endless debt as its currency becomes even more worthless. An act of war by an America with an overextended military, currency in danger of collapse. A risky action in a powder-keg of a region that threatens to evolve into the first stop in a new world war.

How can this be stopped? What should we do? Do we wait for our politicians to do the right thing on their own? If so, we will wait a long time.

We are blessed now to live in a time of Miracles. A time when Americans are rising up in the millions to say no to an oversized government with domestic policies that are a danger to their liberties and to the political and spiritual heritage of our children. It is now time for these same millions to recognize that our government over decades has made similar and even more serious errors in its foreign policy.

With the hostile actions of U.S. Military forces today, the President is now required under the War Powers Resolution of 1973 to report to Congress within 48 hours of this action. The Congress has 60 days to authorize continued military action.

It is time for the Tea Party and all Americans to tell our Congressman to vote no! No more wars of selection. No more wasted taxpayer dollars on foreign misadventures. No more blood of good American men and women spilled on foreign soil. No more foreign entanglements and call to action by an unelected United Nations that is not accountable to the American people. Talk about a foreign entanglement!

Over the next several days, there is likely to be launched an advocacy campaign among many tea party groups in Florida demanding that congress vote no on authorizing military force. I ask you to go to a website and sign up for an email action alert and be prepared to respond. I ask you to go to FLAlliance.com and register. That is FLALLIANCE.com. Get your members to go there. Get them to call their Congressmen and women and tell them: use all resources at your disposal to stop military action by the U.S. in Libya. Launch similar campaign by your tea party groups around the country and by any group that recognizes this to be an unwise act — a dangerous act for the security of America.

Many of the congressmen and Senators sent to Washington by the Tea Party are engaging in uninformed saber rattling. They are being drawn in by the power circles of Washington. They are being persuaded by foreign powers that we must get further entangled and must expend our treasure and our lives abroad.

It is time for Congress to tell the President to return American Military forces home. Close our foreign bases. End our military action. Grow Strong again America and then we will have true national security and no country or entity will lightly threaten the United States Again. They will remember these words from George Washington’s Farewell Address.

If we remain one People, under an efficient government, the period is not far off, when we may defy material injury from external annoyance; when we may take such an attitude as will cause the neutrality we may at any time resolve upon to be scrupulously respected; when belligerent nations, under the impossibility of making acquisitions upon us, will not lightly hazard the giving us provocation; when we may choose peace or War, as our interest guided by justice shall Counsel.”

Copyright © 2011 David McKalip

Ron Paul announces last night (Dec. 8, 2010) on Freedom Watch that Cong. Spencer Bachus has promised him the Chair of the House Sub-Committee on Domestic Monetary Policy.

Peter Schiff

If you’ve spent enough time in the gold community, you might be under the impression that the most imminent threat to the average American isn’t terrorism or unemployment, but rather gold confiscation. Starting with the fact that FDR confiscated gold during the last Great Depression, and continuing to the quite accurate forecast that we are headed into an even Greater Depression, unscrupulous coin dealers have been pushing investors to buy expensive “numismatic” or “collectible” coins that they claim would be protected from government seizure. The only problems are that the original motive for confiscation no longer applies and the “protection” offered by major coin dealers wouldn’t actually help you keep your gold.

THE TYRANT’S ORDER

In 1933, President Roosevelt issued Executive Order 6102, prohibiting the private holding of gold and requiring US citizens to turn over their gold bullion or face a $10,000 fine ($167,700 in today’s dollars) or 10 years imprisonment.

For private citizens, the order listed the following exemption:

Gold coin and gold certificates in an amount not exceeding in the aggregate $100 [about 5 troy ounces at that time] belonging to any one person; and gold coins having a recognized special value to collectors of rare and unusual coins.

Seizing on this “rare and unusual” language, many coin dealers try to convince unsuspecting customers that regular bullion coins are not safe, and that it is worthwhile to pay extra for “numismatic” or “collectible” coins that would be exempt from a Roosevelt-style confiscation.

CALL THE MYTHBUSTERS

The reality is that almost all coins sold as “numismatic” or “collectible” by our competitors are really quite ordinary coins sold at high mark-ups to make these dealers extra profits. If we were in 1933, these coins would absolutely not fall under the definition of “rare and unusual.”

True numismatics are extremely rare or one-of-a-kind coins that collectors purchase for their historical and aesthetic qualities. These coins might retail for $100,000, while only containing $1,400 worth of gold. Most dealers charge a huge premium, so the coin may have to appreciate 30-50% before the buyer can even hope to make a profit. It is a speculative endeavor, and one that is likely to get even riskier as the US descends further into economic depression.

True numismatic coins, like pieces of high art, do well in good times, when people are getting richer and adding to their collections. In bad times, collectors are forced to sell because they need cash. With many collectors in the same boat, prices plunge. Even if the value of the gold in the coin rises, the gold content is only a small fraction of the coin’s value. Since premiums are contracting, the value of the coin falls. So, if you are buying gold due to fear of an economic collapse, you should buy bullion, not numismatics.

WHY WAS GOLD CONFISCATED?

In 1933, when Roosevelt issued his infamous order, the United States was still on a gold standard, meaning every 20.67 paper dollars could have been “redeemed by the bearer on demand” for a troy ounce of gold. Since Roosevelt had many public works projects to finance and also may have wanted to quietly lower real wages to drive employment, he confiscated gold and then devalued the exchange rate to $35/oz (at this point, the only people who could “exchange” were foreign governments). Thus, Americans instantly saw a 40% drop in value for the dollars they held, and the government’s profit was sequestered in something called the Exchange Stabilization Fund, which could be used by the President at whim without Congressional approval. Pretty nifty trick, huh?

It’s important to note that confiscation was necessary to Roosevelt’s plan because we were under a gold standard. Gold at that time was widely held throughout the population. If Roosevelt had devalued the dollar without confiscation, then whatever savings Americans held in gold would have been immune from this hidden tax. Furthermore, many Americans likely would have redeemed whatever paper dollars they held in fear of another devaluation. This could have wrecked the dollar’s viability as a currency.

These rationales no longer apply. In the aftermath of Roosevelt and Nixon’s dismantling of the gold standard, gold is no longer currency. Most Americans hold their savings in dollars and it is the only legal tender (which means it must be accepted in payment of all debts). Thus, President Obama and his buddy Bernanke don’t need to confiscate gold to devalue the dollar and finance excessive spending. In fact, the Fed has more than doubled the monetary base since the financial crisis started.

WHAT, ME WORRY?

The only reason to fear confiscation is in the case that the federal government is in default and needs the gold in order to pay off its creditors. But if it comes to Washington simply stealing our assets at whim, then why would gold be the only target? At that point, real estate, stock and bond certificates, and vehicles would be much easier to seize. Gold has been prized throughout history for its high value-to-weight, making it easy to conceal and trade under tough political conditions. Consider: you could store enough gold to care for a small family for six months (approx. 9 ounces) on the inside of a belt buckle.

Remember, if Washington chooses the confiscation route, we’re talking about a situation of pure pandemonium. When governments begin abrogating property rights in that fashion, the entire market mechanism ceases to function. We saw this in the Great Depression as Hoover and then Roosevelt relentlessly attacked private property and contracts.

If the situation really gets this bad, you aren’t going to trust some government agent with the intelligence of your average TSA officer to judge whether your coins are “numismatic” enough to be exempt from confiscation. The best protection in this case would be to have your gold stored safely at home or off-shore (not in a safety deposit box at a bank, where it is more likely to be seized).

Even in the heat of Roosevelt’s confiscation scheme, government troops did not break into people’s homes. The singular (failed) prosecution under the order took place when a New York lawyer tried to withdraw 5,000 troy ounces from Chase Bank. Ironically, all the gold actually collected by the Treasury was willfully surrendered in a wave of misguided patriotism, while many “law-breakers” simply kept their gold – which is why some old coins escaped the Treasury’s furnaces and are still around today.

SHOP SMART

The bottom line is that unscrupulous dealers use the threat of confiscation as a scare tactic to get you to buy gold coins at mark-ups well above the spot value of the metal they contain. While investors buy physical gold for many reasons – lack of counter-party risk, financial privacy, portability, et cetera – it is principally a store of value, a way to protect your wealth from the relentless devaluation of fiat currencies. Your goal as a buyer is to get the most gold possible for your money, from a dealer you trust. The dealer should make the process transparent and easy to understand, and deliver a genuine product at the agreed-upon price.

As a matter of business ethics and fair dealing to our customers, I decided early on that Euro Pacific Precious Metals would not offer numismatic coins. To put it simply, I think they are a poor investment option.

Peter Schiff is CEO of Euro Pacific Precious Metals. Having spent years encouraging his brokerage clients to buy physical gold, he grew concerned about the growing number of unscrupulous dealers that tried to “up-sell” customers to rare or collectible coins with high markups. Peter Schiff’s gold coin buying philosophy is to buy for the coin’s metal value, not its claimed “numismatic” value. He decided to open his own firm to sell investment-grade bullion products at competitive prices. Euro Pacific only sells reputable, well-known coins that trade on the open market, such as American Gold Eagles, Canadian Maple Leafs, and Australian Kangaroos. To find out more, please visit www.europacmetals.com or call us at (888) GOLD-160.

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Peter Schiff

There has been so much discussion recently about “QE 2″ that you would think the entire financial sector were about to embark on a transatlantic cruise. Unfortunately, they, and we, are not so lucky. In the year 2010, “QE 2″ doesn’t refer to a sumptuous ocean liner, but a second, more extravagant round of “quantitative easing” – stimulus. In the past, this technique was simply called “printing money.” As if the nation has not already suffered enough from the first round, Captain Ben Bernanke and the Fed are determined to compound the damage by hitting us with another monetary juggernaut. Their stated goal is to boost the economy and create jobs. However, since economic growth cannot be achieved by printing money, their QE 2 will sink just as surely as the Titanic.

The intent of QE 2 is to lower interest rates to promote job growth and avoid the apparently growing threat of deflation. But the very idea that the economy is weak because interest rates are too high is laughable. Deflation is the market’s cure for the asset bubbles that have recently burst, so any attempt to avert it will only weaken the economy further.

In fact, one of the reasons the US economy is in such bad shape is that interest rates are already too low. Low rates have encouraged excess borrowing, by both individuals and governments, and discouraged saving, fueling new asset bubbles at the expense of legitimate investment. As a result, the dead weight of debt has simply overloaded our economy, and our creditors are getting nervous. What we need now is to make hard choices, not engage in more easing – to deleverage, not borrow more.

Worse still, by keeping rates too low, the Fed has enabled the US government to grow significantly larger than it otherwise could had its borrowing been restrained by higher rates. Absent these low rates, Washington likely wouldn’t have passed expensive new healthcare and financial regulation reforms; they would be too busy trying to keep the lights on in the Capitol.

For this and other reasons, the bogeyman of deflation is really not a concern at all. It’s not a threat because falling consumer prices could serve as a relief for many suffering from layoffs and pay cuts in the recession. Even if it were a threat, it’s not even likely because so much liquidity has already been created and an infinite amount could still be created at will by the Fed. Consumer prices are already rising across the board, despite a contracting economy, so what’s all this talk about deflation?

The Fed is quick to point to falling real estate prices. But a drop in real estate will no more cause consumer prices to fall than the real estate boom caused them to rise. Real estate prices are too high, and the economy will never truly recover unless they are allowed to fall. It is interesting that when real estate prices were rising, the Fed did not raise rates to bring them down, but now that they are falling, the central bank feels compelled to lower rates to prop them up. If falling real estate prices threaten deflation, why did the Fed not perceive an inflation threat when real estate prices were rising?

My thinking is that, at the end of the day, all this deflation talk is a red herring. The true purpose of QE 2 is to disguise the decreasing ability of the Treasury to finance its debts. As global demand for dollar-denominated debt falls, the Fed is looking for an excuse to pick up the slack. By announcing QE 2, it can monetize government debt without the markets perceiving a funding problem. If the truth were known, a real panic would ensue. So, the Fed pretends buying treasuries is simply part of its master plan to boost the economy, even though, in reality, it is simply acting as the buyer of last resort.

If the Fed really wanted to help the economy, it would raise rates quite dramatically. Instead of preparing for QE 2, it should be unloading the debt it purchased during QE 1. Of course, that is not so easy to do – which is precisely why I was against QE 1 from the beginning. However, even though the exit will be painful, going down with the ship will be even more unpleasant.

Higher interest rates and a commitment from the Fed to refrain from purchasing Treasury debt would force the government to dramatically reduce spending. If we combine less government spending with fewer regulations, reform our tax code in a way that stops punishing savings and investment, stop all government subsidies for real estate so that prices can fall to affordable levels, and allow all insolvent entities to fail, then a real recovery will take hold.

If the Fed refuses to set sail on QE 2, then her loyal passengers might complain, but at least the US will be on solid monetary ground as it tried to rebuild a viable economy. If instead we board QE 2 (and QE 3 and QE 4 thereafter), then we are headed to a sea full of icebergs called interest rate spikes, and all on board will surely drown in a sea of worthless Federal Reserve Notes.

For a more in-depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar, read Peter Schiff’s 2008 bestseller “The Little Book of Bull Moves in Bear Markets” and his newest release “Crash Proof 2.0: How to Profit from the Economic Collapse.”

This bill (now called the Wall Street Reform Bill, to make Wall Street look like the bad guys and take attention off the Fed) will give the Federal Reserve more power. In other words, they’re going to give the private bankers at the Fed, who caused most of the financial meltdown this country is experiencing, more power to do more damage. Call, FAX, email your Senator now and tell them to vote NO on this bill.

www.youtube.com/watch?v=6ojbOd4HPVc

Since my 2008 campaign for the presidency I have often been asked, “How would a constitutionalist president go about dismantling the welfare-warfare state and restoring a constitutional republic?” This is a very important question, because without a clear road map and set of priorities, such a president runs the risk of having his pro-freedom agenda stymied by the various vested interests that benefit from big government.

Of course, just as the welfare-warfare state was not constructed in 100 days, it could not be dismantled in the first 100 days of any presidency. While our goal is to reduce the size of the state as quickly as possible, we should always make sure our immediate proposals minimize social disruption and human suffering. Thus, we should not seek to abolish the social safety net overnight because that would harm those who have grown dependent on government-provided welfare. Instead, we would want to give individuals who have come to rely on the state time to prepare for the day when responsibility for providing aide is returned to those organizations best able to administer compassionate and effective help – churches and private charities.

Now, this need for a transition period does not apply to all types of welfare. For example, I would have no problem defunding corporate welfare programs, such as the Export-Import Bank or the TARP bank bailouts, right away. I find it difficult to muster much sympathy for the CEO’s of Lockheed Martin and Goldman Sachs.

No matter what the president wants to do, most major changes in government programs would require legislation to be passed by Congress. Obviously, the election of a constitutionalist president would signal that our ideas had been accepted by a majority of the American public and would probably lead to the election of several pro-freedom congressmen and senators. Furthermore, some senators and representatives would become “born again” constitutionalists out of a sense of self-preservation. Yet there would still be a fair number of politicians who would try to obstruct our freedom agenda. Thus, even if a president wanted to eliminate every unconstitutional program in one fell swoop, he would be very unlikely to obtain the necessary support in Congress.

Yet a pro-freedom president and his legislative allies could make tremendous progress simply by changing the terms of the negotiations that go on in Washington regarding the size and scope of government. Today, negotiations over legislation tend to occur between those who want a 100 percent increase in federal spending and those who want a 50 percent increase. Their compromise is a 75 percent increase. With a president serious about following the Constitution, backed by a substantial block of sympathetic representatives in Congress, negotiations on outlays would be between those who want to keep funding the government programs and those who want to eliminate them outright – thus a compromise would be a 50 percent decrease in spending!

While a president who strictly adheres to the Constitution would need the consent of Congress for very large changes in the size of government, such as shutting down cabinet departments, he could use his constitutional authority as head of the executive branch and as commander in chief to take several significant steps toward liberty on his own. The area where the modern chief executive has greatest ability to act unilaterally is in foreign affairs. Unfortunately, Congress has abdicated its constitutional authority to declare wars, instead passing vague “authorization of force” bills that allow the president to send any number of troops to almost any part of the world. The legislature does not even effectively use its power of the purse to rein in the executive. Instead, Congress serves as little more than a rubber stamp for the president’s requests.

If the president has the power to order U.S. forces into combat on nothing more than his own say-so, then it stands to reason he can order troops home. Therefore, on the first day in office, a constitutionalist can begin the orderly withdrawal of U.S. forces from Iraq and Afghanistan. He can also begin withdrawing troops from other areas of the world. The United States has over 300,000 troops stationed in more than 146 countries. Most if not all of these deployments bear little or no relationship to preserving the safety of the American people. For example, over 20 years after the fall of the Berlin Wall, the U.S. still maintains troops in Germany.

Domestically, the president can use his authority to set policies and procedures for the federal bureaucracy to restore respect for the Constitution and individual liberty. For example, today manufacturers of dietary supplements are subject to prosecution by the Food and Drug Administration (FDA) or Federal Trade Commission (FTC) if they make even truthful statements about the health benefits of their products without going through the costly and time-consuming procedures required to gain government approval for their claims. A president can put an end to this simply by ordering the FDA and FTC not to pursue these types of cases unless they have clear evidence that the manufacturer’s claims are not true. Similarly, the president could order the bureaucracy to stop prosecuting consumers who wish to sell raw milk across state lines.

A crucial policy that a president could enact to bring speedy improvements to government is ordering the bureaucracy to respect the 10th Amendment and refrain from undermining state laws. We have already seen a little renewed federalism with the current administration’s policy of not prosecuting marijuana users when their use of the drug is consistent with state medical-marijuana laws. A constitutionalist administration would also defer to state laws refusing compliance with the REAL ID act and denying federal authority over interstate gun transactions. None of these actions repeals a federal law; they all simply recognize a state’s primary authority, as protected by the 10th amendment, to set policy in these areas.

In fact, none of the measures I have discussed so far involves repealing any written law. They can be accomplished simply by a president exercising his legitimate authority to set priorities for the executive branch. And another important step he can take toward restoring the balance of powers the Founders intended is repealing unconstitutional executive orders issued by his predecessors.

Executive orders are a useful management tool for the president, who must exercise control over the enormous federal bureaucracy. However, in recent years executive orders have been used by presidents to create new federal laws without the consent of Congress. As President Clinton’s adviser Paul Begala infamously said, “stroke of the pen, law of the land, pretty cool.” No, it is not “pretty cool,” and a conscientious president could go a long way toward getting us back to the Constitution’s division of powers by ordering his counsel or attorney general to comb through recent executive orders so the president can annul those that exceed the authority of his office. If the President believed a particular Executive Order made a valid change in the law, then he should work with Congress to pass legislation making that change.

Only Congress can directly abolish government departments, but the president could use his managerial powers to shrink the federal bureaucracy by refusing to fill vacancies created by retirements or resignations. This would dramatically reduce the number of federal officials wasting our money and taking our liberties. One test to determine if a vacant job needs to be filled is the “essential employees test.” Whenever D.C. has a severe snowstorm, the federal government orders all “non-essential” federal personal to stay home. If someone is classified as non-essential for snow-day purposes, the country can probably survive if that position is not filled when the jobholder quits or retires. A constitutionalist president should make every day in D.C. like a snow day!

A president could also enhance the liberties and security of the American people by ordering federal agencies to stop snooping on citizens when there is no evidence that those who are being spied on have committed a crime. Instead, the president should order agencies to refocus on the legitimate responsibilities of the federal government, such as border security. He should also order the Transportation Security Administration to stop strip-searching grandmothers and putting toddlers on the no-fly list. The way to keep Americans safe is to focus on real threats and ensure that someone whose own father warns U.S. officials he’s a potential terrorist is not allowed to board a Christmas Eve flight to Detroit with a one-way ticket.

Perhaps the most efficient step a president could take to enhance travel security is to remove the federal roadblocks that have frustrated attempts to arm pilots. Congress created provisions to do just that in response to the attacks of September 11, 2001. However, the processes for getting a federal firearms license are extremely cumbersome, and as a result very few pilots have gotten their licenses. A constitutionalist in the Oval Office would want to revise those regulations to make it as easy as possible for pilots to get approval to carry firearms on their planes.

While the president can do a great deal on his own, to really restore the Constitution and cut back on the vast unconstitutional programs that have sunk roots in Washington over 60 years, he will have to work with Congress. The first step in enacting a pro-freedom legislative agenda is the submission of a budget that outlines the priorities of the administration. While it has no legal effect, the budget serves as a guideline for the congressional appropriations process. A constitutionalist president’s budget should do the following:

1. Reduce overall federal spending
2. Prioritize cuts in oversize expenditures, especially the military
3. Prioritize cuts in corporate welfare
4. Use 50 percent of the savings from cuts in overseas spending to shore up entitlement programs for those who are dependent on them and the other 50 percent to pay down the debt
5. Provide for reduction in federal bureaucracy and lay out a plan to return responsibility for education to the states
6. Begin transitioning entitlement programs from a system where all Americans are forced to participate into one where taxpayers can opt out of the programs and make their own provisions for retirement and medical care

If Congress failed to produce a budget that was balanced and moved the country in a pro-liberty direction, a constitutionalist president should veto the bill. Of course, vetoing the budget risks a government shutdown. But a serious constitutionalist cannot be deterred by cries of “it’s irresponsible to shut down the government!” Instead, he should simply say, “I offered a reasonable compromise, which was to gradually reduce spending, and Congress rejected it, instead choosing the extreme path of continuing to jeopardize America’s freedom and prosperity by refusing to tame the welfare-warfare state. I am the moderate; those who believe that America can afford this bloated government are the extremists.”

Unconstitutional government spending, after all, is doubly an evil: it not only means picking the taxpayer’s pocket, it also means subverting the system of limited and divided government that the Founders created. Just look at how federal spending has corrupted American education.

Eliminating federal involvement in K–12 education should be among a constitutionalist president’s top domestic priorities. The Constitution makes no provision for federal meddling in education. It is hard to think of a function less suited to a centralized, bureaucratic approach than education. The very idea that a group of legislators and bureaucrats in D.C. can design a curriculum capable of meeting the needs of every American schoolchild is ludicrous. The deteriorating performance of our schools as federal control over the classroom has grown shows the folly of giving Washington more power over American education. President Bush’s No Child Left Behind law claimed it would fix education by making public schools “accountable.” However, supporters of the law failed to realize that making schools more accountable to federal agencies, instead of to parents, was just perpetuating the problem.

In the years since No Child Left Behind was passed, I don’t think I have talked to any parent or teacher who is happy with the law. Therefore, a constitutionalist president looking for ways to improve the lives of children should demand that Congress cut the federal education bureaucracy as a down payment on eventually returning 100 percent of the education dollar to parents.

Traditionally, the battle to reduce the federal role in education has been the toughest one faced by limited-government advocates, as supporters of centralized education have managed to paint constitutionalists as “anti-education.” But who is really anti-education? Those who wish to continue to waste taxpayer money on failed national schemes, or those who want to restore control over education to the local level? When the debate is framed this way, I have no doubt the side of liberty will win. When you think about it, the argument that the federal government needs to control education is incredibly insulting to the American people, for it implies that the people are too stupid or uncaring to educate their children properly. Contrary to those who believe that only the federal government can ensure children’s education, I predict a renaissance in education when parents are put back in charge.

The classroom is not the only place the federal government does not belong. We also need to reverse the nationalization of local police. Federal grants have encouraged the militarization of law enforcement, which has led to great damage to civil liberties. Like education, law enforcement is inherently a local function, and ending programs such as the Byrne Grants is essential not just to reducing federal spending but also to restoring Americans’ rights.

Obviously, a president concerned with restoring constitutional government and fiscal responsibility would need to address the unstable entitlement situation, possibly the one area of government activity even more difficult to address than education. Yet it is simply unfair to continue to force young people to participate in a compulsory retirement program when they could do a much better job of preparing for their own retirements. What is more, the government cannot afford the long-term expenses of entitlements, even if we were to reduce all other unconstitutional foreign and domestic programs.

As I mentioned in the introduction to this article, it would be wrong simply to cut these programs and throw those who are dependent on them “into the streets.” After all, the current recipients of these programs have come to rely on them, and many are in a situation where they cannot provide for themselves without government assistance. The thought of people losing the ability to obtain necessities for them because they were misled into depending on a government safety net that has been yanked away from them should trouble all of us. However, the simple fact is that if the government does not stop spending money on welfare and warfare, America may soon face an economic crisis that could lead to people being thrown into the street.

Therefore, a transition away from the existing entitlement scheme is needed. This is why a constitutionalist president should propose devoting half of the savings from the cuts in wars and other foreign spending, corporate welfare, and unnecessary and unconstitutional bureaucracies to shoring up Social Security, Medicare, and Medicaid and providing enough money to finance government’s obligations to those who are already stuck in the system and cannot make alternative provisions. This re-routing of spending would allow payroll taxes to be slashed. The eventual goal would be to move to a completely voluntary system where people only pay payroll taxes into Social Security and Medicare if they choose to participate in those programs. Americans who do not want to participate would be free not to do so, but they would forgo any claim to Social Security or Medicare benefits after retirement.

Some people raise concerns that talk of transitions is an excuse for indefinitely putting off the end of the welfare state. I understand those concerns, which is why a transition plan must lay out a clear timetable for paying down the debt, eliminating unconstitutional bureaucracies, and setting a firm date for when young people can at last opt out of the entitlement programs.

A final area that should be front and center in a constitutionalist’s agenda is monetary policy. The Founders obviously did not intend for the president to have much influence over the nation’s money – in fact, they never intended any part of the federal government to operate monetary policy as it defined now. However, today a president could play an important role in restoring stability to monetary policy and the value of the dollar. To start, by fighting for serious reductions in spending, a constitutionalist administration would remove one of the major justifications for the Federal Reserve’s inflationary policies, the need to monetize government debt.

There are additional steps a pro-freedom president should pursue in his first term to restore sound monetary policy. He should ask Congress to pass two pieces of legislation I have introduced in the 110th Congress. The first is the Audit the Fed bill, which would allow the American people to learn just how the Federal Reserve has been conducting monetary policy. The other is the Free Competition in Currency Act, which repeals legal tender laws and all taxes on gold and silver. This would introduce competition in currency and put a check on the Federal Reserve by ensuring that people have alternatives to government-produced fiat money.

All of these measures will take a lot of work – a lot more than any one person, even the president of the United States, can accomplish by himself. In order to restore the country to the kind of government the Founders meant for us to have, a constitutionalist president would need the support of an active liberty movement. Freedom activists must be ready to pressure wavering legislators to stand up to the special interests and stay the course toward freedom. Thus, when the day comes when someone who shares our beliefs sits in the Oval Office, groups like Young Americans for Liberty and Campaign for Liberty will still have a vital role to play. No matter how many pro-freedom politicians we elect to office, the only way to guarantee constitutional government is through an educated and activist public devoted to the ideals of the liberty.

For that reason, the work of Young Americans for Liberty in introducing young people to the freedom philosophy and getting them involved in the freedom movement is vital to the future of our country. I thank all the members and supporters of YAL for their dedication to changing the political debate in this country, so that in the not-too-distant future we actually will have a president and a Congress debating the best ways to shrink the welfare-warfare state and restore the republic.

This essay originally appeared in Young American Revolution, the magazine of Young Americans for Liberty.

Much has been made recently about the supposed economic recovery.  A few blips in a few statistics and many believe our troubles are all over.  Of course, they have to redefine recovery as “jobless” to account for the lack of improvement on Main Street.  But the banks have money, Wall Street is chugging along, and the administration would like to get on with other agendae.

They have even set up a commission to investigate the crisis as if it were all in the past.

The truth is that Americans are still losing jobs, the Fed is still inflating, and more regulations are in the works that will prevent jobs and productivity from coming back.  We are on this trajectory for the long haul.  The claim has been made many times that this administration has only had a year to clean up the mess of the last administration.  I wish they would at least get started!  Instead of reversing course, they are maintaining Bush’s policies full speed ahead.  They are even keeping the Bush-appointee in charge of the Federal Reserve!  They are not even making token efforts at change in economic policy.  And for all the talk of transparency, we hear that some powerful senators will do all they can to block a simple audit of the powerful and secretive Federal Reserve.

We have been on a disastrous course for a long time.  The money supply has doubled in the last year, our debt is unsustainable, the value of the dollar is going to continue its drop, and those Americans who understand where we are headed feel helpless and held hostage by foolish policy makers in Washington.  When the bills finally come due and the dollar stops working we are in for some real social, economic and political chaos.  That is, unless we take some major steps now to allow for a peaceful transition in the future.  These steps are laid out in my legislation to legalize competing currencies.

First of all, no one should be compelled by law to operate in Federal Reserve notes if they prefer an alternative.  We should repeal legal tender laws and allow Americans to conduct transactions in constitutional money.  Only gold and silver can constitutionally be legal tender, not paper money.  Instead, it is illegal to conduct business using gold and silver instead of Federal Reserve notes.  Simply legalizing the Constitution should be a no-brainer to anyone who took an oath of office.  Consequently, private mints should be allowed to mint gold and silver coins.  They would be subject to fraud and counterfeit laws, of course, and people would be free to use their coins or stay with Federal Reserve notes, as they see fit.  Finally, we should abolish taxes on gold and silver, which puts precious metals at a competitive disadvantage to paper money.

The Federal Reserve is a government-sanctioned banking cartel that has held far too much power for far too long and is in the end stages of running the dollar into the ground, and our economy along with it.  The very least Congress can do, if they are not willing to abolish the Fed, and perhaps not even conduct a serious audit of it, is to allow citizens the freedom to defend themselves from being completely wiped out by their monopoly power.

For nearly a century the Federal Reserve has operated in the shadows, away from the prying eyes of Congress, journalists and the American people. Created in 1913, the Fed was given enormous responsibility to protect the value of our currency. Yet in the last 96 years the U.S. dollar has lost more than 95% of its purchasing power. The Fed’s unprecedented actions over the past year in attempting to stabilize the financial system have now forced it into the spotlight, and caused millions of people around the country to question the opacity of the Fed’s financial transactions.

While the Fed is more transparent now than it was 20 or 30 years ago, there is still a long way to go. If the Fed were fully transparent, organizations such as Bloomberg and Fox News wouldn’t have to sue its board of governors to receive materials that should be available through Freedom of Information Act requests. These include information on which banks and companies received loans and for what amounts after the 2008 financial meltdown.

One puzzling assertion made by the Fed and its supporters is that the Federal Reserve has some sort of independence from the government and independence in undertaking monetary policy. Nothing could be further from the truth. The Federal Reserve is a government-created banking monopoly, and its top decision makers are appointed by the president and confirmed by the Senate. If they do not perform satisfactorily in the eyes of politicians, they will not be renominated.

The Fed has also, for the past three decades, been required to engage in monetary policy with the goal of maintaining stable prices and full employment. Since the natural trend over time is for prices to decrease, a mandate to maintain stable prices is a mandate to pursue an expansionary monetary policy and inflate the money supply to counteract the lower prices we would expect from increased productivity.

The Fed chairman is required to appear twice a year before Congress to explain the Fed’s actions, and how the Fed is complying with its mandates of stable prices and full employment. However, the idea that this constitutes any sort of oversight is laughable.

Each congressman who questions the chairman receives only a few minutes in which to ask questions and receive answers. Having been on the receiving end of Alan Greenspan’s notoriously obtuse “Greenspan-Speak” answers and Ben Bernanke’s similarly convoluted statements, we can assure you that the process is completely ineffective at getting any real answers.

No matter how direct the questions are, Fed chairmen answer with a vagueness common to bureaucrats. The whole process is window dressing for public consumption, not any sort of attempt to exercise oversight or gain any real insight into the Fed’s actions.

What is needed is a full audit of the Fed, something that has never happened. We need to know who the Fed is giving money to, what types of securities are being purchased and what backs those securities, how much money is being paid for those securities, etc.

While Rep. Mel Watt’s (D., N.C.) efforts to audit the new lending facilities authorized to bail out private firms such as AIG is a step in the right direction, it is still just a first step. These facilities have the same effect on the money supply as securities purchased through open market operations. Why should securities placed on one line of the Fed’s balance sheet be subject to audit while the exact same securities placed elsewhere on the balance sheet are not subject to audit? The loopholes need to be closed.

In coming weeks we plan to offer companion amendments to legislation already before the House and Senate that will open the Fed up to a complete audit. The amendments set a six-month time lag on the publication of previously unreleased audit data to address the Fed’s concerns that actions undertaken in support of monetary policy would immediately be politicized. The transcripts and minutes of the Federal Open Market Committee meetings would continue to be made public at the Fed’s discretion, with unpublicized details of meetings not subject to any additional scrutiny. Finally, the amendments make clear that the purpose of the audits is not to interfere with or dictate monetary policy.

As strong opponents of government intervention into the economy, we do not want to see Congress directly dictate monetary policy. But while the Fed is involved so heavily in monetary policy and its actions so heavily influence the future of our economy, it is necessary that it be fully transparent. Interventions into the economy on the order of trillions of dollars cannot continue to escape public scrutiny. American taxpayers deserve better.

Mr. Paul is a Republican congressman from Texas. Mr. DeMint is a Republican senator from South Carolina.