While the deleterious economic impact of the cap-and-trade bill that passed the House last week is alarming, the manner by which the legislation was passed is equally worrisome. Not surprisingly, we’re now learning more about just how hard Speaker Pelosi worked to sway key Democrat votes, trading pork for support for her job-killing legislation.

The Washington Times reports that Ohio Representative Marcy Kaptur was awarded a $350 billion earmark to subsidize energy projects in her state in exchange for a yes vote on Waxman-Markey. Minority Leader, John Boehner, who also represents Ohio, criticized the pork, stating that Ohio already had a power authority that satisfied the electricity needs of Ohioans. Beyond that, Rep. Kaptur champions her new project as a one that is modeled after the stimulus package which, as we have told you, has failed to do anything it was intended to do.

This comes on the heels of other news that such deals were the catalyst to the passage of the bill. Cap-and-trade is bad policy, but this back-scratching is bad politics. Representatives who are willing to sell their votes are not stewards of their constituents’ interests. What’s more, leadership that will attach any price tag to bills to advance its agenda is a dangerous prospect for Americans – after being forced to bear the burden of failed spending packages and bailouts we should not have to pay to fund Pelosi’s shifty vote deals.

As Congress reconvenes and the Senate moves to take a look at the bill, we will surely hear more about the backroom antics that got cap-and-trade past the House and we will make sure our readers hear about them. But the question remains…this is the most ethical congress in history?

Wow, they really threw the book at Bernie Madoff! 150 years. Should we be satisfied? Well, sort of. As crimes go, this was a doozy, and we can certainly point to this case as proof that white-collar criminals don't always get off with lighter sentences. But if you polled Madoff's victims, how many of them wouldn't gladly trade the harsh punishment for not having been victims in the first place?

The sad thing is that the Madoff scheme was highly preventable, even under existing regulations. Even sadder is the strong possibility that our response as a society will be to go charging off in all directions, and legislate a "fix" - at staggering cost - to a "problem" that never really existed in the first place. And, in the ensuing complacency, ignore much simpler, virtually cost-free measures that would be useful. The whole sorry episode is a great example of how no amount of rules and procedures can compensate for failures of leadership, character, and plain old common sense. Read on.

A lot of blame has been hurled at the SEC for ignoring warnings, and justifiably so. Fingers have even been pointed at the investors, for not doing the kind of due diligence they should have done before making investments of that size. That's a little harsh, maybe, but a fair point. But here's the thing: Both groups of "culprits" were relying on audited financial statements. That's the whole idea of an audit: some independent, responsible, competent professionals have looked at the financial statements and said they're fine, so why look deeper?

An audit of Madoff's books would have exposed the fraud. Instantly. The first thing the auditors would have asked for is Madoff's brokerage account statements, which obviously didn't exist. Case closed. If Madoff had forged those brokerage statements, having the brokerage firms confirm them would have revealed the forgery. Case closed again. What went wrong here? No audit was ever performed, even though Madoff's financial statements each year were accompanied by a letter from an accounting firm saying that the statements had been audited.

Can this really happen? Well, technically no, since the AICPA - the private body that oversees the auditing profession - requires all accounting firms that perform audits to submit to an annual "peer review." In a peer review, auditors have their audits audited by other audit firms. One look at the Madoff audit work papers would reveal the truth. Moreover, Friehling & Horowitz - the firm that signed Madoff's audit opinion letters - is tiny, so it's a virtual certainty that the client selected for the peer review would be their one huge one. What went wrong here? No peer review was ever performed, since every year F&H certified to the AICPA that they did no audits, and therefore did not require a peer review.

So what we have here is a complete breakdown of the system giving investors in American businesses assurance that the financial statements they rely on are valid. The idea that an accounting firm can avoid peer reviews simply by stating that they did no audits is a little like investigating a murder by simply appealing to the murderer to step forward and confess. Is this really the only mechanism the AICPA has to identify accounting firms that perform audits, or at least claim they perform audits? Is this the best that a bunch of professional auditors could come up with? We can't really blame the AICPA or the audit profession as a whole for the Madoff fraud, but all this highlights the subtle but important distinctions between the words blame, cause, and responsibility.

Self-regulation is often the most reliable, cost-effective way to go. But in order for it to work, we have to be able to trust the self-regulators. The consequences of a breakdown in that trust are horrendous: the disappearance into thin air immense sums of money, a body blow to the credibility of the American investment system, and the risk that misguided efforts at "reform" by the uninformed and the agenda-driven will do even more damage than what we sustained in the first place.

All of this is so much like, uhhhh, what's the phrase I'm groping for? Oh yes: Sarbanes-Oxley.

*Main page photo courtesy of flickr user, losungen.

Happy Fourth of July to all of you.  The incredible blessing of our nation’s freedom cannot be overlooked today, nor can the spirit and vigor with which it was earned.  Because I have spent the last six months in utter fear and shock at quotes like these here, I thought your Independence Day might benefit from the quotes I provide beneath them:

“There will be a time again for making profits, but those times are not now.” – Barack Obama

“I think when you spread the wealth around it is good for everybody.” – Barack Obama

“In America, there's a failure to appreciate Europe's leading role in the world.” – Barack Obama

“My administration is the only thing between you [CEO's] and the pitchforks.” – Barack Obama

“What do you think a stimulus is? It's spending - that's the whole point! Seriously.” – Barack Obama

"A group of investment firms and hedge funds did not make sacrifices.  I don't stand with them. I stand with Chrysler's employees, management and suppliers. I don't stand with those who held out when everybody else made sacrifices." – Barack Obama

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I thought it might be better to direct our Fourth of July attentions to a few quotes like these, quotes that reflect an era and philosophy that defended American ideals, that recognized the merit of the free marketplace, that viewed America as the “last, best hope”, and not as an arrogant, shameful kid who owed the world an apology for its affluence and accomplishments.  In short, I thought a few quotes from those who make me proud to be an American – more proud than I could ever attempt to fully articulate – would be in order:

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"Democratic capitalism is not just the hope of wealth, but it's the hope of justice.  When we look into the face of poverty, we see the pain, the despair, and need of human beings.  But above all, in the face of every child, we must see the image of God.  I believe the ultimate imperative for growth is to advance human dignity." - Jack Kemp

"Property is the fruit of labor...property is desirable...it is a positive good in the world. That some should be rich shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built."  - Abraham Lincoln

“In the first place, we should insist that if the immigrant who comes here in good faith becomes an American and assimilates himself to us, he shall be treated on an exact quality with everyone else, for it is an outrage to discriminate against any such man because of creed, or birthplace, or origin.  But this is predicated upon the person's becoming in every facet an American, and nothing but an American ...  There can be no divided allegiance here.  Any man who says he is an America, but something else also, isn't an American at all.  We have room for but one flag, the American flag.  We have room for but one language here, and that is the English language, and we have room for but one sole loyalty, and that is a loyalty to the American people." - Teddy Roosevelt

“Freedom has its life in the hearts, the actions, the spirit of men and so it must be daily earned and refreshed - else like a flower cut from its life-giving roots, it will wither and die.” - Dwight D. Eisenhower

And lastly, from the incalculably brilliant Walter Russell Mead:

"As the historical process continues to accelerate, and even as dangers surround us on every hand, much of American society is going to approach this new and so far rather unsettling century with the optimistic faith in the invisible hand that has long been our hallmark.  One way or another, large numbers of Americans are likely to continue to believe that the values that have shaped the Anglo-American world and by which the Anglo-Americans have gone on to take the lead in the last three tumultuous centuries remain the values that bring success in their daily economic and political pursuits.  They will also continue to believe that these values are leading us westward and upward ...  America will continue rushing forward, however steep the slope of forbidding the terrain, bearing its banner with the strange device: Excelsior!"

I was asked to give a speech at a TEA Party on July 4, 2009 in Venice, Florida. I thought long and hard about what to say. I then realized that, after reading Thomas Paine's pamphlet "Common Sense" that we today are addicted to our government's generosity much like our founding fathers were to King George III and Great Britain.

On July 3, 1776 the people of the colonies were dependent on Great Britain for their health, safety and well being. Our Fore Fathers recognized this dependence and on July 4, 1776 declared their independence from the government they had long known. Today we Americans have become just as dependent on our own government. I decided to admit my addiction to government generosity and break myself of my habit. I ask you to listen to or read my speech and break your addiction to government generosity and declare your independence.

Please take the time listen to my presentation which is 19 minutes long or read the text of my speech titled, "Dependence Day - 2009":

Dependence Day – 2009

I come before you today to confess my dependence. My dependence is greater than from any narcotic, prescription drug or alcoholic beverage. My dependence is deeper and more troubling because it has taken away our collective virtue, destroyed families, and encumbered everything our children will own.

Hi, I am Rich Swier and I am here to confess my Dependence this 4^th Day of July – Dependence Day 2009.

Our founding father Thomas Paine told me about the evils of my dependence and asked me to use Common Sense to overcome it. He told me that “society is produced by our wants and government by our wickedness.”

He said, “Society in every state is a blessing, but government even in its best state is but a necessary evil; in its worst state an intolerable one…”

I come here today to confess to you that I am addicted to government generosity.

I am dependent on it for my health, welfare, and well being. My dependence has made me a slave in every sense of the word for as President Gerald Ford wrote, “A government big enough to give you everything you want is a government big enough to take from you everything you have.”

I have given up everything I have to keep getting that which I crave most – more government generosity; for you see I can no longer control myself.

We the people began to learn about government generosity 104 years ago. It began in 1905 when America was first exposed to an idea called progressivism. This idea was imported from Europe, the continent our fore fathers escaped from to find freedom and liberty. The idea of progressivism is that government generosity is good if not absolutely necessary for the body and soul.

At first the idea of government generosity did not seem so bad, after all many of my great grandfather’s friends and comrades in public life, at his school, his college and job were exposed to it. The idea of taking government generosity seemed harmless enough; he saw no negative effects then.

It made many in America feel good because we were helping those “in need” who had not partaken of government generosity as yet. Progressives began to sell it to others until finally Presidents Theodore Roosevelt, William H. Taft, Woodrow Wilson, Franklin Delano Roosevelt and Lyndon Baines Johnson became addicted and subsequently began pushing government generosity.

On February 3, 1913 Congress passed and the states ratified the Sixteenth Amendment to our Constitution, which allowed government to fund our addiction with everyone’s money. Congress called this new method of payment the federal income tax. As an aside the original idea was only supposed to tax the top 1% of wage earners. That turned out well didn’t it. With the millions, then billions, and now trillions of dollars that Congress collected, they could entice or even force the strongest American to take the government generosity drug.

In 1913 Congress also created the Federal Reserve, patterned after the Bank of England, and gave the Fed control of our government credit system despite objections of "alarming foreign influence and fictitious credit," favoritism to foreigners and unfair competition against less corrupt state banks.

Then on April 8, 1913 Congress passed and the states ratified the Seventeenth Amendment to the Constitution which transferred U.S. Senator Selection from each state's legislature to popular election by the people of each state.

These two events made it much easier to collect and distribute government generosity as now banks were part of the government distribution system and Senators were no longer loyal to their state or concerned with state sovereignty. Now U.S. Senators, along with U.S. Representatives, saw the value of spreading the government generosity drug amongst the people in return for votes.

During the Great Depression Congress created a new drug named Social Security. It was to be a social insurance program run by government, in other words guaranteed government generosity for life. What could possibly be wrong with that?

The Social Security Act was signed into law in 1935 by President Franklin Roosevelt. He and Congress said this new drug would keep those unemployed, retirees and the poor financially secure. He called it the New Deal. All we needed to do was just pay in and all would be well.

With the passage of the Social Security Act we rapidly gained more addicts and many of you here today are dependent in whole or in part on Social Security. Congress in effect created an entirely new social insurance and social welfare program to disperse their drug – government generosity, also known as the third rail in politics.

I know Congress told you that the money was going into an insurance policy so it would always be there for you and that your family would receive a cash payment upon your death. But in reality Congress changed the rules and took the money and spent it. Today your children and grand children are paying for your drug addiction, not you. So your drug is free, except your children are becoming less and less free as they pay more and more for your addiction.

Then Congress added a new ingredient to the powerful Social Security drug called Medicare on July 30, 1965.

Congress created Medicare as a single-payer health care system. It sounded so innocent – single payer, no one cared enough to ask what that meant. Medicare was for those over 65 years old and was signed into law by President Lyndon B. Johnson. President Johnson called it part of his Great Society program.  Congress immediately got more addicts to begin taking this drug.

At the same time Congress added a second even more powerful ingredient to this drug called Medicaid. This new ingredient brought into being an entirely new distribution system – all of the states of the union. Even though this new program violated state sovereignty it was passed anyway, in no small part because Senators were no longer accountable to the State Legislatures but rather addicted to pushing government generosity.

The states were now helping pay for and distribute this powerful and expensive designer drug. The drug was offered to low-income parents, children, seniors, and people with disabilities. Congress now has more people on the Social Security drug than ever before. Progressives in Congress had turned a corner – addiction to government generosity was now imbedded in our society.

But Congress was not finished for it kept looking for more clients until we now know that the unfunded liabilities for these four drugs (Social Security, Medicare Part A, Medicare Part B and Medicare Part D) will cost our children $99.2 trillion dollars. Ladies and gentlemen, the gross domestic product of the entire world in 2007 was $69 trillion.

Had enough yet?

How about 1977 when Congress created the Community Reinvestment Act designed to address discrimination in loans made to individuals and businesses from low and moderate-income neighborhoods. Sounds wonderful doesn’t it, except this act was just a new strain of the government generosity drug much like injecting pure heroin into the veins of our society. This drug was given to those who wanted the American dream of home ownership, even though they could not afford to pay for the drug. An entirely new group of potential debtor addicts was created – low to middle class Americans and real estate speculators. A whole new distribution system of government generosity was co-opted – America’s home town banks.

So who did the Congress put in charge of making sure this new form of deadly concoction was properly distributed, none other than the Federal Reserve, created by President Woodrow Wilson in 1913. The CRA was in large part responsible for our financial meltdown.

At the beginning of my remarks I said that my dependence has encumbered everything my children will ever own. The government has committed the typical family of four to $1.3 million in debt to pay for our addiction. A typical high school graduate can make as much as $1.53 million over his or her life span. I hope you now understand how our addiction has forever indebted our children.

Are you starting to see a pattern? Can you recognize who the pusher is? More importantly are you starting to realize that you too are addicted?

I mentioned at the beginning of my presentation that my dependence has destroyed families and taken away our collective virtue.

How can government generosity designed to help people, destroy a family? Let me briefly explain.

Congress expanded our addiction to government generosity by creating social welfare programs beginning with the New Deal, which have directly led to broken families. In 1935 under the Social Security program the Congress included the Aid to Families with Dependent Children Act (AFDC).

During the late 1950s many states realized that this act, while created to help widows with children, was being used to subsidize women having children with men they were not married to. Louisiana alone took 23,000 women off the AFDC act rolls based upon their immoral behavior.

In 1960 Arthur Flemming, then head of the Department of Health and Human Services under President Dwight David Eisenhower and a key architect of Social Security, issued an administrative ruling that states could not deny eligibility for income assistance through the AFDC act on the grounds that a home was “unsuitable” because the woman’s children were illegitimate.

In 1968, the United States Supreme Court’s “Man-in-the-House” rule struck down the practice of states declaring a home unsuitable (i.e., an immoral environment) if there was a man in the house not married to the mother. Thus, out-of-wedlock births and cohabitation were legitimized. In very short order, the number of women on welfare tripled and child poverty climbed dramatically. The assault on the family was on and Congress and the Supreme Court were co-pushers of this new government generosity drug called AFDC.  

In effect the federal government became the pimp, the homes of single mothers became the brothels and the fathers became the Johns. The children begotten by these women became the next generation of addicts. Just as surely as a baby born to a mother doing crack is addicted to cocaine, so too are these children born with a life time addiction to the onerous and destructive drug – government generosity.

Since 1968 government generosity expanded to include public housing, expanded social welfare programs and added new Medicare benefits like the prescription drug program enacted by Congress in 2005 and signed into law by President George W. Bush.  Each has destroyed the role of the father as the sole provider for his family and replaced him with – government generosity.

Finally, a brief note on how virtue has been sacrificed in the name of government generosity.

On June 17, 1963 the case of Abington Township School District v. Schempp, was settled by the United States Supreme Court. In this case, the Supreme Court decided 8-1 in favor of the respondent, Edward Schempp, and declared school sponsored Bible reading in public schools in the United States to be unconstitutional.

This single government act more than any other shifted power from God as our savior to Government as our master. Beginning with this Supreme Court decision we have not only taken religion out of our public schools we have taken it out of the public square and with it virtue, for you see virtue is moral excellence.

Karl Marx wrote, “Religion is the opiate of the people.” I disagree. I believe government generosity is the opiate of the people. Without virtue we as a people cannot govern ourselves responsibly, let alone others.

Many Americans today are asking what we can do to break this cycle of addiction. The first thing we must do is admit we are addicted. Once that is done we must take the cure, no matter how painful it may be.

We must tell our supplier, the United States Congress, that we no longer want their government generosity. We must together begin the long process of detoxification. We must all join together to rid ourselves of this addiction or we will surely fall off the wagon separately.

Let us all today take the first step in breaking our addiction by declaring our independence. Let us all take an oath as did those fifty six men in 1776 who signed the Declaration of Independence with a firm reliance on the protection of Divine Providence. Let us today mutually pledge to each other our Lives, our Fortunes, and our sacred Honor as they did two hundred and thirty three years ago.

This is the same oath every member of our military takes. Many of you have never taken this oath unless you have served in our military.  It embodies what it means to be a citizen of the United States.

I ask you now to please stand and raise your right hand and repeat after me:

"I hereby declare, on oath, /that I will support and defend the Constitution of the United States of America/ against all enemies, foreign and domestic;/ that I will bear true faith and allegiance to the same;/ and that I take this obligation freely without any mental reservation/ or purpose of evasion;/ so help me God."

You are all now on your way to independence. As Thomas Paine said in Common Sense, "The Sun never shined on a cause of greater worth." For the cause of America is the cause of all mankind.

Thank you for your patience and May God bless you and the United States of America.

This Fourth of July we look to the blessings of liberty and are reminded of how precious they are.

Two hundred and thirty-three years ago, a group of men, made up of merchants, lawyers, farmers, educators, soldiers, physicians and pastors, risked charges of treason, because they possessed a vision.

They recognized that liberty is a birthright, not something granted by a king. They had the courage of their convictions to pledge their lives, their fortunes and their sacred honor so that a new nation might be born.

Ours is a noble heritage marked by self-sacrifice for causes greater than any one individual. Those in our armed forces who have answered the call to service are often willing to pay the last full measure of devotion so that we can enjoy the freedoms and liberties of our great country.

With that in mind, the House of Representatives took steps to ensure that these courageous men and women have the resources they need to carry out their important missions. Last week the House overwhelmingly passed the National Defense Authorization Act, which offers critical support to our men and women on the front lines.

This bipartisan legislation provides a 3.4% pay increase for military personnel, expands TRICARE coverage, the military health care program, for members of the reserve forces and their families, and includes funding for family housing programs to support and expand the quality housing that our military families deserve.

Additionally, the legislation ensures that our service members have the necessary equipment, weapons and training to complete their missions. The funds authorized by this bill will be used to train U.S. forces, purchase protective gear, repair older equipment, and transport equipment and personnel around the world.

Our soldiers, sailors, airmen, and Marines put their lives on the line to defend our freedom and make America safe. They have made enormous sacrifices even before setting foot on the battlefield, leaving behind loved ones, and for the Guard and reserves, their livelihoods. Our troops have volunteered to defend our country wherever and whenever they are called, and they are executing their mission with professionalism and unparalleled courage.

So I encourage you in the midst of family BBQ's, parades and fireworks to remember and honor our founding fathers and their vision of a great and free nation and to also take a moment to pay tribute to the brave men and women in uniform who continue to serve the cause of freedom today and carry out the vision of our founding fathers. These noble individuals deserve our honor, respect, confidence and above all our continued prayers for their sacrifice here at home and abroad.

From my family to yours, I wish all of you a happy and safe Fourth of July.

Why is Gov. Sarah Palin stepping down July 26th with about fifteen months left in her term?  As a household name since Aug. 2008, Palin might have grown too big for Alaskans to handle, and perhaps she needs a heftier challenge.  Is it a smart move to resign before she finishes her four-year term?  Or does Palin hope to get a huge jumpstart on 2010 (Senate race), or 2012 and 2016 (presidential races)?

Apparently, Palin had her reasons and we ought to respect her choice to battle for Alaska and the country from the outside rather than the inside.  Palin has much more experience now, and she certainly brings energy and positive conservative values to whatever vocation she embraces in the future.  On the flip side, she will be criticized from many quarters for voluntarily quitting before her term is up. 

Palin's lakeside announcement might have been music to the ears of some of the possible GOP presidential contenders in 2012.  Although Jon Huntsman is now ambassador to China, who knows which direction he might take in the next 3 1/2, or 7 1/2 years?  Gov. Bobby Jindal (LA) could be a strong contender in 2012, and beyond.  Moreover, Tim Pawlenty (MN) and Rick Perry (TX) both wrap up their gubernatorial terms in 2010, and could run in 2012. Other possibles could be Michael Bloomberg, Jeb Bush, Gov. Mitch Daniels (IN), Newt Gingrich, Rudy Giuliani, and Mike Huckabee.

Mitt Romney might have a decent inside track because he's already run for president, and has succeeded in many endeavors.  Currently, he has all the time in the world to test the waters, build an organization, and raise money.  He is an experienced ex-governor, understands the private sector, and has sound conservative fiscal and social values.  Romney also understands America's historic role in the world as a beacon of liberty, and this freedom is preserved through robust national security policies.

All of these possible contenders will have substantially more experience than Palin if they prepare for 2012.  The big question remains:  will Palin campaign for any of these political leaders, or will they end up campaigning for her?  The answer to that question might unfold over the next year or two as a number of contenders jockey for position.  It's going to be quite a ride leading up to the next campaign.