It is estimated that up to a quarter of all American households still owe more on their mortgages than their homes are worth. Many of these people have been able to refinance their home loans with much lower interest rates, but that does not solve the problem because they have a balance sheet problem rather than a cash-flow problem. Those who owe more on their homes than they can sell them for, and who have little other savings or assets, are "locked in" to their existing homes. Even if they have a better job offer in a location too distant to commute, they may not be able to take the job because they cannot afford the mortgage payments on their existing homes, cannot sell for a price higher than their mortgage, or cannot afford rent or house payments in the new location. The Obama administration and the Federal Reserve are largely responsible for the problem.  Ironically, they too are locked in to an inescapble conundrum of their own making.

Can you name the worst tax? In recent weeks, there have been a slew of articles in major publications about how many multinational corporations have found legal ways to reduce their tax burdens by running some of their operations through low-tax jurisdictions. In response, those who love high taxes and big government demand that corporations pay more. Economists dislike the corporate income tax because it reduces productive labor and capital and is an additional tax on income that has already been (or will be) taxed. Politicians love the tax because it is largely invisible to most voters. Because of tax competition among countries, corporate tax rates have been dropping globally, resulting in the United States having the world's highest rate. Now the high-taxers are fighting back.  They need to be stopped.

Nassau, The Bahamas. For at least the last 2,500 years, from the time of the Athenian republic, fragile islands of freedom have been under attack. Unfortunately, nothing has changed, except now some of the aggressor states cloak themselves in the mantle of compassionate democratic countries. Rather than using arrows or bullets, the new weapons of the aggressor states are financial sanctions, including restrictions on corresponding banking relationships. It all sounds so civilized, proper and benign, but in reality, it serves to destroy incomes and property both in those jurisdictions under attack and many of those in the attacking states. And the greatest destroyer, the greatest oppressor of financial and economic freedom in the world today is America under Barack Obama.

What do you do if the facts don't support your beliefs? If you are honest, you will rethink what you previously believed. If you are a Keynesian economist, though, like New York Times columnist Paul Krugman, you make silly assertions. In his Jan. 31 column, Mr. Krugman said he wants to see "some example, somewhere, of austerity policies that succeeded." If you are a Keynesian school economist like Mr. Krugman, you define "austerity" as a reduction in government spending as a percentage of gross domestic product (GDP). If you are a classical Austrian school economist, you view a reduction of government spending not as austerity, but a growth-enhancing policy. Mr. Krugman seems to have forgotten that the government share of GDP dropped after Reagan was able to get most of his policies through the Democrat-controlled Congress (which Mr. Krugman would define as austerity). The economy boomed and employment soared. Likewise, when government spending was reduced as a share of GDP during the Clinton administration and the Republican Congress, the economy and employment boomed.

A "think tank" is an organization where scholars and specialists seek to find solutions to problems and then promote their findings. Some think tanks deal with many public policy issues, and others concentrate on one or a few, such as medical care, defense, foreign policy or economic policy. Both the number and size of think tanks has grown exponentially in the past several decades. One reason is the growth of governments, which has created a need for organizations to feed government policymakers with ideas and information -- and, more importantly, to fulfill the need for independent research to critique the many bad ideas emanating from policymakers, politicians and the media. For instance, a fellow at the American Enterprise Institute, Peter Wallison, a former general counsel of the U.S. Treasury, has just written a book explaining, with all the supporting evidence, how a politically inspired, false narrative about the financial crisis led to the destructive Dodd-Frank Act and what corrective action is needed. It's: Bad History, Worse Policy: How a False Narrative About the Financial Crisis Led to the Dodd-Frank Act.

The current debate about the debt vote is minor league compared to what will happen when the government literally cannot spend more than it is taking in. That time may be nearer than you think. It is true that the U.S. government can always "print" money to pay its bills, but at some point, printing more money becomes self-defeating because the resulting increase in the government bond interest rate and required interest payment will spiral out of control. At that point, the government will be forced to operate on a pay-as-you-go basis, as any individual or business is forced to do when they can no longer get credit. Several California cities are now in this situation. The U.S. government now receives about $200 billion a month in revenue and spends about $320 billion a month. Any responsible business or individual faced with a situation where receipts are only 60 percent of expenditures would make changes before their credit was cut off or, at the very minimum, have a plan for which bills to pay first -- but not the U.S. government. It appears that President Obama is once again going to produce a budget that assumes very high levels of deficit spending can go on forever. It also appears that Senate Democrats will continue to not bother to pass a budget. Senate Majority Leader Harry Reid is the ultimate spoiled child, accusing the taxpayers of engaging in child abuse by not giving him an unlimited allowance.

Will 2013 be a better year? A number of economic commentators have been saying the worst is behind us. I think they are wrong, and here is why. In most major countries, including the United States, government is growing faster than the private sector.

As Mitchell's Golden Rule explains, when the private sector grows faster than government, prosperity increases, and when government grows faster than the private sector, misery increases.

As can be seen in the accompanying table, in most of the major nations, debt-to-GDP ratios are increasing, because the deficits as a percentage of gross domestic product (GDP) are greater than economic growth -- meaning these countries are getting deeper in the hole each year.  The US is one of them.

Tax revenue in 2013 will be lower (despite the just passed tax increase), and government spending will be higher than forecast. It's an easy prediction -- and this is why. The capital gains tax rate and the tax on dividends is being raised from 15 percent to 23.5 percent for higher-income people. There are many studies, including those made by the U.S. Treasury, showing that the revenue-maximizing rate on capital gains is less than 15 percent. Taking a capital gain is often a discretionary event, and it is well documented that capital gains realizations fall as the rate is increased. Thus, this rate increase will be a net revenue loser for the government. Expenditures will also be far higher than forecast. The simple fact is the Obama administration and Congress, particularly the Democrats, are unable to resist the urge to spend more.

You may have been reading how the Federal Reserve has been buying huge quantities -- almost a trillion dollars' worth -- of "mortgage-backed securities" (MBS). There is a relatively high probability that this program is going to end in disaster -- and here is why. The Fed is a government institution, fully owned by citizen taxpayers. The dollars it creates only have value to the extent people believe that the Internal Revenue Service can extract real wealth from taxpayers to equal the value of the new dollars being created. Either Congress will have to vote for more taxes (or engage in less spending) to obtain the wealth to cover the new money, or the Fed's printing of money will cause inflation, thereby reducing the value of the money that individuals and businesses have or receive in exchange for the government bonds they have purchased. There are many reasons why inflation could suddenly surge and the Fed would lose control.

How is it possible that the government can spend almost twice as much as it takes in without having high inflation? The fact is that over a long period of time, it can't. In the short run, which can be a few years, the government can paper over its fiscal irresponsibility by expropriating most of the productivity gains in the private sector through regulatory and central bank actions. This is precisely what has been happening in the United States. The recent gains in productivity growth have been taxed away by government. The increases in taxes are all non-legislated taxes, largely invisible to most people. There are four of these hidden taxes.  All four of them are huge and hugely destructive.

In times past, political leaders would lay out their domestic and foreign policies in clear, coherent terms. President Obama talks about getting our fiscal house in order but fails to propose any meaningful spending cuts. His proposals to increase the tax rate on the top 2 percent of taxpayers would fund the government for eight days - assuming no behavioral change by those whose feathers are being plucked. In the real world, we know people will spend a great deal of time and effort to avoid paying high marginal tax rates. In high tax states such as California and New York, high earners will be expected to pay marginal tax rates well over 50 percent. We only need to look at what happened in Britain after the former Labor government of Gordon Brown increased the top rate to 50 percent. In the tax year 2009-10, more than 16,000 people declared an annual income of more than 1 million British pounds. This number fell to 6,000 after the tax rate was increased, partially because two-thirds of those who earned 1 million pounds or more left Britain to avoid the top rate. George Osborne, the current finance minister, just announced that the Conservative government will reduce the rate in order to obtain more revenue.  Why can't -- or won't -- Mr. Obama figure this out?

Last week, Christine Jacobs, the CEO of Theragenics Corp., a public company listed on the New York Stock Exchange that makes medical devices and is involved in cutting-edge cancer cures, wrote a letter to President Obama explaining why it was necessary to "begin moving our U.S. manufacturing to Costa Rica." The power players in Washington still do not get that many businesses are being forced to flee America or just plain shut down because it is no longer profitable or too risky to continue to do business in the historical home of entrepreneurial capitalism. Businesses operating in the United States, and even businesses outside of the country that have a small nexus with the U.S., are going to be hit with a slew of expensive job- and growth-destroying taxes and regulations beginning the first of the new year, even if the "fiscal cliff" is avoided. The more government regulation grows, the more business in America dies.

If you lend money at 5 percent interest for 10 years and then suddenly the borrower announces that he is only going to repay you at 30 cents on the dollar, would you think you have been cheated? The Argentine government defaulted on its debt a little more than a decade ago, and some of the creditors are still in court trying to get paid. Last Wednesday (11/21), Federal Judge Thomas Griesa of the New York District Court ruled against Argentina, which made world headlines. Argentine President Cristina Kirchner Fernandez publicly defied the court, saying her government will not pay "one dollar" to creditors she denounced as "vulture funds." Ms. Kirchner thinks she is heaping abuse on her creditors by calling them vultures.  We should praise them instead -- for it is risk-takers such as them who force corrupt nations to pay their debts.

Dennis Van Roekel, president of the largest teachers union, the National Education Association, failed fifth-grade math last week. The question he failed is: If X (government spending) is growing faster than A (government tax revenue) plus B (new revenue from higher tax rates on ‘the rich'), when will A + B = X? President Obama met with leaders of left-leaning organizations, including Mr. Van Roekel, to discuss the ‘fiscal cliff' last Tuesday (11/13). After the meeting, Mr. Van Roekel appeared on Neil Cavuto's Fox News show to discuss the budget deficit. Mr. Van Roekel told Mr. Cavuto that he had recommended taxing the top 2 percent more to deal with the problem. Mr. Cavuto then correctly explained that taxing the top 2 percent could not solve the problem because even with the increase, spending would still be growing far faster than revenues -- primarily because of entitlement programs. After some back and forth, Mr. Van Roekel could not identify one item in the budget that he was in favor of cutting and kept insisting the problem could be solved only by taxing the top 2 percent, even though Mr. Cavuto again correctly and clearly explained that even taxing the top 2 percent at a 100 percent rate would not produce enough revenue because entitlements are growing faster than the economy. Mr. Van Roekel appeared to be unable to grasp this rather simple concept.

Last Friday (11/09), President Obama said, "We can't just cut our way to prosperity. If we are serious about reducing the deficit, we have to combine spending cuts with revenue -- and that means asking the wealthiest Americans to pay a little more in taxes." Mr. President, with all due respect, you continue to be wrong on both assertions. The president and many of his Keynesian supporters believe that the reason we are having slow growth and very little job creation is because of a lack of sufficient demand. This is why they passed their $833 billion stimulus bill and have promoted other big-spending projects. These endeavors have not worked -- and will not work -- because they have misdiagnosed the problem. The real problem is malinvestment. An excellent explanation of specifically how financial regulations misallocate resources, reduce the level of investment, undermine good management practices and increase the risk to the entire financial system can be found in a new book by John A. Allison, former chairman and CEO of BB&T (the ninth-largest financial company in the United States), entitled "The Financial Crisis and the Free Market Cure: Why Pure Capitalism is the World Economy's Only Hope".

Knowledgeable officials are expecting a regulatory tsunami after the election. By law, the Office of Management and Budget (OMB) is required to publish a report each April and October about new regulations that government agencies are considering. OMB failed to publish the April report. The question is why -- what is Obama's OMB hiding? Given the highly political behavior of the Obama White House, it is not unreasonable to suspect that because of the failure to give notice of impending regulations and the backlog of regulations under review, there will be a tidal wave of new "midnight" regulations immediately after the election. It also is reasonable to suspect that many of the regulations may be politically unpopular and do great economic damage. If Mitt Romney wins, he may be able to pull back many of those regulations, but if Mr. Obama wins, given his rhetoric and previous behavior, a torrent of new regulations is likely.

If there is one thing government bullies like Barack Hussein Obama and his accomplices in Congress do not understand is that, in Adam Smith's phrase, the "invisible hand" of self-interest is what makes the world work, not them. A perfect example is their fascist power grab called FATCA, the Foreign Account Tax Compliance Act.  The cost of compliance and associated risks of FATCA are so high for foreign financial institutions that it will result in the United States losing hundreds of billions in foreign investment and millions of attendant jobs. For three decades, a thorn in the side of the big-government bullies like today's FATCA fascists has been a remarkable woman, former U.S. Ambassador to Switzerland Faith Ryan Whittlesey.  You should know about her.

If you were unemployed, would you prefer a job or a handout? Most people would say a job because of the self-respect that comes with being productively employed. What is not widely recognized is both the emotional and physical damage long-term unemployment does to many people. Over the past several decades, there have been many studies about the effects of long-term unemployment on individuals. If you do a Google search of such studies, you will find a remarkable consensus among the researchers -- even though some are funded by government, some by labor groups and some by employer groups. In sum, all agree that death rates increase markedly for those who lose their jobs. The unemployed, not surprisingly, are much more prone to develop stress-induced conditions such as diabetes and depression. Not being able to find work is stressful, particularly for those with family responsibilities. It is interesting that even though nearly all agree that involuntary unemployment is harmful to the individual and society, many policymakers are willing to accept it rather than focus on what can be done to prevent it.  President Obama certainly seems to be among them.

Why should the federal government bother to impose taxes when it can use the Federal Reserve to "print" all the money it needs to pay its bills? Last year, the Fed bought 77 percent of all of the government's new debt, which is the equivalent of printing money. The government borrowed almost 40 cents for each dollar it spent, with the Fed printing 30 cents of each dollar spent through its bond purchases (creating new money) -- an amount equal to about 7 percent of gross domestic product. What would happen if the Fed printed enough money each year to cover the cost of the federal income tax of approximately $1.4 trillion? Most people who have taken a course in economics know that it ultimately would result in ruinous inflation. Can one envision a world where there is both apparent price stability and no income taxes? The following is to encourage you to think about possible alternatives to the existing economic order.

Economic freedom in the US is dropping fast. The annual Economic Freedom of the World report, including an index of country rankings, has just been released, and it should be a wake-up call. The United States was known as the bastion of economic freedom for more than two centuries, and it was because of its economic freedom that the nation became the pre-eminent economic power.  However, in just a few short years, the U.S. has fallen from No. 3 in 2000 (behind the city-states of Hong Kong and Singapore) to No. 8 in 2005 and to No. 18 in 2010, the last year for which complete statistics are available. Worse yet, the U.S. decline continues, and in next year's ranking, it is almost certain to be lower. A few facts will help illustrate why economic freedom is so important.

Central banks are being pressured by their political masters to solve a problem they cannot solve. On Wednesday (9/12), a German court ruled that the European Central Bank can buy a seemingly unlimited amount of debt from the national banks of the countries in the eurozone without violating German law. By week's end, the U.S. Federal Reserve likely will decide if it is going to engage in another round of massive debt buying. These are political decisions, irrational and destructive on any sound financial or economic basis.  Yet the bankers have been given no choice.

Prague, Czech Republic. Year by year, the current nine countries of Eastern and Central Europe that were controlled by the Soviets -- Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia -- become relatively more prosperous in comparison to the richer nations of Western Europe. As a result of the European debt crisis, this trend is likely to accelerate. It has been more than two decades since these countries acquired their freedom. All have become multiparty, largely free-market democracies. What seems normal now was far from a foregone conclusion at the time of the dissolution of the old Soviet Union. In fact, most bets would have wagered that not all these nations would have made it. Today, all nine are doing better, often far better, than the rest of the EU.  Here's why.

Did you know that President Obama is responsible for the loss of more U.S. jobs than any other person? Did you know that Sen. John F. Kerry and his wife are three to four times as rich as Mitt and Ann Romney, according to the New York Times, yet paid a lower tax rate than the Romneys in 2003, the year before Mr. Kerry ran for president? Do you know how to lower your tax rate? Do you know how abysmally ignorant and hyprocritical Democrats are on tax regulations?  Read on.

Two centuries ago, it was common practice for the doctors to bleed a patient in the belief that it would get rid of the "vapors" that were thought to be causing the illness. As a result, most patients got worse and many died. Much of the world is now suffering from equally incompetent politicos playing economic doctors. Most of the major democratic countries are headed for a fiscal cliff because they have been increasing government spending at a rate far higher than economic growth for the past several years. Politicians tend to like bigger government because it gives them more power -- so they have a natural inclination to try to increase taxes rather than cut spending. As poster children for bad economic policy and for bad tax proposals, I have selected three rich jurisdictions. Despite the vast difference in size of these political entities, the three are exhibiting the same disease -- undisciplined spending. Each of their leaders is prescribing the very same lethal medicine -- tax increases on the most productive and on their capital.

Do you admire what the Olympic athletes have been able to accomplish, and do you think they should be applauded for their outstanding performances? The good side of humanity is revealed when we praise and reward such people. The bad side of humanity is shown by those who wish to punish success. Socialists of all stripes, whether they be politicians, tenured professors, unthinking students, bureaucrats in government (including those enjoying tax-free salaries at international organizations, such as the United Nations and the Organization for Economic Cooperation and Development) have a common refrain that they want equality of outcomes in the name of "fairness" (but not for themselves, of course). In the name of fairness, should we not allow anyone more than 6 feet tall to play basketball? Should we have given medals to all of the Olympic athletes so none of them would feel bad because they did not get medals? After all, they tried. If we did reward them equally, what affect do you think it would have on the future level of performance?

Which level of government do you think should have the responsibility for protecting the rights of the disabled -- local, state, federal or the United Nations? The United States has been a global leader in protecting the disabled and advancing its interests. Over the past few decades, this has been accomplished through a combination of federal, state and local laws and regulations. But now the United Nations is trying to get involved. The United Nations was originally established to prevent war among countries. Having repetitively failed in that mission, it has been interjecting itself into virtually every other aspect of human life, including demands for various forms of global taxes to be collected and distributed by U.N. bureaucrats. On May 18, President Obama sent the U.N. Convention on the Rights of Persons With Disabilities to the Senate for ratification. Such a treaty requires a two-thirds vote of the Senate. The Senate Foreign Relations Committee has just passed this convention, and it is now awaiting floor action by the entire Senate. This treaty must be disabled.

The Obama administration and its apologists, including many in the media, keep telling us that the Great Recession was the worst since the Great Depression in the 1930s, and that is why the recovery has been so anemic. Is that true? In many ways the economic situation in the early 1980s was far darker when President Reagan took office, as the one that Mr. Obama faced when he did. The unemployment rate reached 10.8 percent in the 1982 recession, but only 10 percent in the 2009 recession. When Reagan reached the Oval Office the inflation rate was 12 percent. In contrast, when Mr. Obama assumed office, the inflation rate was zero percent. Reagan was faced with the problems of slaying the dragon of inflation and reviving economic growth. Mr. Obama only had to revive economic growth. Yet Reagan solved his problems while Obama has failed to solve his.  Here's what happened, by the numbers.

Are you upset about rapidly rising food costs and high gas prices? You can thank members of Congress and the administration for this situation. Much of the United States is in the midst of a major drought. That's not the fault of the political class, but those folks have made the consequences of the drought far worse for the entire world. Congress mandates the use of ethanol in motor fuel. Currently, about 40 percent of the U.S. corn crop is used in the production of ethanol. Corn prices rose as a result of the government creating an artificial, additional demand. It is simply madness that this continues, especially when fracking technology is giving us a glut of cheap, cheap energy.

When Barack Obama announced that he again wanted to increase taxes on the top 2 percent of taxpayers, I would have recommended to Mitt Romney that he reply by saying: "President Obama has called for a tax increase on job creators, which will only fund the government for eight days, while I have an economic growth program that will fund the government for eight years and beyond." Mr. Romney is being justifiably criticized for not delivering a clear and concise description of his economic plan. Since he has not done it, I will give it shot.  I can make it so consise, in fact, I can put it on a bumper sticker.

The Constitution gives Congress the exclusive right to tax Americans at the federal level. Yet Congress continues to give away this most fundamental responsibility to international organizations, the most dangerous of which is the Paris-based Organization for Economic Cooperation and Development (OECD). Most Americans probably would not approve of their tax dollars being used to support an international organization that undermines their fundamental liberties and promotes giving their hard-earned money to other governments, often run by corrupt or dictatorial regimes. This is precisely what the OECD is doing, with the blessing of the majority members of Congress. The OECD has just released a report bragging about its "progress" in getting countries to engage in automatic sharing of tax information.  Entitled "Tool Kit for Automatic Exchange of Information," it states: "The automatic exchange of information involves the systematic and periodic transmission of 'bulk' taxpayer information by the source country to the residence country concerning various categories of income (e.g., dividends, interest, royalties, salaries and pensions)." The Obama administration is actively supporting this effort.

Tea Party members are going to be very unhappy. Many of the new members of the House and Senate that the Tea Party helped elect are already becoming part of the political class, as evidenced by their votes for continued farm subsidies, refusals to put reasonable limits on the growth of the food- stamp program, support for unaccountable international organizations, and on and on. (To see how any Congressman is voting according to conservative principles, consider conservativevotingrecords.com, byThe Madison Project.) Members of Congress vote for unjustified spending because they think the recipients will reward them with campaign contributions and praise while the majority of the electorate will never notice.  So how do we stymie the spendaholics -- when even Tea Party politicians are getting drunk on spending?

Assume you are a skilled heart surgeon and your patient needs a new heart valve, but you were given a spoon rather than a scalpel to cut open a chest. Relying on the Federal Reserve and the European Central Bank (ECB) to cure the lack of job growth is going to be no more effective than giving a heart surgeon a spoon. Central banks, such as the Fed and ECB, can cause major economic problems by printing too much or too little money. They do not cause fiscal problems - too much taxing and spending - nor can they cure them. Last week, Fed Chairman Ben S. Bernanke came close to acknowledging what many already know - that the Fed can do little at this point: "To the fullest extent possible, federal tax and spending policies should increase incentives to work and save, encourage investments in workforce skills, stimulate private capital formation, promote research and development, and provide necessary public infrastructure," he said. ECB Chairman Mario Draghi has basically said the same thing to the political leaders of the eurozone countries. The political class, to cover its own irresponsibility, is trying to dump the economic crisis on the central banks.

What government unit has the right to tax you -- your local government, regional or state government, federal government, or multinational organizations such as the United Nations, the World Bank and the World Health Organization? The reason the question is becoming more important is that rising numbers of politically powerful persons and institutions are calling for global taxes on such things as financial transactions, tobacco, sugar and carbon emissions. Think of the consequences if international organizations gain the ability to tax. The tax-exempt bureaucrats who run these organizations will have an endless list of "unmet needs" and thus will create reasons to have never-ending tax increases. The United Nations is pushing a global financial transactions tax "to offset the costs of the enduring economic, financial, fuel, climate and food crises, and to protect basic human rights." Endless global taxation to finance endless global corruption and fascism.

Many Democrats (and some Republicans) are all atwitter about Facebook co-founder Eduardo Saverin deciding to move to Singapore to partially escape what he believes is excessive taxation. Leaving the U.S. is a much more extreme action than moving from a high-tax state to a low-tax state, but a record number of Americans gave up their citizenship last year. Sen. Charles E. Schumer, New York Democrat, and Sen. Robert P. Casey Jr., Pennsylvania Democrat - whose thought processes seem to be similar to those of King George III in 1776 - have denounced Mr. Saverin and introduced legislation to punish him and others who may wish to leave because of high taxes. It appears to me that this is nothing more than a modern version of the Fugitive Slave Act of 1850, which demanded slaves be returned to their "owners," who were in effect imposing close to a 100 percent tax upon their slaves. Why don't more Republicans in Congress stand up to such Democrat thugishness -- most especially when it comes to the deficit spending that's bankrupting us and causing wealthy Americans to leave America?