Jason Interviews FreedomWorks VP Dean Clancy

Jason Hartman interviews Dean Clancy, the Vice President of Public Policy of a grassroots movement called FreedomWorks, to discuss many hot topics and issues that our country is facing. Dean talks about the fiscal cliff and the ramifications of the policies pushed through on New Year’s Eve, and the money being thrown at special interests in typical bloated government fashion. Dean stresses the importance of voter participation and discusses some radical options to turn around the debt crisis and decentralize the system. He states there is more incentive in government to do the wrong thing than what is actually best for our country and its citizens.

FreedomWorks’ aggressive, real-time campaigns activate a growing and permanent volunteer grassroots army to show up and demand policy change. They believe individual liberty and the freedom to compete increases consumer choices and provides individuals with the greatest control over what they own and earn. They lead the fight for lower taxes, less government, and more freedom.

Dean Clancy is FreedomWorks’ Legislative Counsel and Vice President, Health Care Policy. He leads our efforts to reverse the government takeover of health care and adopt a patient-centered approach. Clancy has served as the top White House budget official on health care, Medicare, Social Security, and other major government spending programs; as executive director of the President’s Council on Bioethics; and as a senior policy advisor to the congressional leadership. Clancy boasts an impressive resume a deep expertise on a broad range of domestic and fiscal policy subjects. Jokingly referring to himself as a “recovering Washington insider,” Clancy works closely with Members of Congress, grassroots activists, and the public to defend and strengthen the world’s best health care system and reduce government interference in the doctor-patient relationship.

Female Voice: Welcome to Creating Wealth with Jason Hartman. During this program Jason is going to tell you some really exciting things that you probably haven’t thought of before and a new slant on investing fresh new approaches to America’s best investment that will enable you to create more wealth and happiness then you ever thought possible. Jason is a genuine, self made multi-millionaire who not only talks the talk but walks the walk.

He’s been a successful investor for twenty years and currently owns properties in eleven states and seventeen cities. This program will help you follow in Jason’s footsteps on the road to financial freedom. You really can do it. And now, here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman: Welcome to the Creating Wealth Show. This is your host Jason Hartman and this is episode number 311, and today we have as our guest, Dean Clancy with FreedomWorks.org and I think you’ll like some of the stuff we cover there. Some of the hot topics talk about fiscal cliff ramifications and a whole bunch of other great stuff. So, he’ll be up here in a few minutes, but first I’ve got Michael, investment counsel with us to talk about a few current events and issues and things like that. Michael, how are you doing?

Michael: I’m great today Jason. How are you?

Jason Hartman: Well good, good. And you are coming to us from Newport Beach, right?

Michael: I am and it’s — I don’t know, mid ‘60s, it’s sunny, just kind of a perfect early spring day.

Jason Hartman: Yeah. Good. Good stuff. Well hey, so you’ve got a couple of current event type things — stories that you want to talk about. Let’s dive into those.

Michael: Okay, let’s just jump in — so, I don’t know if it’s — how big a news it is to the rest of the world outside of California, but we just saw that Stockton was okayed by a judge to go through bankruptcy.

Jason Hartman: Yeah, right. And — and — and then Detroit is coming up so, we’re — we’re going to see folks — look I predicted this like I don’t know, seven years ago. We’re going to see a lot of municipal bankruptcies or defaults and they may not actually reach the technical stage of legal bankruptcy protection, but essentially, insolvency. Get used to it and be really careful if you’re financing these municipalities with bonds, mini bonds that offer those — those tax benefits and so forth, the financial planner will sell you. Watch out, watch out, folks. You better be careful.

Michael: And you know, this one’s definitely a departure, just because there’s three hundred thousand people in Stockton, so it’s the largest city so far that doing a municipal bankruptcy and then we’re going to see what happens as CalPERS — the –what is that — [voice over] —

Jason Hartman: That’s the teacher’s retirement fund, yeah.

Michael: Yeah, since they were getting ready to take it to court to say that the California constitution overrides federal bankruptcy law. So, that’ll be pretty — a pretty big deal. We’ll see what happens ultimately with that.

Jason Hartman: Yeah. It’s amazing how complex our legal system is and you know how people can argue things a — a zillion different ways and all these interconnections like that. Yeah, that’s pretty crazy for sure. But what else did you want to say about Stockton?

Michael: Well, I don’t know what else there is to say about Stockton. You know, this is just — there need to be some changes in the system and California — this may set the tone for what’s going to either help California or I don’t know, maybe it’s just going to cause more trouble with you know, the unions that have such a strong hold over the whole state.

Jason Hartman: Yeah, they — they certainly do. And — and you know what’s going to be really interesting is we’ve never had a state go bankrupt and California is essentially bankrupt, except for its assets. If it’s willing to use its — its natural resources and start exploiting them, I mean California could really solve its problems — its money problems by doing that but there’s just such a strong environmental movement there that I don’t know if it’ll — if it’ll really ever happen. So barring that, I think California is still in a world of trouble and what will ultimately happen? I mean, will there be a — a bankruptcy on a state level at some point?

Jerry Brown, Governor Moon — Moonbeam from the ‘70s is back, unfortunately, he could — he could have done it and then they could have reworked all this union pension contracts and stuff like that, the public employee unions, and put that state on a solid footing, but there’s no way he’s going to do that because he’s pandering to his constituency and it’s just pretty interesting. Good, next topic.

Michael: So, in the Washington Post — and then it was referenced on Dan Mitchell from the Cato Institute on his personal blog, the Obama Administration is now starting the banks again to make loans to people with bad credit and it’s interesting the way the Obama Administration phrased their thoughts on the topic. Basically, they feel like there’s a housing recovery and a bloom starting to happen and they feel that it’s unfair to people with lesser credit that they’re being left out. But let me just — this is where we got into trouble in the first place during Clinton’s Administration was when they decided that not enough people owned houses, that certain people with lesser credit should be allowed into the game and now we’re just seeing a repeat, and it’s only been a couple of years since [voice over].

Jason Hartman: I know. This is insane. It — it was way back in the Clinton days and I think even before that, technically that the legislation began but these things get interpreted different ways over the years. But the — the CRA or the community reinvestment act, that was — that was a — a large push for the banks to feel pressured to loan money to minority groups. It was politically correct even if they didn’t have proper financial qualifications. And so, you — you saw banks with guilty consciences that wanted to win political favor with the administration. You saw them basically pandering, just like politicians do, to these — these groups of people. Their — the government would give them more goodies if they finance them. And of course the banks didn’t care because all they did is they — they wrote the loan and then they sold it off into some giant pool of mortgages and then they were purchased by pension plans, other countries like Iceland. It was just insane what happened and — and that’s the problem with the system. It’s — it’s a game of hot potato, where the buck is being passed and passed and passed, and Americans have a really short memory and I — I — I don’t even think it’s really the short memory problem in this case, it’s just the — the pandering to political constituencies and being politically correct.

It’s — I mean think about it, the way — the way you just said that. The Obama Administration thinks it’s unfair that people with bad credit are being left out as the housing market recovers. I mean you can —

Michael: Like there’s some sort of — you know, like we all owed an opportunity to make money? I don’t know, I don’t see that in the constitution that I’m owed something like that an opportunity. It’s a privilege, not a right.

Jason Hartman: The — that’s just unbelievable. I mean —

Michael: But then it was unbelievable they’ve — they’ve said the housing officials were asking the justice department to basically go to the banks and tell them, if they do these loans they won’t face legal or you know any financial recriminations. So, here we go again. It’s going to be — the tax payers will be on the hook for one hundred percent of these loans and that never works out well when the banks have nothing vested in losing when they only have an upside to it.

Jason Hartman: Well, it’s not just the taxpayers actually, it’s the — it’s the bondholders, the people that buy the mortgage back securities. So, it’s really problematic. I mean — but what it’s going to do is it’s going to fuel the housing market and who knows how big they will inflate the bubble this time. But I just want to stress, and of course this is my opinion —

Michael: Yeah.

Jason Hartman: — I could be wrong. There’s my disclaimer, but I think we are at the — we’re just at the very beginning of the next housing bubble. So, there’s a few people out there, and I think you’ve got an article on this and we’ll talk about it in a moment, saying oh the bubble is back and it’s just blown up again. Folks, we’re not even close to a — a real bubble yet. Okay, we’re just at the beginning stages of it, in my opinion. You can ride this for a long way, but again as investors we don’t invest. People listening to this show don’t invest for speculative reasons, anyway.

If appreciation happens, hey it’s just icing on the cake. I mean, we’re investing for cash flow, for solid, legitimate investment grade principles. We’re not speculators. We’re not gamblers. But hey, if we have some speculation money come in, I’m not going to complain about winning the lottery. I’m not going to complain about the icing on the cake, certainly not.

Michael: What do you say, you’d rather be lucky than right?

Jason Hartman: No, I’d rather be lucky than good.

Michael: Okay.

Jason Hartman: I’d rather be lucky than good, and so I’ll — you know, you give me some luck, I’ll take it. Okay?

Michael: All right.

Jason Hartman: All right. Hey, let’s talk about a property. Are — are we kind of finished with that subject, that ridiculousness?

Michael: Yeah, that’s fine.

Jason Hartman: Okay so let’s talk about property. You know we’ve got our Memphis tour coming up and I hope you’re all planning to join us for that. It’s going to be great and the price goes up real soon. In fact, by the time you hear this podcast the — the price may have already gone up. We did announce it on the last show, along with the big announcement about my retirement and we should get back to that subject in just a moment, Michael, because I — I received a few — a few messages about that one. So, we’ll talk about that, but this property in Memphis, I mean this is a good looking property. Almost nineteen hundred square feet, sixty four thousand dollars, only thirty five bucks a square foot and the cash-on-cash is pretty awesome on this, isn’t it?

Michael: Yeah, it’s unbelievable. So, this one right now is — is performer at seventeen percent cash-on-cash return and total return investment at forty seven percent, pretty unbelievable.

Jason Hartman: That is — that is unbelievably good. So, here you’ve got a — a house that’s sixty three thousand nine hundred, protected rent is seven ninety five per month, so you’re above the one percent RV ratio, which I got to tell you folks, it’s getting harder and harder to do that in this market because prices are rising and rents always lag and lag pretty badly most of the time. Prices — rents go up much slower than prices in an accelerating market. But again, they also go down a lot slower in the depreciating market. So, here you’re looking at this performer. Your cash flow here is twenty six hundred and five dollars annually and that’s what generates your seventeen percent cash-on-cash return, and — and here we’ve got a — a prediction on the assumptions here of six percent appreciation, eight percent vacancy rate, management fee at eight percent and maintenance really quite high, actually. This is an older property. It’s a very solid property. Now, it doesn’t say the age.

You know, we require our local market specialist to put the age, but they didn’t do it on this one. I’m guessing that’s a ‘60s house. What do you think?

Michael: That would be my guess but you know I think that is pretty conservative of them to stick in the seven percent for maintenance so they are making some adjustments for the age. And I will just say on this property, you know we put that it had about fifteen hundred — fifteen thousand six hundred dollar down payment for the initial cash invested and then at cash flow’s a little over two hundred a month, and these are the numbers that I hear a lot from investors that I talk to. They say, you know I would like to put about twenty thousand dollars down and make two to three hundred dollars a month cash flow. So, this is exactly the kind of property that I’m hearing from a lot of investors that are looking for right now.

Jason Hartman: Right, right. It’s a — it’s a really nice looking property too. So, one of the things I — I — I want to mention is that, whenever we do a property tour one of the really important reasons to come to that tour is because as you know, if you’re shopping — if you’re making offers and trying to buy properties right now, it’s getting pretty tough to buy them. So, for a — a few weeks before any tour that we do, we always ask our local market specialists to accumulate properties and not post them on the website, not offer them for sale in any way, shape or form. And the people that go on the tour get first dibs of these. Of course, that’s — that’s fair because I mean they made the effort to fly out and do the tour with us, okay and do the creating wealth seminar there, and as — as they did that, we’ve got to give them something. Number one, we’ve got to have inventory for them that they can buy that weekend. But number two, we’ve got to give them something exclusive. We’ve got to give them something they can’t get anywhere else. We ask them to kind of cherry pick their inventory and put it on hold, and they do this and the people on the tour will have first dibs at the properties, and then if anything doesn’t sell, which in this market is pretty unusual, but it may happen. Maybe their — maybe they hold twelve properties and two of them don’t sell. Well, those will show up on our website at Jasonhartman.com, maybe a week later after the tour. Okay.

But — but the best properties will be gone and the people that go on the tours get the first chance to buy them. So I highly recommend you come on the tour. It’s very inexpensive. You’re basically paying less than our cost for your ticket price and then it’s just your travel expenses. And remember the room block on our — our discount at the tour rooms that does end pretty soon. The hotels are putting a lot of pressure — they did extend the date for me, but they want to raise that room price to one fifty nine a night from, I believe it’s one nineteen a night, now. So, hurry up and book the tour. When you book the tour on the website, Jasonhartman.com in the events section, you’ll be emailed all the information about the hotel and the link tour you can book at the early bird rate and the phone number you can call. Okay. Anything else about this one though? That’s — that’s a phenomenal property. I really like it.

Michael: No, it’s just really nice looking and it’s interesting how we decided to have a property that it was Memphis and the tour is coming up, so hopefully if people take a look at some of these properties. It’ll also be more exciting to them, you know to see the opportunity they might be a little more motivated to sign up for the tour.

Jason Hartman: Absolutely, absolutely. Now, we have a holiday in the U.S., and I don’t know — I don’t think it’s around the world. I have a feeling this is just a U.S. holiday. Maybe you know, and maybe some of our listeners know, but every April 1st, we have a holiday called April fools day. Do you know if this is worldwide or is it just U.S.?

Michael: I don’t know. I’m jumping — I’m trying to Google it from really bad.

Jason Hartman: I don’t know. I didn’t bother to look but note that a few days ago it was April 1st when I made that big retirement announcement. So, just take that for what it’s worth folks. I’m not really retiring. I love doing this. Are you kidding me? A lot of people sent notes and — boy that — that whole threat on Facebook was — was almost hilarious. But what I did decide I should do is, I should try although I probably won’t succeed at this, but I should try to kind of take the summer off. I — I’m really going to try to scale back this summer and kind of do — do some non-work things. I — I just kind of — I need a — I love to work. No one has to convince me to work. I’m certainly not doing it for money any more. I love what we do and it’s a mission. You know, it really is a mission.

Michael: Well, those of us that — that know you well, knew that there was no way that you would — could possibly think of retiring any time soon.

Jason Hartman: Yeah, I know. I — I’m — I’m not too — I’m not too much of the retirement kind of guy. At least I don’t see so — see that in the — anywhere in the near future. So folks, I’ll be here with you for better or worse and — and not retiring. Okay so — so if you believed that, April fools, okay. All right. And hey, I think you’ve got one more article, Michael, you want to talk about before we go to the next?

Michael: Well, let’s just talk about what I’ll call general and then we’ll mention that website that I wanted to mention. So, I’m starting to see articles talking about you know all these markets — housing markets the U.S. are being fueled by investors and some of them are trying to hint at saying there’s not enough renters to — to go into these houses that — there’s no possible way rents can keep up without wage increases and — and employment increases. So, let’s just get your thoughts on that because I think we will see more of this in the mentioned media more info about investors driving the markets but then also people already — already trying to say that the market’s are oversold and that it’s already too late.

Jason Hartman: That comment that you just made about how some think there’s no way rents will be able to keep up with housing prices, because the job creation is not enough. That’s basically what you were saying. And I — you know, I’ve heard people make comments for that and folks, this is like the dumbest idea ever. Okay. And here’s why it’s such a completely bogus argument. It’s — it’s because it’s like saying, well not everybody will always be able to afford an iPhone. Okay, so they’ll buy another phone. You know it won’t be an iPhone, it’ll be a lesser phone and I’m not promoting the iPhone necessarily, although I have one, but it’s like saying not everybody will be able to drive a brand new BMW. Okay so, they’re going to go to the model down if they like BMW or they’re going to go to buy a Japanese car or a — a fantastic Korean car.

I mean folks, Hyundai is a phenomenal company if you ask me. They are making incredibly good cars, Hyundai and Kia. Just amazing, and those cars are under priced. You have —

Michael: They have amazing warranties, too.

Jason Hartman: Oh my God, it’s the best one around. Ten year, one hundred thousand miles. The Hyundai Genesis is like the best bargain on the road today, if you ask me. I was — I almost bought one and I was looking at one a few weeks ago. For forty seven thousand dollars, you can get the fully loaded, absolutely top of the line R-Spec car that, in my opinion, except for the band name, is equivalent to a Mercedes S-Class that costs eighty thousand bucks. I mean, that is just a bargain.

Okay, but back to the topic at hand. And — and no Hyundai is not one of my sponsors and neither is Apple, but this is — people, the point is with housing is — and I’ve been saying this for many years, the lifestyle, the standard of living for most Americans is declining and it’s not a good thing. It’s just a — it’s just an accurate thing. And so, people will always live in some house. So okay, that statement — well the rents can’t keep up with the prices. Okay, fine. So, that person that is not getting a raise at their job, that is finding no opportunity out there in the workforce, and their real wages adjusted for inflation are declining, as really they have been since about 1990. I mean, Americans on the whole, if you have a job, you’ve — you’ve not had a raise in years and decades. I mean you’ve been loosing ground in — in real dollars after inflation, and so they’ll rent something. They’ll just rent something less or they’ll own something less.

It’s not as though you’re house is some fixed thing that everybody gets a four bedroom, twenty two hundred square foot house in a nice suburban area. No, that person will move down to a three bedroom, fifteen hundred square foot house in a lesser area. For some reason people think like the house is some static thing that they don’t — if this house goes up in price, there’s no shopping in the market place. There’s no adjustment made by the consumer. The consumer is forced to make adjustments due to economic realities and the consumer in America, by and large, is getting poorer in — in real dollars. Their lifestyle is declining. Their standard of living is declining. So when people say, Jason why are you so pessimistic, I mean I don’t think that bodes well for people renting my house, three, five, ten years from now. Sure it does it’s just that the renter profile’s going to be a different person. It’s going to be usually a person that used to live a better life than they’re living when they’re renting from you, three, five and ten years in the future. That makes sense, right. Am I explaining that well?

Michael: I think so. I think it’s pretty clear and it just — but then it makes these other articles seem very — very — they’re not very multi-dimensional. They look at it from a very narrow focus of — because of A, we — our only answer is that we’re going to go towards B and they don’t think about all this other [inaudible] information.

Jason Hartman: I — I don’t know how some of these economists can say this stuff with a straight face. They get on there and they talk about the national housing market, as if it’s not four hundred local markets. They — they — they talk about housing as though it’s some generic thing. They — they talked about things like the example I just gave, as if the house someone lives in is some static thing. People are going to move down and you need to surface people, as an investor have housing for them those moved down tenants, those moved down occupants.

You know, maybe they owned before and now they’re forced to rent because they can’t afford the home, because they can’t gather a down payment. They — they had a better house in the past, now the house they have is not as good. It’s life, it’s what’s happening. Generally speaking, Americans are getting poorer, okay, and inflation is causing that and taxation too.

Michael: The important thing is also that we are not static so we’re not just sticking with the same markets year after year. We’re looking at them seeing what’s going on. When Phoenix got too hot from driven with a lot of private equity in hedge fund money, you know, when we moved out of there, sure potentially now if there’s — prices got a little high and then maybe they do have vacancies in quite a few areas with some of the hedge funds, but we’re not static. We do keep selling that [voice over].

Jason Hartman: Right, right, right. We’re — we’re area agnostic. Now, that’s an important thing you bring up there because you know I always use the example of Charlotte. Years ago I had recommended and my team recommended Charlotte, North Carolina and then we stopped recommending Charlotte, and then we started recommending it again. You — you see what happens there, and the reason we stopped is because too many investors rushed in there, and if you had to rent a property at that time, it was hard to rent, because there were too many competing rental properties on the market for rent, not rental properties for sale, but for rent because so many investors had rushed in there.

Now, the people that purchased in there prior to that, in most cases and you know in ninety percent of the cases, their property was already stabilized. They already had a tenant and maybe that tenant’s going to be there as — as a multi-year tenant, a lot of times. So maybe you can’t raise your rent or you can’t raise your rent as much as you would like to raise your rent every year, but if your property is stabilized, you just sit there and you know, milk it for cash flow. It’s not like you need to sell just because — because we stopped recommending a market. We’re — we’re saying no new inference at this time. We don’t think it’s a good idea to enter this market, but if you’re already in it and you’re stabilized meaning the property’s rented, just get back and enjoy the monthly checks. You’re — you’re doing great.

Okay well hey, Memphis tour —

Michael: Can we have the website real fast?

Jason Hartman: Yeah, go ahead.

Michael: Okay, so this is the Freedomin50states.org —

Jason Hartman: Oh, that’s a good one you found, yeah.

Michael: — yeah, okay. That’s from the Mercatus Center at George Mason University and this is the third addition of this website which basically Dave created a ranking system of how different states have certain policies that either promote freedom or inhibit that related to the fiscal regulatory and personal realms. And so like fiscal policy may be about thirty five point three percent of the — of the ranking regular — regulatory policy was thirty two percent, personal freedom was thirty two point seven percent. And what it does is they take all these little sub-freedom categories into consideration and they created their own index, but they also let users on the website change the waiting of any of these freedoms and indexes so they can make their own decision about something that they see as being more important to them. Maybe it’s gun policy or marijuana or tax burden and then you can rent the state’s — potentially finding the state that you think is the freest to live in and maybe you know, you make a decision that you want to move there ultimately.

Jason Hartman: Yeah right, right. That’s a — that’s a great little rating system about the freedom of all the states, and you know, the two worst states were New York and California. And — and the freest of states were North Dakota, South Dakota, Oklahoma and I think there was one other that was in that top tier. And then you know Arizona and Texas ranked really well, but they don’t actually want the freest according to this survey. So, you’ve got to balance everything out, whether opportunities, recreation, etcetera, with will the government be off my back?

Michael: Yeah, and it was just entertaining. They have things like bachelor party freedom, which was combined categories such as gambling, victimless crimes, tobacco, beer, happy hour loss, kept regulations, fear of taxes, marijuana, fire works, prostitution. So —

Jason Hartman: Let — let me guess —

Michael: It’s going to — it’s entertaining.

Jason Hartman: I — I guess in Utah, it doesn’t fear that well to those kind of freedoms, right?

Michael: Yeah, I — I forgot to collect from the best bachelor party state.

Jason Hartman: Yeah.

Michael: So —

Jason Hartman: Well, that’s got to be Nevada, right?

Michael: We’ll see. I — I don’t know.

Jason Hartman: Yeah, okay. Anyway, we’ll — we don’t need to go there.

Michael: They can jump on and take a look.

Jason Hartman: Yeah, yeah. But anyway take a look, that’s really interesting and thanks for bringing that to us. That’s — that’s a good website and there’s kind of a funny little video you can watch there too. All right. Hey Michael, thanks so much for joining me today. Let’s get to our guest. We’ll be back with FreedomWorks’ in just about sixty seconds.

Female Voice: I’ve never really thought of Jason as subversive but I just found out that’s what Wall Street considers him to be.

Male Voice: Really, now how is that possible at all?

Female voice: Simple. Wall Street believes that real estate investors are dangerous to their schemes because the dirty truth about income property is that it actually works in real life.

Male Voice: I know. I mean, how many people do you know, not including insiders, who created wealth with stocks, bonds and mutual funds? Those options are for people who only want to pretend they’re getting ahead.

Female Voice: Stuff and other non-direct traded assets are a losing game for most people. The typical scenario is you make a little, you lose a little and spin your wheels for decades.

Male Voice: That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win.

Female Voice: And unluckily for Wall Street, Jason has a unique ability to make the every day person understand investing the way it should be. He shows them a world where anything less than a twenty six percent annual return is disappointing.

Male Voice: Yep, and that’s why Jason offers a one-book set on creating wealth that comes with twenty digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us.

Female Voice: We can take local markets untouched by the economic downturn, exploit packaged commodity’s investing and achieve exceptional returns safely and securely.

Male Voice: I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government.

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Male Voice: To get your Creating Wealth Encyclopedia Book One, complete with over twenty hours of audio, go to Jasonhartman.com/store.

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Jason Hartman: It’s my pleasure to welcome Dean Clancy to the show. He’s the Legislative Counsel for an organization of which I am a big fan and it is FreedomWorks.org and he’s coming to us today from Washington, DC. Dean, how are you?

Dean Clancy: I’m great, thank you.

Jason Hartman: Good. You are in DC, right?

Dean Clancy: Yep, looking at Union Station out my window.

Jason Hartman: Good, good stuff. Well, I guess the most topical thing to talk about is the fiscal cliff disaster. I’m not going to call it the fiscal cliff deal, I’m going to call it the fiscal cliff disaster and you know we’ll get into that but just give us a brief one minute on what is FreedomWorks’ for the audience?

Dean Clancy: Sure. FreedomWorks’ is a national grass roots advocacy network of more than two million Americans who are dedicated to the principles of lower taxes, less government and more freedom. We have four million friends on Facebook with a — the number one non-profit on Facebook and we — we go around the country trying to get help the grass roots freedom movement activists who want to change policy of their communities and elect good people to office, especially fiscal and constitutional and servants.

Jason Hartman: Fantastic. For a long time even on my own Facebook profile, I say that less government equals more freedom, and it’s just so simple. I don’t know why it’s so hard for people to grasp such a concept. Any time government grows freedom declines, the bigger the government, the smaller the citizen. So I’m sure we’re going to find some — some good agreement on that. Well, talk to us if you would about the fiscal cliff debacle and give us the FreedomWorks’ side of what you’re thinking about.

Dean Clancy: Sure. This is interesting because in Washington you have some conservatives who defend the fiscal cliff bill as basically avoiding of a bad situation, automatic tax hikes of continuance of tax cuts for people, and basically putting the tax issue behind republicans. We take a very different view. We think that it really was a disaster. I mean, think about not just substance, but also let’s start with the process. The process was, for twelve years we’ve known the taxes would go up on New Year’s Eve and for a year we knew that there would be a sequester on automatic across the board spending cut that was agreed to back in 2011, the last time we increased Uncle Sam’s credit line. And yet they waited until the last couple of days. Two people went in a room, Mitch McConnell, the republican senate leader and Joe Biden the vice president, and they hammered out this deal which turns out to be loaded with corporate welfare giveaways which does nothing to really spending. In fact, it postpones the sequester and it raises taxes on upper income earners, anyone — everyone who works. It all turns out to be a — a tax increase on seventy seven percent of Americans. They jam it through the senate at 1:30 a.m. on New Year’s Eve. I’m told that a number of the senators were shall we say, enjoying themselves at that hour and they only had a little bit of time to read it. Senator Mike Lee from Utah complained that he was only given a total of six minutes to look at the bill which was sixty pages long —

Jason Hartman: Oh but Dean —

Dean Clancy: — [voice over] —

Jason Hartman: — Dean, Dean, Dean, Dean stop for a moment. We’ve got to pass the bill to see what’s in it.

Dean Clancy: Well yeah, that’s — that’s the new normal.

Jason Hartman: Yeah. [Inaudible].

Dean Clancy: And that’s it. And then the next day, the house of representatives is told they’ve got to deal with it or it’s going to be some kind of big crisis and so they end up deciding to just push it through, without even off — giving anyone a chance to offer abundance. The republicans just basically rolled over and swallowed this really bad bill and the thing is full — in addition to raising taxes and not cutting spending at all, is actually full induced spending and pork. It’s got three hundred forty billion dollars induced spending and it’s got stuff like — if I could just give you a few choice examples here, two hundred forty eight million dollars for Hollywood film producers. Two hundred twenty two million dollars for — in tax breaks for rum producers in Puerto Rico. Nine billion dollars on — on a tax break that helps companies off shore their — their money. That’s the one that helps the General Electric to evade U.S. taxes, and there’s another one the helps GE, twelve billion dollars in tax favors for the wind energy industry. And by the way, on that tax credit you don’t even have to have built a windmill to get it in 2013. You just have to basically say, you’re in the process of building windmills.

Jason Hartman: Unbelievable.

Dean Clancy: And it goes on and on. Auto — auto race track owners, coal miners of — on Indian land and so on —

Jason Hartman: This — this sounds like —

Dean Clancy: — and [voice over] —

Jason Hartman: — it sounds like it — it sounds like you know more crony capitalism. Government throws money in things that don’t work so it can support people that — they think they put them and keep them in power.

Dean Clancy: That’s exactly right. It is cronyism. Basically, Max Baucus the Senator from Montana who is the chairman of the senate finance committee, he — well he’s got a bunch of former staff — staffers of DC who have become lobbyists and — and over the summer they all came up with their wish list of things they’d like to get done in the next must pasted bill and they got that all through the senate finance committee and then he was just waiting there to be dropped by — you know, by parachute into this fiscal cliff deal without anybody having a chance to comment on it or — or even as I said, read it. So it — the process really stinks, and — and — and — and there’s — there’s another lesson here on this for us on the grass roots freedom movement and that is beware of cliffs. They keep telling us that we’ve got a cliff, we’ve got an emergency we’ve got to bend the rules and the process so that we can avoid some bad thing from happening. Well, to heck with that. These cliffs are intentional. They are planned from politicians. They right the deadlines into the legislation so that they’ll have another excuse to raise taxes and spending and we — we got to get out of this.

Jason Hartman: We can’t let a good crisis go to waste. All I have to do is quote the Obama idiots.

Dean Clancy: Yeah. That’s right. You’re — you’re a font of the quotes, you know.

Jason Hartman: Yeah, yeah.

Dean Clancy: [Inaudible].

Jason Hartman: That’s unbelievable. But — but yeah, that’s exactly what they do. They create a crisis so the government can rush into solvent and they all look so self important giving up their New Year’s eve to help the people and — and take care of business in Washington when they should be home with their families. Well, you know this is just — it’s absurd. You know what I mean, it’s just absurd.

Dean Clancy: Yeah, it’s really — it’s disgusting but — and — and — and the nice thing is we’re only forty nine days from the next cliff, which is —

Jason Hartman: The debt ceiling.

Dean Clancy: — the debt — debt ceiling and also the sequester, which was postponed for two months. Those — those both will come — come back around February 28th, March 1st, and when that happens it will be another crisis and we’ll be told well we just got accept new taxes and new spending and we’ll have to postpone those spending cuts yet again. We got to get out of this cycle and that’s why with FreedomWorks’ are calling on — on conventional republicans, especially — but also Washington generally, to do your job, go back to regular orders. Why not let people read the bill? Why not let people amend the bill? How about pass the budget? Harry Reid and the senate democrats have not passed a budget which is required under the law for the past three years running. We’re — we’re going on four years, now.

They’ve simply refuse to show the American people where they want to take this in terms of using our tax money and — and spending. And you know, our debt is out of control —

Jason Hartman: Yeah.

Dean Clancy: — Sixteen trillion in debt. That’s — that’s you know, we’re approaching Grease level — levels of debt. That’s debt that’s on the books. There’s plenty of unfounded liabilities that aren’t even accounted for and then we’re borrowing forty cents out of every dollar we spend. This is crazy. My analogy on this is — is don’t raise the debt ceiling unless we get a budget plan.

Jason Hartman: It is unbelievable that these people can just sell America’s future the way they’re doing it and I sort of — sometimes I question myself and I wonder if maybe there just — maybe they’re doing the perverse way, the right thing. Maybe I just don’t understand the ultimate exit which would be to inflate our way out of the mess and you know maybe we can just keep getting China to buy our debt and kick the can down the road for the next five decades and the poor will get poorer and the middle class will get poorer due to inflation. Most people don’t know how to plan properly or invest properly for inflation, but some benefit tremendously from it, myself included, because I think I know how to beat them at their own game or at least play their game, but maybe this is just the way of things. I don’t know, I — it seems crazy.

Dean Clancy: I hope not, I hope not. If you do the things that —

Jason Hartman: It seems so irresponsible.

Dean Clancy: — it is, it’s terribly irresponsible. There is a problem and it’s structural. It needs to change. My — my — my joke on this is you know, we face a cross roads. One road leads to default, the other to inflation. Let’s — let’s pray that we have the wisdom to choose correctly. But of course, there — there is a third path which would be to cut spending. And that’s where our problem is and — and as I was saying before we shouldn’t increase Uncle Sam’s credit line until we get a plan in place to help him get his sending habit under control. And we’re probably going to need structural reforms to do that, some kind of constitutional amendments. But in theory we could do it if — if our politicians would simply wake up and if our voters would hold them accountable. And that’s — you know, FreedomWorks’ that’s what we try to do.

Jason Hartman: Yeah well, you’re certainly right. The problem is what’s the incentive to do the right thing in Washington?

Dean Clancy: Well, that’s the problem. There’s every incentive to do the wrong thing and — and the result is the mess we’re in. I think at some point Uncle Sam’s going to need co-signers on his loans. We’ve been talking as if the bond markets will — will kind of serve that function. So far they haven’t and maybe if there’s another downgrade of this year, and at the moment it looks like we’re headed towards — towards one maybe that will — will start to wake folks up. The other possibility will be constitutional reform where the state, in effect, would have to act as co-signers on any additional debt. State legislatures would have to approve a debt limit increase for example. This is kind of a you know, out of the box idea that’s — that’s kind of bobbing around now among fiscal and constitution conservatives. It’s like — you know we’ve tried everything else. Maybe we need to get radical, but hopefully not. Hopefully, we can just get bipartisan agreement on changes that will — will keep our debt spending radio under control.

Jason Hartman: Whenever the people in control of the treasury can — can go out that treasury to buy votes from people, but there’s no incentive to ever change that. It — it just seems like it may be that way forever and it seems like that’s the way it’s always been throughout history is by — by votes.

Dean Clancy: Yeah, that’s true. When the people learn that they can vote themselves money out of the treasury, that’s when democracies decline and we may be subject to that same law, but you know the founding fathers tried to prevent that by having checks and balances and federalism separation of powers, all these great limits of government. We got away from that in the 20th century. Really it’s exactly one hundred years now that we’ve been in this experimental progressivism as in centralized power and trust. You need some bureaucrats to govern us and we’ve got to get back to a more decentralized system.

Jason Hartman: Ex — explain how [voice over] —

Dean Clancy: Can I ask you a question?

Jason Hartman: Yeah, sure you can but —

Dean Clancy: Okay.

Jason Hartman: — but first I’ve got a question for you. Explain how it’s one hundred years? I mean I know that it’s one hundred years for the federal reserve and the IRS, but what else?

Dean Clancy: Well in 1913 — yeah, 1913 was in — in my view the worst year in American history because not only did it give us the federal reserve, which is you know a — a cartel of semi-private banks that basically manipulates the money supply, and it facilitated deficits of debt, but it also gave us the federal income tax which enables the government to take massive amounts of money out of the economy and it also causes redistri — it enables redistribution of wealth and of course, the terrible invasions of our privacy and then social engineering through tax credits, deductions, loop holes, etcetera, etcetera. And then the third thing is they changed how United States senators are chosen. Before 1913, the states chose the senators. They were effectively ambassadors from the state government, the legislatures picked them.

Since 1913, they have been chosen by the voters of [inaudible] chose are representatives in the house and that weekend the role of the states in our system. Before 1913, the states and the Feds had fought each other over — over you know who will get power of jurisdiction. Now they’ve effectively cooperated. All U.S. senators do, in terms of defending their state’s interest, is to try to fight to get more money out of the federal trough back home to their constituents, and so all of this is facilitated, a huge extension of government. You know, a nice measure of this is, in the 19th century the average peace time federal outlays just about three percent of GDP.

In the 20th century it has been well over fifteen percent. Right now we’re spending nearly a quarter of GDP through our federal government. You know, this is something that the founding fathers would have been horrified by —

Jason Hartman: I — I — I just —

Dean Clancy: — and so —

Jason Hartman: — yeah, certainly I agree with you there, but I just want to touch on that senator comment for a moment, because what you’re saying would seem really counter intuitive. I mean, why wouldn’t you want the voters to elect the senators from their state to — I mean look at who they’ve elected, Feinstein and Boxer in California.

Dean Clancy: Well, that’s true. I — I actually don’t think that the quality of senators is any worse now than it was, you know, one hundred — two hundred years ago. I think the incentives of the senators have changed dramatically. So that instead of — it used to be when a senator went to Washington, the state legislature would actually send him instructions and it would say vote for this, vote against that, and if you defy us on this we may not reappoint you and that — that packet has a check. And instead now the senators completely ignore their state governments. They do what they think is in their own personal interest to get re-elected. They truckle to the voters and it facilitates that problem as you identified of the voters voting themselves money out of the treasury, which is really a way of the people helping themselves to their neighbor’s money and you — we need something. It doesn’t necessarily have to be the senate but something in our federal government needs to represent the states and put the states against the Feds because that’s where freedom comes in, the space between [inaudible] in sort of check and balance at the two levels, and we don’t have that right now.

So, there’s a number of ways you can try to restore that balance but it is clear that for one hundred years we’ve — we’ve lacked and — and see where it’s gotten us.

Jason Hartman: We’ll be back in just a minute.

Female Voice: Are you interested in a property out side of our network? Do you need a second opinion? No problem. Let Jason’s experts evaluate the deal. Our deal evaluator is only fifty dollars. For more information, go to Jasonhartman.com, now.

Jason Hartman: Now, you had a question for me.

Dean Clancy: Yeah, I was trying to see about inflation. You said you thought that the way out of this debt problem is probably going to be inflation. How — how would that work and — and on what time line do you think that might happen?

Jason Hartman: Well, the time line is always the question my friend. That is the answer that nobody really knows. Ultimately, I think it’s just a progressive debasement of the dollar and just a progressive inflation of just — or I should call it regressive, but just an inflation that just marches on every single day and it’s just part of life. It’s like oxygen, you know nobody really notices it, and it’s just part of your existence because everybody just assumes for some odd reason that prices just go up. You know and they don’t even know a thing about economics or why that happens or never really seem to question it most people as to, why are prices higher now than they were twenty years ago? What — what — what should —

Dean Clancy: Right.

Jason Hartman: — what should make that happen? And so my plan, although I can’t give you a time line, I — I don’t think anybody can, but my — my plan is just basically to copy what the government does and what the government does is it accumulates massive amounts of debt — actually long term fixed rate debt, and then it haze that debt back in cheaper dollars and China and Japan and other countries seem willing to cooperate in that even though they must know better themselves, but whether it’s our customer base being a good exporter for those — those countries export to us is what I mean to say, being good customers for them and/or our — our military might in throwing our weight around, I don’t know why they cooperate. And it really it — it doesn’t seem like they should. Certainly the Chinese are smart enough to know better but then they’re going to be paid back in ever cheaper more worthless dollars. But they do — they’re cooperating so far.

Dean Clancy: They’re — they’re — they’re — I mean, they can’t be just stupid, they must think that it’s like inflation will not be that big a problem.

Jason Hartman: I — I mean — yeah I — I — I don’t know what they think. It’s just hard to know. Certainly they understand it, but the thing is people argue that America is doing such a stupid thing and you know, on its face. I completely agree with that, but if you really kind of dig a little deeper and take that to the next level, I mean think about it. We’ve got the goods, we’ve got all this stuff over here and we pay for them in worthless currency. That’s sort of a good deal for us, really. And — and — and the way I do that I my personal investing life is I just buy income properties and get long term debt against them and the debt is just debased by inflation. So, it seems to be the same thing the government does, pretty much.

Dean Clancy: Well, that’s good. Beat them at their own game.

Jason Hartman: Yeah, yeah. So you — if you can own commodities with cheap long term debt that you pay back in cheaper dollars, it’s a great deal.

Dean Clancy: Yeah. This is good advice. I’d like to get in on this deal.

Jason Hartman: Well, [inaudible] —

Dean Clancy: What about the federal reserves and what they’re doing? I — I — I’m not enough of an economist to understand whether they’re planting the seeds of a big inflation or if — if they’re not and —

Jason Hartman: Yeah, I would —

Dean Clancy: — can you tell me about that?

Jason Hartman: — I would certainly say that they are planting the seeds of a big inflation, however some of the things they do really kind of surprise me, almost make me think that they’re making compromises too in a sense because with this bond buying program, I mean they’ve got to know themselves that they’re getting these bonds that will ultimately become worth less and less. I don’t want to say worthless but worth less and less as — as time goes on. So — but they create fake money out of thin air and charge interest on it so they’ve got the best deal in the world. No question about it, and I ––and I believe that the federal reserve is really one of the reasons — one of the major reasons that we are always hedge fully at war because they finance wars. They finance both sides of wars and it’s not just our federal reserve but it’s other central banks that are part of the same cartel around the world, whether it be the ECB, European Central Bank or — or others, and it — it seems like the countries we really hate and don’t like are ones that won’t participate in that system whether they be Iran, North Korea, Cuba.

Dean Clancy: Wow, this is an interesting take.

Jason Hartman: Yeah.

Dean Clancy: So, if — if we abolish central banks will we live world peace?

Jason Hartman: No, but I think we’d be a lot closer to it.

Dean Clancy: [Voice over].

Jason Hartman: Yeah, yeah. No, I — I don’t think so. I think there’d still be conflicts but at least the conflicts would be you know, I’ll say legitimate conflicts. The conflicts now seem like they’re generated intentionally just to — for the – the various powers that be to benefit from them whether it be the — the banking industrial complex or the military industrial complex, probably the reason for JFK’s assassination. But there are all these people that benefit. Whenever you put these big structures in place, there are all these people that are on the take. I mean, look at — look at the state of California, my — my home state that I left last year, the Socialist Republic of California. These public employee unions are destroying that state. I mean it is — they — they’re just completely destroying the state. And — and two major things, what you said about what happened one hundred years ago, a very good point.

But two major things that happened on the federal and the state side, you know over the last few decades is from what I know, John F. Kennedy allowed federal employees to unionize and that was the beginning of the end. I mean, it — it is unbelievable to me that government — and government is the arbiter of fairness. It is the court system, it is — it is — it is the way we come and seek fairness, okay through — through our society —

Dean Clancy: Through government.

Jason Hartman: — through government — through justice and — and — and — and through that. And — and — and it is amazing to me that employees of the government are allowed to unionize against essentially the tax payers. And — and — and it’s just unfathomable —

Dean Clancy: Yeah.

Jason Hartman: — it makes no sense at all.

Dean Clancy: Yeah. It is — it’s terrible — right, the government employees are becoming the larger share of unionized workers in the country. It is especially a problem I mean at the state level where they — they sometimes do collectively bargain against the state government effectively, you know, attacking the treasury things you know holding up the — the citizens. I think at the federal level the federal workers are not allowed to collectively bargain. They can get together for other purposes. In fact, the path does strike back in 1981. I think the reason Reagan fired all the air traffic controllers is precisely because they violated the rules that you can’t go on strike. But still, it is a problem and my feeling is, it’s — it’s – it’s bigness, its centralization is the problem. Big government eventually relates to big business and big labor and big banks, and then you get the cronyisms and the corruption and it becomes a self sustaining kind of organism that has a mind of its own, doesn’t really care about justice, it just cares about its own interests, and we all get sucked into it. We get hurt by it. And the answer to it is decentralization.

Jason Hartman: Yeah, it’s an iron triangle of selfish, self interested groups and just to finish that thought, the thing I was going to say about Jerry Brown is in the ‘70s, Jerry Brown allowed the pub — public employees in California to unionize against the tax payer and that’s just the beginning of the end.

Dean Clancy: That’s insane, that’s insane. Yeah, the FDR has a famous this letter to the union where just because now I’m not going to let you — I’m not going to let federal workers unionize because that is you know, in effect an assault on the treasury and we can’t allow that.

Jason Hanson: It — it’s surprising that that would be from FDR but I applaud him for that.

Dean Clancy: Yeah.

Jason Hartman: But what else does FreedomWorks’ up to now days? Are you working on specific campaigns or mobilizing certain efforts? Tell us about that.

Dean Clancy: Yeah, absolutely. We — we are engaged I think more than ever at the state level at the moment. We’re — we’re very supportive of school choice efforts around the country. We’re also fighting on pay check protection, which is letting workers deny money — they don’t have to give their dues money to the union to be used for political causes that they impose. We support secret ballot elections for union employees and the kind of reforms that you saw in Wisconsin. Of course, right to work. We want to reform health care, as well. We’ve been fighting Obama Care ever since it first appeared and we are — we have an effort called Blockexchanges.com where we are actually helping to coordinate the — battling the states, to block the exchanges so that we can force the administration to get back to congress to try to reopen the Obama Care law our ultimate goal to dismantle and repair that law in replace of the patent center care.

We’re also for example, just today, raising the standard of opposition to Jack Lou as the nominee for treasury secretary. Jack Lou has served in a number of posts including visit director to the White House chief of staff and he has not been forefront with congress. He’s helped put together budgets that do absolutely nothing to get our fiscal house in order and a lot of members of congress — you know and he’s lied to them about the budget. And so — so those are examples of what we’re working on.

Jason Hartman: Well good stuff. Give out your website if you would and tell people you know, any — any tips you have on what they can do if they want to get involved.

Dean Clancy: Sure. Freedomworks.org is our website and if you are interested in getting involved in some of these — these battles that we’re engaged in to — to promote freedom, just click on the take action tab and we have what we call action centers there. You just click on them and they’re designed so that you can for example, patch through and send an email to your member of congress or senator or you can call their office and deliver a message about how you feel on — on one of these issues. And again, I’ll mention the Blockexchanges.com website where you can get involved in the fight for health care freedom.

Jason Hartman: Good stuff. Well Dean Clancy, thank you so much and keep up the good work with FreedomWorks’.

Dean Clancy: Well thank you, Jason. It’s my pleasure.

Female Voice: This show is produced by the Hartman Media Company. All rights reserved. For distribution or publication rights and media interviews, please visit www.HartmanMedia.com or email [email protected]. Nothing on this show should be considered to be specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Empowered Investor, LLC., exclusively. (Top image: Flickr | Gage Skidmore)

Transcribed by Debra


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