Month: February 2009

Profit-taking by Uncle Sam

I don’t know if you’ve noticed this, but while I was out and about today I saw that gas prices are edging back up again. What were numbers in the $1.50 range a month or so ago are now creeping back up into the mid-$1.80’s at some stations I witnessed along U. S. 50.

In the meantime, the buzz around our nation’s capital has centered on the tax difficulties encountered by several of President Obama’s nominees and the fate of the so-called stimulus package in the Senate.

But a few months ago you’ll likely recall that gas was north of $4 a gallon and Exxon/Mobil was making what many termed obscene profits because of the price spike in crude oil futures. Last May, a bill (S.2971) was introduced which would, in part install a “temporary fee on excess oil profit”:

(a) In General- In addition to any other tax imposed under this title, there is hereby imposed on any applicable taxpayer an excise fee in an amount equal to 50 percent of the excess profit of such taxpayer for any taxable year beginning during 2008.

(b) Applicable Taxpayer- For purposes of this chapter, the term `applicable taxpayer’ means, with respect to operations in the United States–

(1) any integrated oil company (as defined in section 291(b)(4)), and

(2) any other producer or refiner of crude oil with gross receipts from the sale of such crude oil or refined oil products for the taxable year exceeding $1,000,000,000.

The reason I bring this up now is because forecasting the effects of legislation sometimes takes awhile, and this week a study was released showing the possible consequences of such a tax on our domestic energy industry. Continue reading “Profit-taking by Uncle Sam”

A safe government job

Longtime readers of my site know I’m a fan of Newt Gingrich – for the most part. Sometimes I quibble with his ideas based on my belief that they’re overly based on Federal involvement in issues better left to inferior jurisdictions (e.g. the states and local government) but today he wrote a winner. I’ll let the column speak for itself.

Where Newt’s contention leads me is to a very simple question: why are government jobs safe? There’s two ways to answer this.

The first is to notice that when government addresses a problem, somehow it creates two others. If things were otherwise, that agency or bureau would have no more reason to exist. Through experience we’ve found it’s terribly difficult to kill off a government program – after all, we still pay a telephone tax meant to help pay for the Spanish-American War over a century ago!

And it’s tough to counter a government employee lobby – of all people, Newt should know this because Big Labor took his “wither on the vine” comment out of context and scared seasoned citizens into thinking he was going to cut out Medicare.

Secondly, let’s look at a part of President Obama’s stimulus program – the part about building infrastructure. Okay, we’re building a new bridge. But when that’s done, where do the workers go to next if the economy is still ailing? Do we have to create another project for them to shift to once the first one is complete? Again, this has the potential of being self-perpetuating.

I also see this as the weakness of a common local practice – seeking grants for operational purposes.

Last week I noted in my account of Sheriff Lewis’s appearance at our Republican Club meeting that the county received an $89,000 grant from the federal government to hire personnel. In fact, one thing I didn’t mention in my retelling of the events is that the Sheriff’s Department has an employee who spends much of his time seeking to acquire federal and state grants for various purposes.

In many respects, state and federal grant money is like crack to local administrators. They become hooked on the allure of “free” money to purchase items or hire additional personnel; however, there always seems to be strings attached and at the very least there’s the question of who pays to maintain the personnel or buy the next item if the grant money runs out or the program goes away. (Obviously this is another reason why federal programs never die because the states and counties would scream bloody murder if they couldn’t feed their addiction.)

Here lies the reason why what Newt said is so true. It would take bold, decisive action to sweep away the layers of Fedzilla bureaucracy – not just from a politician who isn’t concerned about re-election but from voters who would have to rededicate themselves every election hence to not vote for candidates who sing that siren song of having government do things for you.

If there is one thing in common about the legacy of both Ronald Reagan and Newt Gingrich, it is that they made valiant attempts to beat back the marauding beast that is the federal government but unfortunately it was just too strong to be held off for long.

This is why I contend lasting change would require the support of at least two generations, and these generations need to persevere and not settle for that safe government job.

Seeing how my “comrade” does

I think I mentioned this last month, and yesterday the Club For Growth was slated to unveil its winner of the first of probably many “Comrade of the Month” awards. I haven’t seen the winner yet though.

According to their blog, they had eighty nominees but the one I nominated made the cut for the final five. I’d have to say she’s an underdog but as far as I know you can still cast your vote here. Rep. Betty McCollum is the woman who is seeking to make health care a Constitutional right.

The Club was even kind enough to reprint some of what I wrote in my nomination, which was quite nice of them.

I’m sure some people reading this are saying, “but health care should be a right, isn’t that part of the right to life?” Of course, many of them don’t mind denying the right to life to the unborn in the womb, but that’s a post for another day.

Here’s the problem with that contention. If we decide health care is a right, then who becomes the protector of that right? The second section in the proposed amendment provides the answer:

The Congress shall have power to enforce and implement this article by appropriate legislation.

In other words, what Barack Obama calls a “negative right” becomes a positive right – the government SHALL have power. If they say you should carry health insurance, they have the power to compel you to do so. If they say that certain foods or food products are unhealthy, they can ban their use. If there is rationing of care required, they get to decide who will receive care – tough tiddly-winks if you’re elderly, a smoker, or obese. In those cases, you’ve forfeited your right to life due to your bad habits or the fact you’ve lived a certain number of years.

The system we have is far from perfect; however, it’s still the best system in the world as evidenced by the number of people who come to America seeking treatment. Yes, most of them are wealthy and can afford to make the trip but Americans also open their hearts and wallets on numerous occasions to the less fortunate around the world.

It would be a mistake to adopt a system similar to that of Canada or Great Britain. Unfortunately, when health care is “free” it becomes much more costly for everyone. A better solution would be to free up the market we have presently by eliminating red tape and regulation.

Economic primer on the stimulus

And it comes in a nice tidy 7 1/2 minute lesson, courtesy of the Center for  Freedom and Prosperity Foundation (h/t NetRightNation):

It’s been said many times in many ways, but those who fail to recall their history are doomed to repeat it. It seems that this video illustrates the effect the Bush tax cuts had on the economy; unfortunately the economic strength they created was sapped in part by government overspending at all levels.

I’m going to keep harping on one particular point until I’m blue in the face because it’s so right yet people can’t seem to see how right it is – money is better kept in YOUR pocket to spend where YOU decide it should be. Is there a toll which needs to be paid for the common good? Yes, there are some functions which government is appointed to do and there’s funding required to accomplish those tasks – one example is our military, which really doesn’t take a huge chunk of the overall federal budget.

The same goes for state governments, which have their own various purposes spelled out in their respective state Constitutions. Many require the state to fund public education, so that becomes an area states should take the lead in while the federal government butts out.

Once you reach the local level, those locally generated tax dollars should pay for basic functions of local government: public safety, roads, water and sewer systems if the municipality or other governmental entity features such systems, and the minimum amount of administration required by law. Even items which are associated with public service such as trash pickup and snow removal aren’t necessarily required functions – living outside the city limits I contract with a private refuse pickup service and they do a fine job.

So what would be a good stimulus plan? How about measures to create jobs in the private sector instead of increasing the number of unionized government positions? We know that President Obama is paying back one of the largest sectors of his support (both electorally and financially) by creating a huge number of government jobs and focusing other tasks on areas which are de facto unionized (for example, public works construction jobs which pay the so-called prevailing wage.)

And even if that money kept with John Q. Citizen simply went into a bank or to pay creditors, this would lessen the need for federal bailouts of those industries – either way I see it as a win-win situation (as opposed to the selling out Republicans in the Senate seem to want on the stimulus package.)

There’s a lot of work to be done, but the hard part is standing by and watching the politicians mess the situation up further. Maybe they need to watch this short video.

Rules for the rest of us

It’s time for me to get all populist on you folks.

There was a little bit of buzz last week in conservative circles about a bill introduced by Congressman John Carter of Texas. Dubbed “The Rangel Rule”, H.R. 735 allows the rest of us to get away with the same trick Congressman Charlie Rangel of New York and Treasury Secretary Timothy Geithner have managed to pull – owing or paying back taxes without penalties or interest.

In the novel Animal Farm, some of the protagonists George Orwell created were “more equal than others.” Apparently this is holding true for elected officials as well, and for every Rod Blagojevich who’s ejected from office for malfeasance it seems there’s ten who get away scot-free with some sort of criminal act. Nor is it exclusive to Democrats, but they tend to have the preponderance of cases where conflicts of interest or graft occur. Methinks this is because they tend to favor a more powerful and centralized system of governance.

While H.R. 735 was introduced as a somewhat tongue-in-cheek measure, there is a principle involved and as I see the proposal it can be a small step to accomplishing two further milestones on the path toward making ours a freer and more prosperous nation.

Carter’s proposal shows that there are some in our society who see their elected or appointed position as a way to enrich themselves. By getting into a place where they can wheel and deal with legislation and favors, many of weak character see themselves as kingmakers rather than the representatives of the people in whose service they were originally expected to perform.

This is a potentially fatal flaw to a democracy if left unchecked, but one way to combat this would be to reduce the amount of money each of these Huey Long wannabes are entrusted to spread around through increasing the amount of money remaining in the pockets of the rest of us by revamping the system of tax collection to one based on consumption. This is a point I’ve made many times before so I won’t belabor it here.

More importantly, even the most expert tax attorneys and quite often the IRS have a difficult time interpreting the labyrinth of tax rules and regulations which are already in place, let alone all the “fixes” applied by Congress in numerous bills they pass each year. Obviously this doesn’t excuse outright cheating but millions of Americans make billions of dollars’ worth of mistakes figuring out their annual tax toll. It’s a consequence of a system which is tinkered with daily in order to give advantages to favored lobbying groups or desired behaviors, such as buying a house or installing solar panels.

The principle of using the tax code to regulate behavior is rather odious to me because it provides rewards and punishments far beyond what the free market and one’s ambition would normally entail. As it stands today our progressive tax code penalizes success and makes those less successful into wards of the state, waiting for handouts they never earned but by virtue of their income status become “entitled” to receive.

We do not elect our representatives to become wealthy through their service, but somehow most of them do. And while in principle there should be nothing that precludes individual campaigns for Federal office to cost many millions or even north of one billion dollars, it’s worth pausing to consider why so much skin is placed in the game and what can be done to make things better for the rest of us.

Thoughts on the local political scene

I thought today would be a good day to place a post like this. Chances are I’m not going to have a boatload of readers today as most people are out and about plus have something other than politics on their mind.

(For the record, I’m rooting for the Steelers solely because Ben Roethlisberger went to my alma mater, Miami University. I do admire the way Troy Polamalu plays as well. Aside from that, I’m in it for the commercials and hopefully a good game.)

But my true intention was to discuss the local political scene. As is often the case, our little city is divided into all-but-armed camps which seemingly coalesce around which bloggers are behind them.

For example, let’s take the District 2 Council race. The last time this particular seat was contested, I voted for Debbie Campbell. This time around I don’t have a vote because I bought a house probably a Tiger Woods drive outside the city limits. I know Debbie from seeing her around the city at various events and I’ve also now met Muir Boda and had the opportunity to speak with him at some length. In my opinion, either would be a good choice; in fact they really don’t disagree a lot on issues as Boda noted.

But the arguments over issues seem to have been subordinated to a war over which blogs support who. The same also goes for the race for Mayor, with candidates complaining about unfair media treatment and being smeared and maligned for little to no reason.

Of the four hopefuls, I’ve had the opportunity to meet and talk to three of them over the time I’ve been here and there’s nothing that would outwardly disqualify any of them in my eyes. Obviously there are a number of my cohorts on the blogosphere who feel differently owing to age-old grudges, personality conflicts, and the like. In District 1, I only know peripherally one of the players so right now I have no opinion aside from the fact that just a few hundred votes will be required to win, which is truly sad. As I recall the last race only garnered slightly over 200 votes total.

What should decide these races? Well, personality does have a place but it’s not the make-or-break item. Any group of those trying to accomplish a task is going to have its angels and scoundrels.

The important issues to me are crime and fiscal responsibility. Even though I don’t live in Salisbury, it’s a population center and those tend to attract criminals like moths to a flame. I think there’s a good idea going with the crime task force studying Dover, Delaware (a similar sized city with a much lower crime rate) but there are other measures which can also be taken – some costly and some not so much. One contention is whether Salisbury Police Chief Allen Webster works with the Sheriff’s Department well; obviously his fate may rest on who wins the Mayoral race. And what of the police substations or local Block Watch programs?

The costly measures to combat crime take up another whole piece of the pie. While the federal government seems to be ramping up its spending to a breakneck pace, the state is being much more cautious because it has to balance its budget by statute. However, I believe that each candidate should keep in mind that it’s all our tax money regardless of whether it comes directly from a city taxpayer, from Annapolis, or from inside the Beltway. And the deviousness of superior governmental authorities has no end – hire someone using federal or state grant money and you’re beholden to Fedzilla or Annapolis to keep that position filled unless you can come up with the coin in your budget once the grant money runs out.

Obviously there are some projects that the city cannot handle alone; unfortunately a number of those are forced upon Salisbury from without because of state or federal regulations. The wastewater treatment plant comes to mind. No one’s in favor of dirty water, but how much extra cost was brought on by unnecessary or redundant provisions?

Many talk about eliminating a culture of corruption in politics, but few talk about creating a culture of thrift. In theory, each year’s budget should take a hard look at what needs to be accomplished, what would be considered a wish list, and how much needs to be set aside for unexpected situations. For example, standard practice in the building industry is a 10% contingency allowance for changes and unforeseen field conditions. Running a city like Salisbury is different; still, there does need to be some sort of rainy day fund for the city and I’m not sure that’s always taken into account. It would actually be prudent in my view to budget in a manner assuming zero help from the federal and state governments.

The voters of Salisbury need to take their candidates to task over the direction the city needs to proceed. I fear that the issues are being lost in the shuffle and personalities of those not even in the running are taking center stage.