Tag Archives: Mike Pompeo

Kansas wind turbines

Special interests defend wind subsidies at taxpayer cost

man-digging-coinsThe spurious arguments made in support of the wind production tax credit shows just how difficult it is to replace cronyism with economic freedom. From October, 2012.

We often see criticism of politicians for sensing “which way the wind blows,” that is, shifting their policies to pander to the prevailing interests of important special interest groups. The associated negative connotation is that politicians do this without regard to whether these policies are wise and beneficial for everyone.

So when a Member of Congress takes a position that is literally going against the wind in the home district and state, we ought to take notice. Someone has some strong convictions.

This is the case with U.S. Representative Mike Pompeo, a Republican representing the Kansas fourth district (Wichita metropolitan area and surrounding counties.)

The issue is the production tax credit (PTC) paid to wind power companies. For each kilowatt-hour of electricity produced, the United States government pays 2.2 cents. Wind power advocates contend the PTC is necessary for wind to compete with other forms of electricity generation. Without the PTC, it is said that no new wind farms would be built.

Kansas wind turbinesThe PTC is an important issue in Kansas not only because of the many wind farms located there, but also because of wind power equipment manufacturers that have located in Kansas. An example is Siemens. That company, lured by millions in local incentives, built a plant in Hutchinson. Employment was around 400. But now the PTC is set to expire on December 31, and it’s uncertain whether Congress will extend the program. As a result, Siemens has laid off employees. Soon only 152 will be at work in Hutchinson, and similar reductions in employment have happened at other Siemens wind power equipment plants.

Rep. Pompeo is opposed to all tax credits for energy production, and has authored legislation to eliminate them. As the wind PTC is the largest energy tax credit program, Pompeo and others have written extensively of the market distortions and resultant economic harm caused by the PTC. A recent example is Puff, the Magic Drag on the Economy: Time to let the pernicious production tax credit for wind power blow away, which appeared in the Wall Street Journal.

The special interests that benefit from the PTC are striking back. An example comes from Dave Kerr, who as former president of the Hutchinson/Reno County Chamber of Commerce played a role in luring Siemens to Hutchinson. Kerr’s recent op-ed in the Hutchinson News is notable not only for its several attempts to deflect attention away from the true nature of the PTC, but for its personal attacks on Pompeo.

There’s no doubt that the Hutchinson economy was dealt a setback with the announcement of layoffs at the Siemens plant that manufactures wind power equipment. Considered in a vacuum, these jobs were good for Hutchinson. But we shouldn’t make our nation’s policy in a vacuum, that is, bowing to the needs of special interest groups — sensing “which way the wind blows.” When considering everything and everyone, the PTC paid to producers of power generated from wind is a bad policy. We ought to respect Pompeo for taking a principled stand on this issue, instead of pandering to the folks back home.

Kerr is right about one claim made in his op-ed: The PTC for wind power is not quite like the Solyndra debacle. Solyndra received a loan from the Federal Financing Bank, part of the Treasury Department. Had Solyndra been successful as a company, it would likely have paid back the government loan. This is not to say that these loans are a good thing, but there was the possibility that the money would have been repaid.

But with the PTC, taxpayers spend with nothing to show in return except for expensive electricity. And spend taxpayers do.

Kerr, in an attempt to distinguish the PTC from wasteful government spending programs, writes the PTC is “actually an income tax credit.” The use of the adverb “actually” is supposed to alert readers that they’re about to be told the truth. But truth is not forthcoming from Kerr — there’s no difference. Tax credits are government spending. They have the same economic effect as “regular” government spending. To the company that receives them, they can be used — just like cash — to pay their tax bill. Or, the company can sell them to others for cash, although usually at a discounted value.

From government’s perspective, tax credits reduce revenue by the amount of credits issued. Instead of receiving tax payments in cash, government receives payments in the form of tax credits — which are slips of paper it created at no cost and which have no value to government. Created, by the way, outside the usual appropriations process. That’s the beauty of tax credits for big-government spenders: Once the program is created, money is spent without the burden of passing legislation.

If we needed any more evidence that PTC payments are just like cash grants: As part of Obama’s ARRA stimulus bill, for tax years 2009 and 2010, there was in effect a temporary option to take the federal PTC as a cash grant. The paper PTC, ITC, or Cash Grant? An Analysis of the Choice Facing Renewable Power Projects in the United States explains.

Astonishingly, the wind PTC is so valuable that wind power companies actually pay customers to take their electricity. It’s called “negative pricing,” as explained in Negative Electricity Prices and the Production Tax Credit:

As a matter of both economics and public policy, no government production tax subsidy should ever be so large that it creates an incentive for a business to actually pay customers to take its product. Yet, the federal Production Tax Credit (“PTC”) for wind generation is doing just that with increasing frequency in electricity markets across the United States. In some “wind-rich” regions of the country, wind producers are paying grid operators to take their generation during periods of surplus supply. But wind producers more than make up the cost of the “negative price” payment, because they receive a $22/MWH federal production tax credit for every MWH generated.

In western Texas since 2008, wind power generators paid the electrical grid to take their electricity ten percent of the hours of each day.

Once we recognize that tax credits are the same as government spending, we can see the error in Kerr’s argument that if the PTC is ended, it is the same as “a tax increase on utilities, which, because they are regulated, will pass on to consumers.” Well, government passes along the cost of the PTC to taxpayers, illustrating that there really is no free lunch.

Kerr attacks Pompeo for failing to “crusade” against two subsidies that some oil companies receive: Intangible Drilling Costs and the Percentage Depletion Allowance. These programs are deductions, not credits. They do provide an economic benefit to the oil companies that can use them (“big oil” can’t use percentage depletion at all), but not to the extent that tax credits do.

Regarding these deductions, last year Pompeo introduced H. Res 267, titled “Expressing the sense of the House of Representatives that the United States should end all subsidies aimed at specific energy technologies or fuels.”

In the resolution, Pompeo recognized the difference between deductions and credits, the latter, as we’ve seen, being direct subsidies: “Whereas deductions and cost-recovery mechanisms available to all energy sectors are different than credits, loans and grants, and are therefore not taxpayer subsidies; [and] Whereas a deduction of costs and cost recovery with respect to timing is not a subsidy.”

Part of what the resolution calls for is to “begin tax simplification and reform by eliminating energy tax credits and deductions and reducing income tax rates.”

Kerr wants to deflect attention away from the cost and harm of the PTC. Haranguing Pompeo for failing to attack percentage depletion and IDC with the same fervor as tax credits is only an attempt to muddy the waters so we can’t see what’s happening right in front of us. It’s not, as Kerr alleges, “playing Clintonesque games of semantics with us.” As we’ve seen, Pompeo has called for the end of these two tax deductions.

If we want to criticize anyone for inconsistency, try this: Kerr criticizes Pompeo for ignoring the oil and gas deductions, “which creates a glut in natural gas that drives down the price to the lowest levels in a decade.” These low energy prices should be a blessing to our economy. Kerr, however, demands taxpayers pay to subsidize expensive wind power so that it can compete with inexpensive gas. In the end, the benefit of inexpensive gas is canceled. Who benefits from that, except for the wind power industry? The oil and gas targeted deductions also create market distortions, and therefore should be eliminated. But at least they work to reduce prices, not increase them.

By the way, Pompeo has been busy with legislation targeted at ending other harmful subsidies: H.R. 3090: EDA Elimination Act of 2011, H.R. 3994: Grant Return for Deficit Reduction Act, H.R. 3308: Energy Freedom and Economic Prosperity Act, and the above-mentioned resolution.

I did notice, however, that Pompeo hasn’t called for the end to the mohair subsidy. Will Kerr attack him for this oversight?

Finally, Kerr invokes the usual argument of government spenders: Cut the budget somewhere else. That’s what everyone says.

Creating entire industries that exist only by being propped up by government subsidy means that we all pay more to support special interest groups. A prosperous future is best built by relying on free enterprise and free markets in energy, not on programs motivated by the wants of politicians and special interests. Kerr’s attacks on Pompeo illustrate how difficult it is to replace cronyism with economic freedom.

Pompeo responds to Washington’s attacks on Koch Industries

From the office of U.S. Representative Mike Pompeo.

Statement from Congressman Mike Pompeo on Washington’s Attacks on Koch Industries

WASHINGTON — Congressman Mike Pompeo issued the following statement on the unwarranted attacks on Koch Industries in light of the efforts to reform the Internal Revenue Service:

“The IRS’s targeting of individuals demonstrates the administration’s lawlessness at its worst. Public officials have a responsibility to uphold the Constitution and use their office to protect the rights of Americans, rather than attack them for their political advocacy. Silencing critics through government muscle, as the IRS has done, runs counter to every founding principle of the United States of America.

“Yet opponents of the House’s effort to hold the IRS accountable have doubled down and continued to attack two private citizens, Charles and David Koch, as deserving of such government abuse. Senator Reid’s attacks today from the Senate floor are reprehensible.  This cannot be tolerated — not for these two great men or for any individual who disagrees with those in power.

“The Kochs’ Wichita-based company employs close to 60,000 people in manufacturing jobs. These predominantly middle-class employees live in nearly all 50 states and are a benefit to the communities they work and live in. They are good people and good neighbors, my neighbors, and deserve protection under the law that is equal to those lawmakers who seek to marginalize them.

“The jobs created by this company are a far greater benefit to the middle class than any wasteful Washington program. We should be taking lessons from hardworking Americans in the private sector instead of continuing to play politics with people’s lives.”

Earlier today, Senate Majority Leader Harry Reid accused the Kochs of funding ads critical of the Affordable Care Act’s disastrous implementation that he claims are “completely untrue,” a claim that contradicts the thrust of most news coverage of the rollout.

For more information, contact:
JP Freire | Director of Communications and Speechwriter
Office of Congressman Mike Pompeo (R-Kansas)
107 Cannon HOB| Washington, D.C. 20515
Office (202) 225-6216 | Fax (202) 225-3489
JP.Freire@mail.house.gov

Voice for Liberty radio logo for featured posts 01

Voice for Liberty Radio: Mike Pompeo

Voice for Liberty logo with microphone 150

In this episode of WichitaLiberty Radio: U.S. Representative Mike Pompeo of Kansas spoke at a meeting of the Wichita Pachyderm Club. Some of the topics and questions Pompeo answered included:

The size of the defense budget, the threats to our nation, and the importance of the National Security Agency in keeping the country safe. He addressed privacy concerns.

What about tension between the Speaker of the House and tea party and conservatives?

What’s wrong the the just-passed farm bill, and how did it pass?

Attitudes towards and respect for Congress and the President.

The arrest of a suspect in an attack on the Wichita Airport.

The presentation started with a video of Rep. Pompeo questioning Health and Human Services Secretary Kathleen Sebelius.

This recording contains Pompeo’s prepared remarks in full and selected responses to questions at the Wichita Pachyderm Club on February 7, 2014.

Shownotes

Mike Pompeo Congressional office.
Campaign website: pompeoforcongress.com
Twitter at @RepMikePompeo
Wichita Pachyderm Club

Pompeo votes against debt ceiling increase

From the office of U.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district.

Pompeo Votes Against Unlimited Government Spending
“We can’t keep raising the debt ceiling without addressing the drivers of our debt.”

Washington — Congressman Mike Pompeo released the following statement following his vote on the debt ceiling:

Washington has once more kicked the can down the road by raising the limit on the government credit card without dealing with the drivers our national debt. This means fewer jobs, higher taxes, and ordinary Kansans suffering under the ever-increasing, costly burden of Obamacare that will achieve few, if any, of its goals. We cannot afford this new entitlement and the President is now on track to double the national debt. Every American family has to live within its means, and Washington should do the same. Today’s legislation may well have averted the “crisis of the moment,” but it did nothing to avert the much greater crisis that is inevitable with our current rate of spending that we must fix immediately.

Pompeo addresses ObamaCare, debt ceiling, government accountability

Today U.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district addressed the Wichita Rotary Club.

He told the audience that despite is not just about what we’ll do next week or even in 2014. The challenge, he said, is changing the nation’s long-term financial trajectory.

On the rollout of ObamaCare, he said that he tried to enroll but failed. He said he was sympathetic with the challenges in rolling out the information technology that implements ObamaCare, but it’s a challenge that should never have been undertaken.

Mike Pompeo, October 7, 2013.

He said he recognizes the risks to the economy that the debt ceiling issue poses. He said we have to take on the obligations of the next 10 to 15 years and we have to do it now.

Pompeo also spoke about government accountability. “It is so easy to spend your money,” he said. “You can be a hero, you can go to ribbon cuttings, … but I have to tell you that when politicians do that in today’s financial situation, they are doing nothing short of lying to you. I use that term intentionally, and with malice aforethought. Because to say they’re misleading you would imply there’s some chance they don’t know that. And they do. This is not politics. This is math.”

On Syria, Pompeo said he’s heard Republicans say we should stay out of the Middle East. But Pompeo said there are from 10,000 to 30,000 soldiers there today. When politicians imply that if we don’t launch some missiles into Syria we’ll be “out” of the Middle East, that is untrue, he said, and “perpetrated with malice aforethought.”

Pompeo votes to delay Obamacare, keep government open

From the office of U.S. Representative Mike Pompeo:

Pompeo Votes To Delay Obamacare, Keep Government Open

Washington –- Congressman Mike Pompeo, R-Kansas, is voting tonight to delay Obamacare for ordinary citizens, pay the armed services, ensure that the government continues running. He released the following statement:

“Well-connected friends of President Obama shouldn’t be the only Americans spared from the looming health care law — delaying Obamacare for businesses and not for individuals is irresponsible and reckless. This continuing resolution would also provide the hard-earned funding for our amazing armed forces and that the government is still providing services to the American people.

“The President has shown his willingness to delay Obamacare unilaterally in some instances, we are simply urging him to do so on a broader scale. I hope that Senate Majority Leader Harry Reid will also vote to keep the government open.”

Wichita performs a reference check, the video

Citizens of Wichita are rightly concerned about whether our elected officials and bureaucrats are looking out for their interests, or only for the interests and welfare of a small group of city hall insiders. The video below explains, or click here to view in HD on YouTube. For an article on this topic, see Wichita performs a reference check, sort of.

Wichita performs a reference check, sort of

Wichita city hall logo

For a video presentation of this material, click on Wichita performs a reference check, the video.

Citizens of Wichita are rightly concerned about whether our elected officials and bureaucrats are looking out for their interests, or only for the interests and welfare of a small group of city hall insiders. Cronies, if you will.

A recent application filed with Wichita City Hall regarding the West Bank Development Project raises two questions: Did the government officials listed as references give their permission, and were any of the references contacted to learn what they knew about the applicants?

The application filed by the River Vista development team shows this: The team, consisting of George Laham, Dave Wells, Dave Burk, and Bill Warren listed numerous local, state, and federal officials as references. Here’s the list of officials that appeared one or more times:

Wichita city manager Robert Layton
Wichita Mayor Carl Brewer
Wichita City Council Member Jeff Longwell (district 5, west and northwest Wichita)
Wichita City Council Member and Vice Mayor Pete Meitzner (district 2, east Wichita)
Sedgwick County District Attorney Marc Bennett
Sedgwick County Sheriff Jeff Easter
Sedgwick County Commissioner Dave Unruh
Sedgwick County Commissioner Tim Norton
Kansas Governor Sam Brownback
U.S. Representative Mike Pompeo

Except for Jeff Easter, none of these officials gave permission for their names to be used in this way. (We didn’t get a response regarding Tim Norton.)

Furthermore, none of these officials were contacted by the evaluation committee whose job it is to vet these potential city partners.

A few questions: First, do you think it is appropriate for the city manager to be listed as a reference, given that anyone who reads this document would take it as an endorsement? No, of course it is not appropriate.

Related: Do you think it’s appropriate for the city manager to endorse one of the applicants? We don’t know if the presence of the city manager’s name as a reference implies an endorsement, because George Laham did not ask the city manager if he could be listed as a reference. We know this because we asked.

Further, the committee that evaluated the development teams did not call the city manager to inquire about George Laham. We asked about this, too. But making inquiries of references: Isn’t that what an evaluation committee or vetting team should do? But we know that the evaluation committee did not contact even one of these officials that were listed as references.

These applicants likely knew that the evaluation committee would not contact these references. Therefore, they freely listed these government officials. Which makes us wonder — what is the point of having an evaluation committee?

Even further: Is it appropriate for the city to partner with people who think it’s proper to list the city manager as a reference without asking if that was permissible, knowing that the manager wouldn’t be contacted? Same question regarding the mayor, governor, our U.S. Congressman, and district attorney?

In light of this — numerous government officials listed as references without their permission or knowledge, an evaluation committee that never contacted these officials, and the information that these references could have provided: Do you think the evaluation committee fulfilled its duty to perform due diligence on behalf of the interests of the people of Wichita?

What the evaluation committee might have learned

If the evaluation committee had contacted these references, here’s what might have been learned.

Dave Wells: Wells is president of Key Construction. Last year the Wichita Eagle reported on “city-financed downtown parking garages that spiraled well over budget.” Noting the cost overruns, reporter Bill Wilson wrote: “The most recent, the 2008 WaterWalk Place garage built by Key Construction, an original partner in the WaterWalk project, came in $1.5 million over budget at almost $8.5 million. That’s the biggest parking garage miss, according to figures from the city’s office of urban development, although the 2004 Old Town Cinema garage built by Key Construction came in almost $1 million over budget at $5.225 million.” (Wichita city manager proposes eliminating no-bid construction projects.)

Also, two years ago Key Construction proposed — and was awarded by the city council — a no-bid contract for a parking garage. But the city later put the contract to competitive bid. Key, which first bid $6 million, later bid $4.7 million. If the desire of the majority of the city council, including Mayor Carl Brewer, had been realized, Wichita taxpayers would have sent an extra — and unnecessary — $1.3 million to a politically-connected construction company.

By the way, the mayor’s relationship with Wells means he should not have voted on this matter.

Dave Burk, Dave Wells: These two were original partners in WaterWalk, which has received over $40 million in subsidy, with little to show for results.

Dave Burk: He’s received many millions from many levels of government, but still thinks he doesn’t get enough. This is what we can conclude by his appeal of property taxes in a TIF district. Those taxes, even though they are rerouted back to him for his benefit, were still too high for his taste, and he appealed. The Wichita Eagle reported in the article (Developer appealed taxes on city-owned property): “Downtown Wichita’s leading developer, David Burk, represented himself as an agent of the city — without the city’s knowledge or consent — to cut his taxes on publicly owned property he leases in the Old Town Cinema Plaza, according to court records and the city attorney.”

rebenstorf-quote-dave-burkA number of Wichita city hall officials were not pleased with Burk’s act. According to the Eagle reporting, Burk was not authorized to do what he did: “Officials in the city legal department said that while Burk was within his rights to appeal taxes on another city-supported building in the Cinema Plaza, he did not have authorization to file an appeal on the city-owned parking/retail space he leases. … As for Burk signing documents as the city’s representative, ‘I do have a problem with it,’ said City Attorney Gary Rebenstorf, adding that he intends to investigate further.”

Council member Jeff Longwell was quoted by the Eagle: “‘We should take issue with that,’ he said. ‘If anyone is going to represent the city they obviously have to have, one, the city’s endorsement and … two, someone at the city should have been more aware of what was going on. And if they were, shame on them for not bringing this to the public’s attention.’”

In a separate article by the Eagle on this issue, Wichita city manager Robert Layton said that anyone has the right to appeal their taxes, but he added that ‘no doubt that defeats the purpose of the TIF.’”

The manager’s quote is most directly damaging. In a tax increment financing (TIF) district, the city borrows money to pay for things that directly enrich the developers, in this case Burk and possibly his partners. Then their increased property taxes — taxes they have to pay anyway — are used to repay the borrowed funds. In essence, a TIF district allows developers to benefit exclusively from their property taxes. For everyone else, their property taxes go to fund the city, county, school district, state, fire district, etc. But not so for property in a TIF district.

This is what is most astonishing about Burk’s action: Having been placed in a rarefied position of receiving many millions in benefits, he still thinks his own taxes are too high. Now he wants more city taxpayer subsidy.

warren-bailout-poses-dilemma

Bill Warren: In 2008 the Old Town Warren Theater was failing and its owners — Bill Warren being one — threatened to close it and leave the city with a huge loss on a tax increment financing (TIF) district formed for the theater’s benefit. Faced with this threat, the city made a no-interest and low-interest loan to the theater. Reported the Wichita Eagle: “Wichita taxpayers will give up as much as $1.2 million if the City Council approves a $6 million loan to bail out the troubled Old Town Warren Theatre this week. That’s because that $6 million, which would pay off the theater’s debt and make it the only fully digital movie theater in Kansas, would otherwise be invested and draw about 3 percent interest a year.”

Besides Warren, you may — or may not — be surprised to learn that the theater’s partners included Dave Wells and Dave Burk, the same two men mentioned above. Also, Mayor Brewer’s relationship with Warren means he should not have voted on this matter.

Pompeo on Syria intervention

This morning U.S. Representative Mike Pompeo appeared on Fox News Network to talk about Syria. Video follows.


Also, KFDI reported this today:

Kansas Fourth District Representative Mike Pompeo has just returned from a week in the Middle East in which he met with national security figures from the United States and its allies.

Pompeo said there is a broad concensus that American foreign policy in the Middle East has been weak and feckless.

The congressman called for a strong response to the alleged use of chemical weapons by Syrian dictator Bashar Assad, who Pompeo called a war criminal.

“We’ve got to make sure that those who control Syria and big pockets of the Middle East are not beholden to the Ayatollahs in Iran and to Hezbollah and to Russia,” he said.

Pompeo said if the U.S. does nothing in response to Syrian actions, we will ultimately have risk to the American homeland.

“We don’t need 20,000 soldiers on the ground,” Pompeo said. “But we need an enormous effort to make sure that, in a post-Assad world, we do not have Iran in control.”

Pompeo said he hopes the president will do more than he has outlined so far, adding that a “shot across the bow” is not enough.

Pompeo on national security issues

On the Joseph Ashby Show today, U.S. Representative Mike Pompeo of Wichita explained his views on our national security programs.

U.S. Representative Mike Pompeo on the Joseph Ashby Show.

When the host drew an analogy between the National Security Agency’s collection of data and the Internal Revenue Service scandals, Pompeo said: “Had there been this kind of oversight of Lois Lerner, this would not have happened.” He went on to explain that oversight of IRS is all by one branch of government, the executive branch. Oversight of NSA is “radically different,” he said.

Pompeo also noted that while we should not minimize the importance of the IRS scandals, national security is a much weightier matter.

Interestingly, the perception of the breadth of data that’s being collected may be overstated. In a June 18 hearing of the House Permanent Select Committee on Intelligence, Pompeo asked these questions of the Director of the NSA (video follows):

Pompeo: Gen. Alexander, from the data under Section 215 that’s collected, can you figure out the location of the person who made a particular phone call?

General Keith Alexander, Director of the National Security Agency: Not beyond the area code.

Pompeo: Do you have any information about signal strength or tower direction? I’ve seen articles that talked about you having this information. I want to make sure for the record we’re got that right.

Alexander: We don’t have that in the database.

Pompeo: Systems are needed, and risk of abuse is low

Recently U.S. Representative Mike Pompeo of Wichita appeared on Stossel to defend the programs the National Security Agency uses to gather data on Americans and others. I wondered about these questions: If it’s true that the information leaked by Edward Snowden has harmed the security of the United States, how is it that this was able to happen? Aren’t there many thousands of people with knowledge and information similar to, or greater than, what Snowden had access to? Is the security of our country dependent on all of them keeping their secrets?

In a telephone conversation, Pompeo told me there are thousands of people who have access to classified material. Each one of these persons represents some risk.

How did the Snowden situation develop? We don’t yet know the answer, Pompeo said. It was a mistake, he said, for the NSA to permit Snowden to have access to, and be able to take from the facility, the breadth of information he has released. But Snowden did not leak actual intelligence data; only an informational presentation about the programs being used.

Snowden has harmed our security, and he may not be finished releasing information. Appearing on Stossel, Pompeo told the host that already Al-Qaeda is behaving differently. “They might well have suspected that some of this was going on. But they learned a couple things. They learned not only what was going on, but they’ve also learned the legal limits of these programs. Having shared that is very dangerous, and allows the enemy to have insights into the things we’re doing, to go catch the really bad guys — the terrorists who still want to kill us.”

Addressing privacy concerns, on Stossel Pompeo emphasized the “tremendous oversight” of intelligence services. Actual telephone calls are not being listened to. Further, the data that’s collected is not “mined” continuously, he said. It’s only for specific purposes, and then with FISA court approval, that the data is used.

An important distinction, Pompeo told me, is that it is data about telephone calls that is being collected, not the actual content of the calls. He emphasized the process and layers of oversight, by both agencies and courts. Even with a president and attorney general who have shown themselves not always worth of public trust, Pompeo says that the depth and scope of oversight gives him confidence that the risk of abuse is low.

Interestingly, the perception of the breadth of data that’s being collected may be overstated. In a June 18 hearing of the House Permanent Select Committee on Intelligence, Pompeo asked these questions of the Director of the NSA (video follows):

Pompeo: Gen. Alexander, from the data under Section 215 that’s collected, can you figure out the location of the person who made a particular phone call?

General Keith Alexander, Director of the National Security Agency: Not beyond the area code.

Pompeo: Do you have any information about signal strength or tower direction? I’ve seen articles that talked about you having this information. I want to make sure for the record we’re got that right.

Alexander: We don’t have that in the database.

On Stossel, Pompeo defends NSA programs

Last week U.S. Representative Mike Pompeo of Wichita appeared on Stossel to defend the programs the National Security Agency uses to gather data on Americans and others.

Stossel has broken with many libertarians on this issue, illustrating, as Pompeo tells him, this issue is not partisan.

As member of the House Permanent Select Committee on Intelligence, Pompeo certainly knows a lot about U.S. Intelligence programs, and probably knows much that he can’t reveal to the public.

But I’ve wondered this: If it’s true that the information leaked by Edward Snowden has harmed the security of the United States, how is it that this was able to happen? Aren’t there many thousands of people with knowledge and information similar to, or greater than, what Snowden had access to? Is the security of our country dependent on all of them keeping their secrets?

The future of Obamacare, now he tells us

This is a sad commentary on the state of politics and governance in the U.S., from the Boston Globe:

Unencumbered by the political pressures of a reelection campaign, Baucus is in a position to call out both the failure of federal officials to prepare for implementing Obamacare as well as the unintended consequences of its complex regulations.

A short while ago, before U.S. Senator Max Baucus announced his retirement, U.S. Representative Mike Pompeo of Wichita noticed the incongruity of Baucus complaining about a law he passed, tweeting the following:

Following are excerpts from a letter Pompeo sent to Baucus, followed by the entire letter.

My shock wasn’t because I disagreed: You’re right to say this legislation has led to great uncertainty for hard-working Americans, small business owners, and families. No, I was shocked because you wrote this bill. I was saddened because your acknowledgment of the harm caused by PPACA has come so late.

No one in the country bears more responsibility for the complexity of this law than you. When your supermajority couldn’t pass the bill using normal procedures, you and your Senate colleagues rammed through the final legislation by using parliamentary gimmickry. Then, in the House, Speaker Pelosi cheerfully urged members to pass the legislation “in order to find out what’s in it.” This was not good policy-making, and now we’re seeing the consequences.

Secretary Sebelius’s implementation of the law is certainly flawed, but the policy process produced a law that could not possibly be implemented successfully. As legislators, it is our responsibility to write bills that clearly explain our meaning and have achievable goals. By your own admission, this law is a disaster.

You drafted it, you twisted arms to get it passed, and, until now, you have lauded it as a model for all the world. Your attempts to pass the buck to President Obama’s team will not work, nor will they absolve you of responsibility for the harm that you have brought via this law.

Download (PDF, 125KB)

Ending the Economic Development Administration

economic-development-administration

If you think a proper function of the federal government is spending your tax dollars to build replicas of the Great Pyramids in Indiana or a gift shop in a winery, you’re not going to like legislation introduced by U.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district, including the Wichita metropolitan area.

Others, however, will appreciate H.R. 887: To terminate the Economic Development Administration, and for other purposes. In the following article from last year, Pompeo explains the harm of the Economic Development Administration, which he describes as a “politically motivated federal wealth redistribution agency.” Pompeo had introduced similar legislation last year, and this bill keeps the effort alive in the new Congress.

In his article from last year Pompeo mentions the trip by Assistant Secretary of Commerce for Economic Development John Fernandez to Wichita. Since then, Fernandex has moved on to the private sector, working for a law firm in a role that seems something like lobbying.

For more background on this agency, see Economic Development Administration at Downsizing the Federal Government.

End the Economic Development Administration — Now

By U.S. Representative Mike Pompeo, January, 2012

As part of my efforts to reduce the size of government, I have proposed to eliminate the Economic Development Administration (EDA), a politically motivated federal wealth redistribution agency. Unsurprisingly, the current leader of that agency, Assistant Secretary of Commerce for Economic Development John Fernandez, has taken acute personal interest in my bill to shutter his agency.

Last week, Secretary Fernandez invited himself to Wichita at taxpayer expense and met with the Wichita Eagle’s editorial board. Afterwards, the paper accurately noted I am advocating eliminating the EDA even though that agency occasionally awards grant money to projects in South Central Kansas. They just don’t get it. Thanks to decades of this flawed “You take yours, I’ll take mine” Washington logic, our nation now faces a crippling $16 trillion national debt.

I first learned about the EDA when Secretary Fernandez testified in front of my subcommittee that the benefits of EDA projects exceed the costs and cited the absurd example of a $1.4 million award for “infrastructure” that allegedly helped a Minnesota town secure a new $1.6 billion steel mill. As a former CEO, I knew there is no way that a taxpayer subsidy equal to less than one-tenth of one percent (0.1%) of the total capital needed made a difference in launching the project. That mill was getting built whether EDA’s grant came through or not. So, I decided to dig further.

I discovered that the EDA is a federal agency we can do without. Similar to earmarks that gave us the infamous “Bridge to Nowhere” or the Department of Energy loan guarantee scandal that produced Solyndra, the EDA advances local projects that narrowly benefit a particular company or community. To be sure, the EDA occasionally supports a local project here in Kansas. But it takes our tax money every year for projects in 400-plus other congressional districts, many if not most of which are boondoggles. For example: EDA gave $2 million to help construct UNLV’s Harry Reid Research and Technology Park; $2 million for a “culinary amphitheater,” tasting room, and gift shop at a Washington state winery; and $500,000 to construct (never-completed) replicas of the Great Pyramids in rural Indiana.

Several times in recent decades, the Government Accountability Office has questioned the value and efficacy of the EDA. Good-government groups like Citizens Against Government Waste have called for dismantling the agency. In addition, eliminating the EDA was listed among the recommendations of President Obama’s own bipartisan Simpson-Bowles Deficit Reduction Commission.

So why hasn’t it been shut down already? Politics. The EDA spreads taxpayer-funded project money far and wide and attacks congressmen who fail to support EDA grants. Soon after that initial hearing, Secretary Fernandez flew in his regional director — again at taxpayer expense — to show me “all the great things we are doing in your home district” and handed me a list of recent and pending local grants. Hint, hint. You can’t say I wasn’t warned to back off. Indeed, Eagle editors missed the real story here: Secretary Fernandez flew to Wichita because he is a bureaucrat trying to save his high-paying gig. The bureaucracy strikes back when conservatives take on bloated, out-of-control, public spending, so I guess I’m making progress.

Please don’t misunderstand. I am not faulting cities, universities, or companies for having sought “free” federal money from the EDA. The fault lies squarely with a Washington culture that insists every program is sacred and there is no spending left to cut.

A federal agency run at the Assistant Secretary level has not been eliminated in decades. Now is the time. My bill to eliminate the EDA (HR 3090) would take one small step toward restoring fiscal sanity and constitutional government.

Nation can no longer afford wind tax credit

From The Hill:

Sen. Lamar Alexander (R-Tenn.) on Wednesday said the nation’s fiscal situation has become so dire that the government can no longer afford to maintain a wind power production credit that has been in place since in 1992.

“I think there is certainly the largest realization that we’ve ever had that it’s time for it to end,” Alexander said at a Wednesday event hosted by The Hill and sponsored by the American Energy Alliance.

In a longer story, The Hill reports on the efforts of U.S. Representative Mike Pompeo, a Republican representing the Kansas fourth district (Wichita metropolitan area and surrounding counties) to end the wind production tax credit:

Rep. Mike Pompeo (R-Kan.) said he hopes that conversation leads to the elimination of all energy subsidies.

Pompeo has led the House charge against the credit. He got 46 other House GOP members to sign a September letter urging Boehner to nix the provision.

Pompeo said the wind credit’s history is instructive when debating the benefits of tax carve-outs for specific industries.

He pointed to a steep decline in wind turbine installations when the credit last lapsed in 2004 as proof that subsidies distort markets and investment. And planned projects and investments already are down for next year as a result of the credit’s cloudy future.

“I think that’s further evidence that it’s non-economic,” Pompeo said.

Pompeo has been at the forefront of efforts to end subsidies that distort energy markets. He and Alexander recently contributed an op-ed to the Wall Street Journal, which may be read at Puff, the Magic Drag on the Economy: Time to let the pernicious production tax credit for wind power blow away. Pompeo also develops the argument in Governor Romney is right: End the wind production tax credit and Mike Pompeo: We need capitalism, not cronyism. The special interests that benefit from cronyism have struck back, but unsuccessfully: Kerr’s attacks on Pompeo’s energy policies fall short.

Kerr’s attacks on Pompeo’s energy policies fall short

We often see criticism of politicians for sensing “which way the wind blows,” that is, shifting their policies to pander to the prevailing interests of important special interest groups. The associated negative connotation is that politicians do this without regard to whether these policies are wise and beneficial for everyone.

So when a Member of Congress takes a position that is literally going against the wind in the home district and state, we ought to take notice. Someone has some strong convictions.

This is the case with U.S. Representative Mike Pompeo, a Republican representing the Kansas fourth district (Wichita metropolitan area and surrounding counties.)

The issue is the production tax credit (PTC) paid to wind power companies. For each kilowatt-hour of electricity produced, the United States government pays 2.2 cents. Wind power advocates contend the PTC is necessary for wind to compete with other forms of electricity generation. Without the PTC, it is said that no new wind farms would be built.

The PTC is an important issue in Kansas not only because of the many wind farms located there, but also because of wind power equipment manufacturers that have located in Kansas. An example is Siemens. That company, lured by millions in local incentives, built a plant in Hutchinson. Employment was around 400. But now the PTC is set to expire on December 31, and it’s uncertain whether Congress will extend the program. As a result, Siemens has laid off employees. Soon only 152 will be at work in Hutchinson, and similar reductions in employment have happened at other Siemens wind power equipment plants.

Rep. Pompeo is opposed to all tax credits for energy production, and has authored legislation to eliminate them. As the wind PTC is the largest energy tax credit program, Pompeo and others have written extensively of the market distortions and resultant economic harm caused by the PTC. A recent example is Puff, the Magic Drag on the Economy: Time to let the pernicious production tax credit for wind power blow away, which appeared in the Wall Street Journal.

The special interests that benefit from the PTC are striking back. An example comes from Dave Kerr, who as former president of the Hutchinson/Reno County Chamber of Commerce played a role in luring Siemens to Hutchinson. Kerr’s recent op-ed in the Hutchinson News is notable not only for its several attempts to deflect attention away from the true nature of the PTC, but for its personal attacks on Pompeo.

There’s no doubt that the Hutchinson economy was dealt a setback with the announcement of layoffs at the Siemens plant that manufactures wind power equipment. Considered in a vacuum, these jobs were good for Hutchinson. But we shouldn’t make our nation’s policy in a vacuum, that is, bowing to the needs of special interest groups — sensing “which way the wind blows.” When considering everything and everyone, the PTC paid to producers of power generated from wind is a bad policy. We ought to respect Pompeo for taking a principled stand on this issue, instead of pandering to the folks back home.

Kerr is right about one claim made in his op-ed: The PTC for wind power is not quite like the Solyndra debacle. Solyndra received a loan from the Federal Financing Bank, part of the Treasury Department. Had Solyndra been successful as a company, it would likely have paid back the government loan. This is not to say that these loans are a good thing, but there was the possibility that the money would have been repaid.

But with the PTC, taxpayers spend with nothing to show in return except for expensive electricity. And spend taxpayers do.

Kerr, in an attempt to distinguish the PTC from wasteful government spending programs, writes the PTC is “actually an income tax credit.” The use of the adverb “actually” is supposed to alert readers that they’re about to be told the truth. But truth is not forthcoming from Kerr — there’s no difference. Tax credits are government spending. They have the same economic effect as “regular” government spending. To the company that receives them, they can be used — just like cash — to pay their tax bill. Or, the company can sell them to others for cash, although usually at a discounted value.

From government’s perspective, tax credits reduce revenue by the amount of credits issued. Instead of receiving tax payments in cash, government receives payments in the form of tax credits — which are slips of paper it created at no cost and which have no value to government. Created, by the way, outside the usual appropriations process. That’s the beauty of tax credits for big-government spenders: Once the program is created, money is spent without the burden of passing legislation.

If we needed any more evidence that PTC payments are just like cash grants: As part of Obama’s ARRA stimulus bill, for tax years 2009 and 2010, there was in effect a temporary option to take the federal PTC as a cash grant. The paper PTC, ITC, or Cash Grant? An Analysis of the Choice Facing Renewable Power Projects in the United States explains.

Astonishingly, the wind PTC is so valuable that wind power companies actually pay customers to take their electricity. It’s called “negative pricing,” as explained in Negative Electricity Prices and the Production Tax Credit:

As a matter of both economics and public policy, no government production tax subsidy should ever be so large that it creates an incentive for a business to actually pay customers to take its product. Yet, the federal Production Tax Credit (“PTC”) for wind generation is doing just that with increasing frequency in electricity markets across the United States. In some “wind-rich” regions of the country, wind producers are paying grid operators to take their generation during periods of surplus supply. But wind producers more than make up the cost of the “negative price” payment, because they receive a $22/MWH federal production tax credit for every MWH generated.

In western Texas since 2008, wind power generators paid the electrical grid to take their electricity ten percent of the hours of each day.

Once we recognize that tax credits are the same as government spending, we can see the error in Kerr’s argument that if the PTC is ended, it is the same as “a tax increase on utilities, which, because they are regulated, will pass on to consumers.” Well, government passes along the cost of the PTC to taxpayers, illustrating that there really is no free lunch.

Kerr attacks Pompeo for failing to “crusade” against two subsidies that some oil companies receive: Intangible Drilling Costs and the Percentage Depletion Allowance. These programs are deductions, not credits. They do provide an economic benefit to the oil companies that can use them (“big oil” can’t use percentage depletion at all), but not to the extent that tax credits do.

Regarding these deductions, last year Pompeo introduced H. Res 267, titled “Expressing the sense of the House of Representatives that the United States should end all subsidies aimed at specific energy technologies or fuels.”

In the resolution, Pompeo recognized the difference between deductions and credits, the latter, as we’ve seen, being direct subsidies: “Whereas deductions and cost-recovery mechanisms available to all energy sectors are different than credits, loans and grants, and are therefore not taxpayer subsidies; [and] Whereas a deduction of costs and cost recovery with respect to timing is not a subsidy.”

Part of what the resolution calls for is to “begin tax simplification and reform by eliminating energy tax credits and deductions and reducing income tax rates.”

Kerr wants to deflect attention away from the cost and harm of the PTC. Haranguing Pompeo for failing to attack percentage depletion and IDC with the same fervor as tax credits is only an attempt to muddy the waters so we can’t see what’s happening right in front of us. It’s not, as Kerr alleges, “playing Clintonesque games of semantics with us.” As we’ve seen, Pompeo has called for the end of these two tax deductions.

If we want to criticize anyone for inconsistency, try this: Kerr criticizes Pompeo for ignoring the oil and gas deductions, “which creates a glut in natural gas that drives down the price to the lowest levels in a decade.” These low energy prices should be a blessing to our economy. Kerr, however, demands taxpayers pay to subsidize expensive wind power so that it can compete with inexpensive gas. In the end, the benefit of inexpensive gas is canceled. Who benefits from that, except for the wind power industry? The oil and gas targeted deductions also create market distortions, and therefore should be eliminated. But at least they work to reduce prices, not increase them.

By the way, Pompeo has been busy with legislation targeted at ending other harmful subsidies: H.R. 3090: EDA Elimination Act of 2011, H.R. 3994: Grant Return for Deficit Reduction Act, H.R. 3308: Energy Freedom and Economic Prosperity Act, and the above-mentioned resolution.

I did notice, however, that Pompeo hasn’t called for the end to the mohair subsidy. Will Kerr attack him for this oversight?

Finally, Kerr invokes the usual argument of government spenders: Cut the budget somewhere else. That’s what everyone says.

Creating entire industries that exist only by being propped up by government subsidy means that we all pay more to support special interest groups. A prosperous future is best built by relying on free enterprise and free markets in energy, not on programs motivated by the wants of politicians and special interests. Kerr’s attacks on Pompeo illustrate how difficult it is to replace cronyism with economic freedom.

Pompeo: Wind production tax credit should expire

U.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district, and U.S. Senator Lamar Alexander contribute the following article on the harm of the wind power production tax credit (PTC). The NorthBridge Group report referenced in the article is available at Negative electricity prices and the production tax credit.

Puff, the Magic Drag on the Economy
Time to let the pernicious production tax credit for wind power blow away

By Lamar Alexander And Mike Pompeo

As Congress works to reduce spending and avert a debt crisis, lawmakers will have to decide which government projects are truly national priorities, and which are wasteful. A prime example of the latter is the production tax credit for wind power. It is set to expire on Dec. 31 — but may be extended yet again, for the seventh time.

This special provision in the tax code was first enacted in 1992 as a temporary subsidy to enable a struggling industry to become competitive. Today the provision provides a credit against taxes of $22 per megawatt hour of wind energy generated.

From 2009 to 2013, federal revenues lost to wind-power developers are estimated to be $14 billion — $6 billion from the production tax credit, plus $8 billion courtesy of an alternative-energy subsidy in the stimulus package — according to the Joint Committee on Taxation and the Treasury Department. If Congress were to extend the production tax credit, it would mean an additional $12 billion cost to taxpayers over the next 10 years.

There are many reasons to let this giveaway expire, including wind energy’s inherent unreliability and its inability to stand on its own two feet after 20 years. But one of the most compelling reasons is provided in a study released Sept. 14 by the NorthBridge Group, an energy consultancy. The study discusses a government-created economic distortion called “negative pricing.”

This is how it works. Coal- and nuclear-fired plants provide a reliable supply of electricity when the demand is high, as on a hot summer day. They generate at lower levels when the demand is low, such as at night.

But wind producers collect a tax credit for every kilowatt hour they generate, whether utilities need the electricity or not. If the wind is blowing, they keep cranking the windmills.

Why? The NorthBridge Group’s report (“Negative Electricity Prices and the Production Tax Credit”) finds that government largess is so great that wind producers can actually pay the electrical grid to take their power when demand is low and still turn a profit by collecting the credit — and they are increasingly doing so. The wind pretax subsidy is actually higher than the average price for electricity in many of the wholesale markets tracked by the Energy Information Administration.

This practice drives the price of electricity down in the short run. Wind-energy supporters say that’s a good thing. But it is hazardous to the economy’s health in the long run.

Temporarily lower energy prices driven by wind-power’s negative pricing will cripple clean-coal and nuclear-power companies. But running coal and nuclear out of business is not good for the U.S. economy. There is no way a country like this one — which uses 20% to 25% of all the electricity in the world — can operate with generators that turn only when the wind blows.

The Obama administration and other advocates of wind power argue that the subsidy provided by the tax credit allows the wind industry to sustain American jobs. But they are jobs that exist only because of the subsidy. Keeping a weak technology alive that can’t make it on its own won’t create nearly as many jobs as the private sector could create if it had the kind of low-cost, reliable, clean electricity that wind power simply can’t generate.

While the cost of renewable energy has declined over the years, it is still far more expensive than conventional sources. And even the administration’s secretary of energy, Steven Chu, calls wind “a mature technology,” which should mean it is sufficiently advanced to compete in a free market without government subsidies. If wind power cannot compete on its own after 20 years without costly special privileges, it never will.

Governor Romney is right: End the wind production tax credit

U.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district, contributes the following article on the harm of government involvement in energy markets, wind power specifically. Pompeo has written extensively on energy; see Pompeo on energy tax simplification, Era of energy subsidies is over, and Free market energy solutions don’t jeopardize national security. He has also introduced legislation to end all tax credits for energy, H.R. 3308: Energy Freedom and Economic Prosperity Act.

There’s been a steady drumbeat from those seeking an extension of the wind production tax credit. For many reasons, including some that former Massachusetts Gov. Mitt Romney has carefully highlighted in his opposition, this is a bad idea.

First, an extension continues this unsettling policy trend in which citizens are asked to bear all the risks and gain none of the rewards. This socialization of risks and privatization of profits guarantees disasters, for corporate boards and even their federal overseers can become careless and, in some instances, reckless. This fact was clearly demonstrated by the Solyndra debacle — when a company with close ties to the Obama administration lost more than a half billion dollars of taxpayers’ money. At the heart of that fiasco was both the company and the administration’s indifference to the taxpayers.

Solyndra also revealed something else damaging about federal involvement in markets: the potential for political corruption. It’s clear that the Obama administration became emotionally, and inappropriately, invested in the fortunes of one company and one sector. When that happens, the system is compromised, cronyism flourishes and corruption is inevitable.

President Barack Obama talks about the need to “invest” in alternative energy sources. But the reality is that he is not investing his money — he’s spending yours. I’m not sure that too many Americans would choose the president to manage their retirement accounts. His record — a jobless and exceedingly shallow recovery — is not good.

With this production tax credit extension, the wisdom of the investment is especially dubious. Wind companies and their lobbyists have, for the last year, been telling all who would listen that the expiration of the tax credit could spell doom for their industry. Obama repeats this claim regularly on the campaign trail.

But what does that say about the industry? If you need a tax credit to compete, you are probably not that competitive.

Moreover, the tax credit is not de minimis for either taxpayers or companies that are lobbying for it. It will cost the taxpayers more than 12 billion dollars inside the budget window. Worse, the credit is set at 2.2 cents per kilowatt hour. Just to compare, the national average for produced power is around 6 cents per kilowatt hour. That means that the wind industry gets an almost 40 percent subsidy for each unit it produces. How many companies would like that?

You also have to remember that wind power enjoys a mandate in more than 30 states. That is, regardless of cost — or price to ratepayers — utilities must use wind or other renewables for specific amounts of power generation. So, the wind companies enjoy not only a tax credit, but a must-use mandate as well — regardless of cost.

It would be one thing if we were running out of natural gas and confronted a real national requirement to use alternative energy. But it’s the reverse. The United States has more traditional energy resources than anywhere else on Earth, according to the Congressional Research Service. With the surge in production from the shale formations, a new Barclays report just concluded, natural gas will likely dominate wind in the marketplace for the foreseeable future.

Even now, in places like Williston, N.D., companies are hiring everyone who can get there to work on rigs or in ancillary jobs. If the president is genuinely worried about jobs, maybe he should visit the Bakken in North Dakota, or the Marcellus in Pennsylvania or the Eagle Ford in Texas.

Using wind power to generate electricity is not a new idea. The first windmills used to generate electricity went up in the 19th Century. The production tax credit is also not a new idea. It is now about 20 years old.

Romney’s opposition to continuing the wind subsidy is absolutely correct. At some point, an industry has to either succeed or fail on its own merits.

For wind companies, we are at that point now.

Energy subsidies exposed

On the campaign trail, President Barack Obama calls for an end to energy subsidies for the fossil fuel industry. It turns out, however, that this industry receives relatively little subsidy, while the president’s favored forms of energy investment — wind and solar — receive much more. Additionally, coal, oil, and gas industries paid billions in taxes to the federal government, while electricity produced by solar and wind are a cost to taxpayers.

Saturday’s Wall Street Journal piece The Energy Subsidy Tally: Wind and solar get the most taxpayer help for the least production gathers the facts: “The nearby chart shows the assistance that each form of energy for electricity production received in 2010. The natural gas and oil industry received $2.8 billion in total subsidies, not the $4 billion Mr. Obama claims on the campaign trail, and $654 million for electric power. The biggest winner was wind, with $5 billion. Between 2007 and 2010, total energy subsidies rose 108%, but solar’s subsidies increased six-fold and wind’s were up 10-fold.”

When looking at subsidy received per unit of power produced, the Journal found that oil, gas, and coal received $0.64 per megawatt hour, hydropower $0.82, nuclear $3.14, wind $56.39, and solar $775.64. Commented the Journal: “So for every tax dollar that goes to coal, oil and natural gas, wind gets $88 and solar $1,212. After all the hype and dollars, in 2010 wind and solar combined for 2.3% of electric generation — 2.3% for wind and 0% and a rounding error for solar. Renewables contributed 10.3% overall, though 6.2% is hydro. Some ‘investment.’”

In Kansas, there is disagreement among elected officials over wind power. Kansas Governor Sam Brownback and U.S. Senator Jerry Moran favor the production tax credit that makes wind feasible. Together they penned an op-ed that tortures logic to defend the tax credits. Each has spoken out on his own on the national stage. See Brownback on wind, again and Wind energy split in Kansas.

Brownback has also supported, at both federal and state levels, renewable portfolio standards. These in effect mandate the production of wind power. Recently Kansas Policy Institute produced a report that details the harmful effect of this law: “Renewable energy is more expensive than conventional energy, so government mandates are necessary to ensure that more renewable energy is purchased. However, the unseen consequences of well-intended efforts to increase energy independence are rarely considered. The authors estimate that by 2020, the average household’s electricity bill will increase by $660, approximately 12,000 fewer jobs will have been created, and business investment in the state will be $191 million less than without the mandate.” See The Economic Impact of the Kansas Renewable Portfolio Standard.

In Wichita, Mayor Carl Brewer is recruiting wind power companies to come to Wichita. If he is successful, you can be sure it will be at great cost to Kansas and Wichita taxpayers.

Contrast with the position taken by U.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district, which includes the Wichita metropolitan area. Recently he wrote: “Supporters of Big Wind, like President Obama, defend these enormous, multi-decade subsidies by saying they are fighting for jobs, but the facts tell a different story. Can you say ‘stimulus’? The PTC’s logic is almost identical to the President’s failed stimulus spending of $750 billion — redistribute wealth from hard-working taxpayers to politically favored industries and then visit the site and tell the employees that ‘without me as your elected leader funneling taxpayer dollars to your company, you’d be out of work.’ I call this ‘photo-op economics.’ We know better. If the industry is viable, those jobs would likely be there even without the handout. Moreover, what about the jobs lost because everyone else’s taxes went up to pay for the subsidy and to pay for the high utility bills from wind-powered energy? There will be no ribbon-cuttings for those out-of-work families.”

Pompeo has introduced legislation in Congress that would end tax credits for all forms of energy production. See H.R. 3308: Energy Freedom and Economic Prosperity Act.

The Energy Subsidy Tally
Wind and solar get the most taxpayer help for the least production.

President Obama traveled to Iowa Tuesday and touted wind energy subsidies as the path to economic recovery. Then he attacked Mitt Romney as a tool of the oil and gas industry. “So my attitude is let’s stop giving taxpayer subsidies to oil companies that don’t need them, and let’s invest in clean energy that will put people back to work right here in Iowa,” he said. “That’s a choice in this election.”

There certainly is a subsidy choice in the election, but the facts are a lot different than Mr. Obama portrays them. What he isn’t telling voters is how many tax dollars his Administration has already steered to wind and solar power, and how much more subsidized they are than other forms of electricity generation.

Continue reading at the Wall Street Journal (subscription required)

Pompeo: Impending tax increases threaten economic growth and jobs

Following is an article from U.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district, which includes the Wichita metropolitan area.

This week the House of Representatives will vote to stop the largest tax hike in American history, which, absent legislative action, is set to occur on January 1, 2013. I hope the Senate and President Obama will join us. Last week’s report of the economy growing at an anemic 1.5 percent is further evidence that tax increases are not what our nation needs.

Don’t be fooled into thinking this impending tax hike is “on the other guy” or “only on the rich.” President Obama is demanding that federal taxes go up on nearly every single American and nearly every single business. Whether you make more or less than $250,000, whether you own a business or work at one, whether you are retired and receiving dividend income or whether you are a Kansas school teacher who is provided health care under your employer’s plan — your taxes will go up. It will even become far more expensive for many people to die, with a major increase in the estate tax taking effect. All of this will occur as a direct result of the President’s deep and open desire to raise taxes and spread the wealth.

This pending federal tax increase would be on top of several tax increases the Democrats have already given each of us. President Obama’s health care takeover increases taxes by $800 billion over the next ten years alone. More than a dozen of those tax increases — including the individual mandate — hit the middle class squarely. These increases violate his oft-repeated promise not to raise taxes on those making less than $200,000. They also lower incomes as the threat of tax increases has caused the economy to remain stagnant with unemployment above 8 percent for 41 consecutive months.

The anticipated economic consequence of such an enormous tax hike is so devastating that the media has coined the term “Taxmageddon” to describe it and suggested that a failure to stop it would be equivalent to driving our economic car off a “fiscal cliff.”

How big is the impending tax increase? In 2013, every taxpayer in Kansas will be charged with paying an additional $2,984 in federal income taxes. The increased tax payments of all the families in Kansas’ Fourth District put together totals a staggering $1 billion, $4.2 billion from all Kansans, and $494 billion nationwide. The tax increase would target Kansas families, low-income workers, and retirees — and it would be the largest tax hike our state has ever had to endure.

The President has it backwards. We don’t have a problem with too few taxes. Our problem, rather, is that we have too much federal spending. The federal government is already 20% bigger than when President Obama took over. We have more people on food stamps and more people drawing federal disability benefits than ever before in our nation’s history. A tax increase will just make these problems worse by further stunting economic growth.

I firmly believe that the first thing Congress must do to provide economic certainty is to stop the tax hike now. Until American families and job creators are certain their federal taxes will not be increased, we cannot get the economy back on track. This week I will vote in the House of Representatives to approve a bill that would provide that certainty by halting Taxmageddon in its tracks. If President Obama and Senate Democrats follow suit, the result will be relief and certainty for small businesses and families that would propel economic growth and create a job for every American who wants one.

Farm bill contains energy spending

The Obama Administration’s politically-driven energy spending (think Solyndra) has illustrated for Americans that government should not be in the business of selecting and subsidizing energy sources. But the farm bill currently under consideration contains more of this wasteful spending. The bill has advanced from a Senate committee.

According to the Congressional Budget Office, the “Energy Title” (the section of the bill that addresses energy) will result in additional spending of $780 million over the next ten years, with $550 million of that in the first five years. This additional spending is over the “baseline” spending. Total spending on energy in the farm bill would be $1.5 billion over ten years.

One of the programs in the farm bill is Biomass Crop Assistance Program (BCAP), which, according to the USDA, “provides financial assistance to owners and operators of agricultural and non-industrial private forest land who wish to establish, produce, and deliver biomass feedstocks.” In other words, it pays farmers to grow and deliver crops. This program was cited by the USDA Inspector General for problems including improper payments and administration problems.

Another energy-related program in the farm bill is Biorefinery Assistance Program (BAP). This program has had its share of failures along the lines of Solyndra. Range Fuels, for example, was formed to produce cellulosic ethanol. It received a $76 million grant from the Department of Energy (during the Bush Administration), and later a $80 million loan under BAP during the Obama Administration. The plant produced one batch of methanol — not the type of alcohol that cars use as fuel — and then shut down. For more, see the Wall Street Journal The Range Fuels Fiasco: A case study in the folly of politically directed investment.

There’s also the Rural Energy for America Program, which provides loan guarantees and grants for rural America to install renewable energy systems such as wind and solar power, as well as more exotic technologies like geothermal.

There’s other energy-related spending in the bill, but you get the idea. Some of this spending is government choosing winners and losers in the energy marketplace, rather than letting markets work out which technologies are worthwhile investment subjects. Some of it is simply welfare spending on special interest groups. This energy-related spending is happening where you might not think to look for it: the farm bill. (The total cost of the farm bill over ten years is estimated by the CBO to be $969 billion.)

There’s other spending on biofuels that’s not in the farm bill. Last year a cellulosic ethanol plant in western Kansas received a $132 million loan guarantee. All this spending is in spite of the fact that there has been no commercial-scale cellulosic ethanol production.

Spending on these rural energy programs provides an opportunity for politicians to engage in what U.S. Representative Mike Pompeo has termed “photo-op economics.” Those who have fought for these spending programs get to participate in groundbreaking ceremonies and other highly visible new events. The lobbyists who fight for them earn large fees. But this type of spending represents cronyism at its fullest, where the public at large is taxed to provide benefits for the few. We need to end this type of spending, whether it be hidden in the farm bill or elsewhere.

Brownback on wind, again

This week Kansas Governor Sam Brownback again made the case for government spending on a particular industry. The industry is wind power, and the governor made his remarks at a national conference of the wind industry.

The wind industry, with Brownback’s support, wants to extend the production tax credit (PTC) for the production of electrical power by wind. In March Brownback and U.S. Senator Jerry Moran of Kansas wrote an op-ed making the case for extending the PTC. At the conference this week, Brownback called for extending the PTC, although he did support a four-year phaseout.

The PTC pays generators of wind power 2.2 cents per kilowatt-hour produced. To place that in context, a typical Westar customer in Kansas that uses 1,000 kilowatt-hours in the summer pays $95.22 (before local sales tax), for a rate of 9.5 cents per kilowatt-hour. (This is the total cost including energy charge, fuel charge, transmission charge, environment cost recovery rider, property tax surcharge, and franchise fee, according to a March 2010 illustration provided by Westar.) So 2.2 cents is a high rate of subsidy for a product that sells for 9.5 cents.

Brownback and Moran contend that the PTC is necessary to let the wind power industry “complete its transformation from being a high tech startup to becoming cost competitive in the energy marketplace.” The problem with this line of argument is that wind is not an industry in its infancy. The PTC has been in place since 1992, a period of twenty years. If an industry can’t get established in that period, when will it be ready to stand in its own?

The authors also contend that canceling the PTC is, in effect, a “tax hike on wind energy companies.” To some extent this is true — but only because the industry has enjoyed preferential tax treatment that it should never have received, coupled with a misunderstanding of the tax credit mechanism.

The proper way to view the PTC is as a government spending program. That’s the true economic effect of tax credits. Only recently are Americans coming to realize this, and as a result, the term “tax expenditures” is coming into use to accurately characterize the mechanism of tax credits.

Amazingly, Brownback and Moran do not realize this, at least if we take them at their written word when they write: “But the wind PTC is a winning solution because it allows companies to keep more of their own dollars in exchange for the production of energy. These are not cash handouts; they are reductions in taxes that help cover the cost of doing business.” (Emphasis added.)

It is the mixing of spending programs with taxation that leads these politicians to wrongly claim that tax credits are not cash handouts. Fortunately, not everyone falls for this seductive trap. In an excellent article on the topic that appeared in Cato Institute’s Regulation magazine, Edward D. Kleinbard explains:

Specialists term these synthetic government spending programs “tax expenditures.” Tax expenditures are really spending programs, not tax rollbacks, because the missing tax revenues must be financed by more taxes on somebody else. Like any other form of deficit spending, a targeted tax break without a revenue offset simply means more deficits (and ultimately more taxes); a targeted tax break coupled with a specific revenue “payfor” means that one group of Americans is required to pay (in the form of higher taxes) for a subsidy to be delivered to others through the mechanism of the tax system. … Tax expenditures dissolve the boundaries between government revenues and government spending. They reduce both the coherence of the tax law and our ability to conceptualize the very size and activities of our government. (The Hidden Hand of Government Spending, Fall 2010)

U.S. Representative Mike Pompeo of Wichita recognized the cost of paying for tax credit expenditures when he recently wrote: “Moreover, what about the jobs lost because everyone else’s taxes went up to pay for the subsidy and to pay for the high utility bills from wind-powered energy? There will be no ribbon-cuttings for those out-of-work families.” See Mike Pompeo: We need capitalism, not cronyism.

So when Brownback and Moran write of the loss of income to those who profit from wind power, we should remember that these profits do not arise from transactions between willing partners. Instead, they result from politicians like these who are willing to override the judgment of free people and free markets with their own political preferences — along with looking out for the parochial interests of the home state. We need less of this type of wind power.

Five questions with Mike Pompeo

Originally published in The Washington Times. Below, U.S. Representative Mike Pompeo from Wichita explains his opposition to tax credits for all energy production, the problems with over-regulation of business, and the state of the economic recovery. As Decker notes, Pompeo’s stance against energy tax credits, which includes the production tax credit for wind power, is contrary to that of several Kansas politicians, including Kansas Governor Sam Brownback and U.S. Senator Jerry Moran. These have editorialized in favor of tax expenditures to support the wind power industry.

5 Questions with Rep. Mike Pompeo: “We can’t spend our way out of this mess”
By Brett M. Decker
The Washington Times

Rep. Mike R. Pompeo was elected in 2010 by the 4th Congressional District of Kansas. A native of Wichita and graduate of the United States Military Academy at West Point, he patrolled the Iron Curtain as an Army officer before the Berlin Wall came down in 1989. After leaving active duty, Mr. Pompeo attended Harvard Law School, where he was as an editor of the Harvard Law Review. Before running for office, he managed two small businesses. He founded Thayer Aerospace, which grew to employ more than 400 workers, and was president of Sentry International, a company that manufactures oilfield equipment. You can find out more about the congressman’s work at: pompeo.house.gov.

Decker: You have authored a bill to eliminate all energy tax credits. That can’t be popular for a congressman from a corn state. What’s so important about your legislation that it is worth ticking off constituents back home?

Pompeo: The federal government has been a proven failure in picking winners and losers in the energy sector. Democrats and Republicans alike have used our tax code to reward their favorite energy sources — that is, ones in their home district — with tax loopholes. This causes every American taxpayer to subsidize those industries and causes consumers to pay higher prices for energy. This results in terrible energy policy and even worse tax policy. More importantly, taxpayers are getting hammered both coming (higher taxes) and going (higher energy costs).

My bill, the Energy Freedom and Economic Prosperity Act (HR 3308), would eliminate all energy tax subsidies from our Internal Revenue Code and turn that savings toward lowering our corporate tax rate to foster job growth here in America. The bill is revenue neutral and supported by every major conservative group, such as: Americans for Prosperity, Americans for Tax Reform, Club for Growth, Council for Citizens Against Government Waste, Freedom Action, Heritage Action, National Taxpayers Union, 60 Plus Association and Taxpayers for Common Sense. It gets rid of every tax credit related to energy; it favors no company, no person and no energy source. It treats them all equally. That is the American way.

When I’m at home, Kansans tell me they want honest and serious leadership from their elected representatives, not the business-as-usual policies that got us into this economic mess. I am working hard to provide solutions to meet a most pressing goal: preserving our way of life for our kids and grandkids.

Decker: I understand that you would use savings from the elimination of energy subsidies to lower the corporate tax rate. How would that work and why is it necessary?

Pompeo: My goal in getting rid of tax loopholes is not to raise taxes. Our problem in Washington, D.C. is not a revenue problem, it is a spending problem. My goal is to make the tax code fairer and flatter and reward energy sources that lower costs for consumers. So, any increase in taxes that occurs because these tax goodies are eliminated will be offset by lower taxes for every single business in America. My bill would mean fewer tax loopholes for the powerful and the connected, and lower tax rates for everyone willing to take risk and engage in American commerce. This is the perfect combination and the way our tax code needs to be reformed. The Energy Freedom and Economic Prosperity Act does this in one small place — the realm of energy tax credits — and it provides a model for the broader tax reform that will set our nation on a prosperous course for decades to come.

Sen. Jim DeMint [of South Carolina] has sponsored a companion provision which garnered the support of a majority of the Republican Conference, including Minority Leader Mitch McConnell [of Kentucky], during a recent vote on the Senate Floor. In the House, my bill enjoys the support of strong conservatives, including Budget Committee Chairman Paul Ryan [of Wisconsin]. I believe there is a growing consensus that my bill represents a free-market model for how to enact real, comprehensive tax reform.

Decker: Before coming to Washington last year, you spent your career in the private sector, including building a successful aerospace company from the ground up. I have had many job creators tell me that if they had to start all over again that creating their own company would no longer be worth all the hassle, harassment and heartache. What are the most damaging government hindrances to entrepreneurs today?

Pompeo: I’d start a business again in a heartbeat. Indeed, I hope that one day I may get the chance to do so when my mission here in Washington, D.C. is complete.

It is true that President Obama has unleashed a slew of regulations upon small business. I struggled against that regulatory burden firsthand while running a company in Kansas. It is difficult to create jobs when you face an overwhelming tax burden, as well as countless compliance and reporting rules. I’ve been there. I’ve grappled with these issues while keeping the lights on and making payroll. That’s why we need to roll back government interference and grow our economy so people can find jobs. The energy sector is a perfect example where the Obama administration’s actions are harming both businesses and consumers. Having run a small business that provided oil and gas exploration equipment to domestic energy producers, I have seen this firsthand. Why, for example, has this president’s Environmental Protection Agency attacked with intent to destroy the coal industry that provides over 50 percent of all American power? Layer upon layer of regulations aimed at — in the president’s own words — “bankrupting” that industry. Why, for example, has this president put 10 (ten!) agencies on the beat to regulate hydraulic fracturing — a process that has been effectively regulated by states for decades with a tremendous safety record.

These are the reasons some entrepreneurs are reluctant to start businesses and take risks. We can do better, we can create jobs in America, and I am confident the next administration will.

Decker: Every time I sit down with a business leader, I get an earful about 2002’s Sarbanes-Oxley Act that dramatically altered federal accounting regulations and 2010’s Dodd-Frank Act to supposedly reform Wall Street. Should these laws be repealed? Why or why not?

Pompeo: I’ve heard a great deal more about Dodd-Frank than I have Sarbanes-Oxley from Kansans. Both laws have had very significant and negative consequences for our economy. I support the repeal of Dodd-Frank in its entirety. Its goal to protect taxpayers from failures of the nation’s largest financial institutions is not accomplished and, instead, has negatively impacted community and regional banks along with their customers. It has also created yet another “do-good” organization, the Consumer Financial Protection Board. The CFPB will not protect consumers. Instead, it will add to the cost for every hardworking taxpayer who seeks to purchase a home with a mortgage or who wants to engage in other banking activity. Once again, the federal government, in its effort to protect citizens, fails in its mission and instead creates a bureaucracy that eclipses any good that might have been sought.

Decker: The Obama administration talks an awful lot about an economic recovery, yet the unemployment rate is still sky high, record numbers of Americans are on food stamps and the national debt continues to mount due to runaway federal spending. What does such an anemic recovery say about the real state of our economy?

Pompeo: This very weak data shows this is not a recovery that will truly provide the jobs and opportunity our nation must have and the next generation deserves. The $831 billion “economic stimulus,” passed into law in 2009, dug the hole deeper and did not accomplish what the president said it would – keeping unemployment below 8 percent. This should come as no surprise. Businesses have no interest in hiring new employees in this environment of higher taxes, regulatory uncertainty and the staggering costs of Obamacare. Republicans were swept into power in 2010 because Americans saw our solutions for recovery: less spending, less government and less regulation. All of these things are what will kick-start our recovery. We can’t spend our way out of this mess. That’s been tried and it failed. The real economy, private-sector job growth, will return when leaders in Washington, D.C. recognize what Kansans already know: The solutions are not to be found in ever-expanding government. The solutions are found through freedom, liberty, innovation and rewarding earned success.

Kansas and Wichita quick takes: Thursday May 17, 2012

Watchdog reporter at Pachyderm. This Friday (May 18th) the Wichita Pachyderm Club features Paul Soutar, Reporter for Kansas Watchdog, speaking on “The evolution of journalism and how the new media empowers citizens.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … The club has an exceptional lineup of future speakers as follows: On May 25th: Ron Estes, State Treasurer of Kansas, speaking on “A report from the Kansas Treasurer.” … On June 1st: Gary Oborny, Chairman/CEO Occidental Management and Real Estate Development, CCIM Designated member of the Storm Water Advisory Board to the City of Wichita, speaking on “What is the economic impact of EPA mandates on storm water quality in Wichita?”

Kansas senators vote for cronyism. Veronique de Rugy explains the harm of the Export-Import Bank of the United States in Why Would Anyone be Against the Export-Import Bank? “First, the Ex-Im Bank is nothing more than corporate welfare. This is an agency that is in the business of subsidizing private companies with taxpayer dollars. … An excellent paper by Cato Institute’s trade analyst Sallie James exposes just how unseemly, inefficient, and irrelevant the Export-Import Bank is. As James explains, the Bank not only picks winners and losers by guaranteeing the loans of private companies, but it also introduces unfair competition for all the U.S. firms that do not benefit from such special treatment.” The bill is H.R. 2072: Export-Import Bank Reauthorization Act of 2012. Both Kansas senators Jerry Moran and Pat Roberts voted for this bill. So did U.S. Representative Kevin Yoder of the Kansas third district. But Representatives Tim Huelskamp, Lynn Jenkins, and Mike Pompeo voted against it.

Koch = big oil? Politico: “The Koch brothers have an unlikely ally in the war of words with their liberal adversaries: the nation’s journalistic fact-checkers. Both The Washington Post’s Fact Checker blog and the nonpartisan site FactCheck.org have dinged critics of David and Charles Koch in recent weeks for referring to the billionaire brothers as Big Oil. Why? Because Koch Industries’ business interests extend well beyond the company’s involvement in petroleum refining and other oil-based operations. And while no corporate midget, the company isn’t anywhere near as big as true oil giants like ExxonMobil. ‘So even if all of Koch Industries’ revenues came from its refining business — which they do not — they would still be a fraction of the revenues of the companies that actually represent ‘Big Oil,” the FactCheck.org critique read.” More at Fact-checkers and Kochs’ ‘Big Oil’. Another example of how facts don’t get in the way of Koch critics. Or try For New York Times, facts about Kochs don’t matter.

Economic freedom. Why does the political left criticize Charles and David Koch? In the following video from last year, Koch Industries CEO and board chairman Charles G. Koch explains the principles of economic freedom, something that he and David Koch have worked to advance for many years. These principles, according to Koch, include private property rights, impartial rule of law, free trade, sound money which reduces boom and bust cycles, and a small and limited government. These principles are good for everyone, I should add, including those currently at the bottom of the economic ladder.

We aren’t Greece … yet. “Once again, Greece finds the international community questioning its ability to pay its debts. Default and an exit from the Euro Zone (or countries which share the Euro as a common currency) threatens on the horizon. Here in the U.S., we face high debts and have a lowered credit rating due to Washington’s inability to agree on deficit reduction. Just how alike are our two nations?” An infographic from Bankrupting America explains.


Bankrupting America

Pompeo: Ending tax credits for energy doesn’t violate pledge

In a news conference last week, U.S. Representative Mike Pompeo of Wichita and two others criticized President Barack Obama for misunderstanding of the meaning of a taxpayer protection pledge that Pompeo has signed.

The pledge is the famous pledge advanced by Grover Norquist of Americans for Tax Reform, where signers pledge not to increase taxes. The “tax increase” the president refers to are various tax credits that benefit some forms of energy production, particularly wind and solar power. Norquist, along with Senator Jim DeMint of South Carolina, participated in the conference.

Pompeo said the president “called out” those who signed the ATR pledge, specifically arguing that allowing the wind production tax credit (PTC) to expire would be a violation of the pledge. The ATR taxpayer protection pledge is to “One, oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and two, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.”

Pompeo has introduced legislation in the House of Representatives that would end tax credits on all forms of energy production. By itself, that might be a violation of the pledge. The bill, however, specifies that the savings from the elimination of the spending on tax credits would be used to lower the corporate income tax rate. The use of the savings to reduce tax rates is in agreement with the second plank of the ATR pledge.

Pompeo’s bill is H.R. 3308: Energy Freedom and Economic Prosperity Act. This bill is currently in committee. Sen. DeMint introduced an amendment to a Senate bill that would have accomplished the same, but the amendment received only 26 votes. Pompeo characterized this as an advance, as just a few years ago, he said such a bill or amendment would have received only a few votes. But this received the votes of a majority of Republican members of the Senate, including that of minority leader Mitch McConnell.

In his remarks, DeMint said that while the president talks about eliminating corporate loopholes, he is hypocritical in his criticism of this legislation. If Congress could eliminate the tax credits — loopholes — for big oil and all energy and lower tax rates for all, it would be “a model for what we could do across our whole tax code.”

Norquist emphasized the temporary nature of many loopholes or tax advantaged treatment added to the tax code. These are usually pitched as temporary measures, needed because the policy goal is good, the industry is in its infancy, and it needs temporary help. But as in the case of the wind PTC, these special advantages are often extended or made permanent.

The issue of special tax treatment for the oil and gas industry arose. Norquist said that these tax considerations almost always fall into the categories of depreciation and expensing, which are available to all industries. He said if these are available to General Electric and Wal-Mart, they should also be available to all industries, including oil and gas.

Not everyone, including all conservatives, agree that tax credits are a form of spending implemented through the tax code. Recently Kansas Governor Sam Brownback and U.S. Senator Jerry Moran of Kansas made the case for extending the production tax credit for the production of electrical power by wind. See Wind tax credits are government spending in disguise.

In their op-ed, the Kansans argued the PTC is necessary to let the wind power industry “complete its transformation from being a high tech startup to becoming cost competitive in the energy marketplace.” As the PTC has been in effect is 1992, a period of 20 years, Norquist’s warning about the temporary nature of these programs is relevant.

The proper way to view the PTC is as a government spending program, recognizing the true economic effect of tax credits. Only recently are Americans coming to realize this, and as a result, the term “tax expenditures” is coming into use to accurately characterize the mechanism of tax credits. Canceling this spending is what would let tax rates be reduced, according to Pompeo’s proposed legislation.

Amazingly, Brownback and Moran do not realize this, at least if we take them at their written word when they write: “But the wind PTC is a winning solution because it allows companies to keep more of their own dollars in exchange for the production of energy. These are not cash handouts; they are reductions in taxes that help cover the cost of doing business.” (Emphasis added.)

Pompeo: Compromise has meant increased spending

At the recent economic development conference produced by Kansas Policy Institute, U.S. Representative Mike Pompeo of Wichita explained how the process of political compromise has worked to increase spending. Political compromise of the type Pompeo explained is also called logrolling.

Pompeo told the audience that in his first 15 months in office, over 260 people came to his office to ask for something, a particular request. 85 percent of those requests came from Fortune 500 companies, our largest companies. Sometimes, he said, they brought along one of his constituents to help make the argument.

These companies were asking for money from the federal treasury or some other form of special treatment, which Pompeo referred to as crony capitalism.

Pompeo said he’s urged to compromise, to go along and get along. But he described how compromise has worked in Congress over the past 60 years, no matter which party is in charge of Congress or the presidency, and no matter the combination: “Congressman ‘A’ needed a bridge in his district, Congressmen ‘B’ wanted a flood control project in hers, and the president wanted more money for education. And the compromise was ‘Let’s do all three.’”

The compromise for 60 years has been not to meet in the middle, but to increase spending. The real party of interest — people whose money is being spent — wasn’t in the room.

Later, he explained the difficulty that elected officials face. Citing his proposed legislation to end federal tax credits for all forms of energy production, Pompeo said that the beneficiaries of these credits will come to his office and point out jobs created by — for example — a wind power equipment plant in Hutchinson. These people working are easy to see. They’re concentrated in one place at one company.

But the costs of these credits and programs are being borne elsewhere, he said, and their effects are difficult to see.

Kansas Policy Institute to host economic development summit

This Wednesday (April 11th) Kansas Policy Institute will host an educational event focusing on local economic development. This event is vitally important as it is becoming apparent that Wichita’s traditional process of economic development is not working very well. Also, we’ve recently learned that in both Kansas and Wichita, business tax costs are very high, with only a handful of states ranking worse.

To register at no cost for this event, click on EcoDevo Through Economic Competitiveness . Following is information from KPI on this event.

Just last month, Wichita voters took to the ballot box to weigh in on whether the City of Wichita should provide government funded incentives for a new downtown hotel. As the Wall Street Journal wrote after voters decided against this form of corporate welfare:

Local politicians like to get in bed with local business, and taxpayers are usually the losers. So three cheers for a voter revolt in Wichita, Kansas last week that shows such sweetheart deals can be defeated.

This vote was only the latest reminder about the debate surrounding economic development, growth, and competitiveness both in Kansas and around the country.

On one side are people who feel the best way to foster economic growth is at the direction of elected officials and bureaucrats. On the other, are those who believe that creating a pro-growth environment with lower taxes and regulations is the correct tactic with which to create jobs and prosperity for all.

KPI is hoping to look beyond the issue of the Ambassador hotel in Wichita or Solyndra in D.C., and focus on the larger issues at an upcoming mini-summit on 11 April.

National and Kansas experts will join at the WSU MetroPlex for a half-day of panel discussions and expert presentations. This free event is open to the public and you can register here. We’ll have breakfast and lunch and check out the agenda below.

Eco-Devo Through Economic Competitiveness, April 11, 2012

7:30 to 8:15 am: Registration and breakfast.

8:15 am: Welcome: Dave Trabert, President of Kansas Policy Institute.

8:30 am: Implications of Location Matters: A Comparative Analysis of State Tax Costs on Business: Joe Henchman, Vice President of Legal and State Projects at the Tax Foundation.

9:00 am: Shaping Government to Increase Competitiveness: The Honorable Maurice McTigue, Vice President of the Mercatus Center at George Mason University

9:45 am: Break

10:00 am: Panel Discussion: Different Perspectives on Competitiveness and Development. Panelists include:
Ron Wilson, Director of the Huck Boyd National Institute for Rural Development at Kansas State University.
Jeremy Hill, Center for Economic Development and Business Research at Wichita State University.
Art Hall, Ph.D., Executive Director of the Center for Applied Economics at the University of Kansas.
The Honorable Maurice McTigue, Vice President of the Mercatus Center at George Mason University.
Walter Berry, Chair, Wichita Metro Chamber of Commerce Board of Directors.
Nick Jordan, Kansas Secretary of Revenue.

11:45 am: Break

12:00 pm: Lunch served

12:15 pm: A Perspective from Washington: U.S. Representative Mike Pompeo

Wind tax credits are government spending in disguise

Recently Kansas Governor Sam Brownback and U.S. Senator Jerry Moran of Kansas made the case for extending the production tax credit (PTC) for the production of electrical power by wind.

The PTC pays generators of wind power 2.2 cents per kilowatt-hour produced, a high rate of subsidy for a product that sells for 9.5 cents, according to a March 2010 illustration provided by Westar.

Brownback and Moran contend that this tax credit is necessary to let the industry “complete its transformation from being a high tech startup to becoming cost competitive in the energy marketplace.” But wind is not a new industry. The PTC has been in place for twenty years. If an industry can’t get established in that period, when will it be ready to stand in its own?

The authors also contend that canceling the PTC will result in a “tax hike on wind energy companies.” To some extent this is true — but only because the industry has enjoyed preferential tax treatment that it should never have received.

The proper way to view the PTC is as a government spending program in disguise. That’s the true economic effect of tax credits. They are equivalent to grants of money.

Amazingly, Brownback and Moran do not realize this — at least if we take them at their written word as they describe the PTC: “These are not cash handouts; they are reductions in taxes that help cover the cost of doing business.” (Emphasis added.)

It is the mixing of spending programs with taxation that leads these politicians to wrongly claim that tax credits are not cash handouts. But not everyone falls for this seductive trap. In an article in Cato Institute’s Regulation magazine, Edward D. Kleinbard explains:

Specialists term these synthetic government spending programs “tax expenditures.” Tax expenditures are really spending programs, not tax rollbacks, because the missing tax revenues must be financed by more taxes on somebody else. … Tax expenditures dissolve the boundaries between government revenues and government spending. They reduce both the coherence of the tax law and our ability to conceptualize the very size and activities of our government. (The Hidden Hand of Government Spending, Fall 2010)

U.S. Representative Mike Pompeo of Wichita recognized the cost of paying for tax credit expenditures when he recently wrote: “Moreover, what about the jobs lost because everyone else’s taxes went up to pay for the subsidy and to pay for the high utility bills from wind-powered energy? There will be no ribbon-cuttings for those out-of-work families.”

This is an example of the seen and unseen, where thinking is confined only to what is easily seen. Many years ago Frederic Bastiat explained this problem in his famous parable of the broken window. More recently the school of public choice economics has warned us the problem of concentrated benefits and dispersed costs. Politicians hope we won’t notice.

When Brownback and Moran write of the loss of income to those who profit from wind power, we should remember that these profits do not arise from transactions between willing partners. Instead, they result from politicians who override the judgment of free people and free markets with their own political preferences — along with looking out for the parochial interests of the home state. We need less of this type of wind power.

Kansas and Wichita quick takes: Friday March 23, 2012

Pompeo meeting tomorrow. From the congressman’s office: “Kansas Fourth District Congressman Mike Pompeo will host a town hall meeting at the WSU Hughes Metroplex in Wichita on Saturday, March 24 at 11:30 am. Congressman Pompeo will take questions from constituents and discuss issues related to Congress and the federal government. The public and members of the media are welcome and encouraged to attend.” The WSU Hughes Metroplex is located at 5015 East 29th Street North.

Obamacare anniversary. Listening to President Barack Obama you wouldn’t know it, but it’s the second anniversary of his signature legislative achievement. The problem? It’s very unpopular. A recent poll found “Two-thirds of Americans say the U.S. Supreme Court should throw out either the ‘individual mandate’ in the federal health care law or the law in its entirety — signaling the depth of public disagreement with that controversial element of health care reform.” Locally, two Congressmen are not happy with the law, either. In a statement Last week U.S. Representative Tim Huelskamp, who is in his first term representing the Kansas first district, wrote “Two years ago, President Obama began a terrible experiment in government-run health care. Even though we are still two years away from the full implementation of the law, the devastating harm is already coming to light. There is no shortage of new ‘unintended consequences,’ usually with taxpayers and patients paying the price — literally or figuratively. The universal rule of medicine is ‘Do No Harm,’ yet the only thing ObamaCare seems to do is damage. … Americans were assured we could keep our health insurance if we like it, but the Congressional Budget Office now estimates as many as 20 million Americans could lose their employer-based coverage because of ObamaCare.” … U.S. Representative Mike Pompeo of Wichita wrote “My conservative colleagues and I warned during the debate over Obamacare that having the government take over 1/6th of the U.S. economy would not reduce health care costs or improve access to health care, but Democrats rammed the bill down the throats of the American people anyway. At the time, then-Speaker Nancy Pelosi infamously declared that the Democrats needed to pass it in order to know what was in it. Now we know. Obamacare’s price tag has doubled and the newest projections show that up to 88 million Americans will not be able to ‘keep their plan if they like it,’ as President Obama so often promised in his sales pitch.”

Ambassador Hotel. The free-market organization Heartland Institute contributes coverage in the special election in Wichita regarding the Ambassador Hotel. Of special note is how some people just don’t get it. Writes the reporter: “Reflecting on the defeat of the rebate, [Wichita Downtown Development Corporation chair Tom] Docking said, ‘The anti-development, anti-tax populace out there are numerous and they’re well organized.’ Weeks objected to this characterization. ‘We’re not anti-development. I am a capitalist. . . Anti-tax, yes, we’re very much that. But ‘organized’ I don’t think applies to us at all. We beat it back this one little time.’” … Docking was also quoted as saying the election “was portrayed in a lot of circles in a way that was not accurate.” I should mention that WDDC and Docking were extended several invitations to appear at forums where the issues could be discussed. No one would agree, with Docking and others preferring to level their charges in forums where they knew they would not be challenged or held accountable.

Kansas and Wichita quick takes: Monday March 19, 2012

Eisenhower expert to present. This Friday (March 23rd) the Wichita Pachyderm Club features David Nichols, Ph.D. Dr. Nichols is a recognized expert on the Eisenhower presidency and is currently working on his third book on Ike, this one dealing with Senator Joe McCarthy with a focus on Ike’s management techniques. On Friday, Nichols’ topic will be “The Eisenhower Leadership Model: What business people (and even politicians) can learn from Ike.” … The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … The club has an exceptional lineup of future speakers as follows: On March 30th: Tom DeWeese, President, American Policy Center, speaking on U.N. Agenda 21: Sustainable Development. … On April 6th: Jordan A. Poland, who will discuss his Master of Arts thesis in Public History at Wichita State University, titled “A case study of Populism in Kansas. The election of Populist Governor Lorenzo Lewelling from Wichita, and the Legislative War of 1893.” … On April 13th: Alvin Sarachek, Ph.D., Geneticist, Distinguished Professor Emeritus of Natural Sciences at Wichita State University, speaking on “Human Genetic Individuality and Confused Public Policy Making.” … On April 20th: Senator Steve Morris, President of the Kansas Senate, speaking on “Legislative update.” … On April 27th: Dr. Malcolm C. Harris, Sr., Professor of Finance, Friends University, speaking on “The Open Minded Roots of American Exceptionalism, and the Decline of America’s Greatness.”

Pompeo town hall meeting. From the congressman’s office: “Kansas Fourth District Congressman Mike Pompeo will host a town hall meeting at the WSU Hughes Metroplex in Wichita on Saturday, March 24 at 11:30 am. Congressman Pompeo will take questions from constituents and discuss issues related to Congress and the federal government. The public and members of the media are welcome and encouraged to attend.” The WSU Hughes Metroplex is located at 5015 East 29th Street North.

Crises of Governments. A new short book from Institute of Economic Affairs is Crises of Governments: The Ongoing Global Financial Crisis and Recession. Barro is Robert Barro is the Paul M. Warburg Professor of Economics at Harvard University; a Senior Fellow of the Hoover Institution of Stanford University; and a Research Associate of the National Bureau of Economic Research. The complete book is available online at no cost. Some highlights from the executive summary include these: “The ‘Great Recession’ has been particularly deep. In the USA, the loss of GDP relative to trend growth has been 9 per cent. The recovery from recession has also been much slower than the recovery from the recessions of the early 1980s and early 1990s. After those recessions, the USA achieved economic growth of 4.3 per cent and 3.6 per cent respectively.” … “One of the major causes of the crash was the boom in securitisation whereby inherently risky loans were packaged together and sold as very low-risk securities. This was strongly encouraged by the government; Fannie Mae and Freddie Mac, the government agencies responsible, should be privatised.” … “In general a fiscal stimulus package might raise output in the very short run but the long-term fiscal multiplier is negative. This leads growth to stall after an initial increase, as is happening at the moment.” … “Spending and welfare programme entitlements grew rapidly under President George W. Bush and that growth has continued under President Obama. In many respects, as far as economic policy is concerned, Bush and Obama are ‘twins’, just as Reagan and Clinton were ‘twins.’” … “The next crisis will be a crisis of government debt. This debt consists of both explicit borrowing and also of entitlements through social security programmes that have been dramatically expanded under Presidents Bush and Obama. This crisis of government debt is not just a US problem.” … “The coming crisis can be addressed in the USA only by reforming entitlement programmes and also by tax reform to reduce ‘tax expenditures’ or special exemptions from taxes for certain types of economic activity. In the EU, fiscal and monetary policy need to be decoupled so that member states do not become responsible for each other’s borrowing.”

What are the limits of democracy? “Imagine if everything in society was determined through a majority vote.” Politics — elections, in particular — is an especially bad way to make decisions. Free markets allow people to get just what they want from an incredibly broad array of choices. In elections, we are usually left to choose between the lesser of two evils on the basis of their campaign promises. And once in office, we learn the worthlessness of promises made on the campaign trail. It is best that we remove decision-making from the public sphere, as much as we can. “Therefore it is important to remember that individual choice, limited government, and free markets are the necessary condition for a free and truly democratic society,” concludes narrator Professor Pavel Yakovlev in this video from LearnLiberty.org, a project of Institute for Humane Studies.

Brownback, Moran wrong on wind tax credits

In the following commentary, Kansas Governor Sam Brownback and U.S. Senator Jerry Moran of Kansas make the case for extending the production tax credit (PTC) for the production of electrical power by wind.

The PTC pays generators of wind power 2.2 cents per kilowatt-hour produced. To place that in context, a typical Westar customer in Kansas that uses 1,000 kilowatt-hours in the summer pays $95.22 (before local sales tax), for a rate of 9.5 cents per kilowatt-hour. (This is the total cost including energy charge, fuel charge, transmission charge, environment cost recovery rider, property tax surcharge, and franchise fee, according to a March 2010 illustration provided by Westar.) So 2.2 cents is a high rate of subsidy for a product that sells for 9.5 cents.

The authors contend that the PTC is necessary to let the wind power industry “complete its transformation from being a high tech startup to becoming cost competitive in the energy marketplace.” The problem with this line of argument is that wind is not an industry in its infancy. The PTC has been in place since 1992, a period of twenty years. If an industry can’t get established in that period, when will it be ready to stand in its own?

The authors also contend that canceling the PTC is, in effect, a “tax hike on wind energy companies.” To some extent this is true — but only because the industry has enjoyed preferential tax treatment that it should never have received, coupled with a misunderstanding of the tax credit mechanism.

The proper way to view the PTC is as a government spending program. That’s the true economic effect of tax credits. Only recently are Americans coming to realize this, and as a result, the term “tax expenditures” is coming into use to accurately characterize the mechanism of tax credits.

Amazingly, Brownback and Moran do not realize this, at least if we take them at their written word when they write: “But the wind PTC is a winning solution because it allows companies to keep more of their own dollars in exchange for the production of energy. These are not cash handouts; they are reductions in taxes that help cover the cost of doing business.” (Emphasis added.)

It is the mixing of spending programs with taxation that leads these politicians to wrongly claim that tax credits are not cash handouts. Fortunately, not everyone falls for this seductive trap. In an excellent article on the topic that appeared in Cato Institute’s Regulation magazine, Edward D. Kleinbard explains:

Specialists term these synthetic government spending programs “tax expenditures.” Tax expenditures are really spending programs, not tax rollbacks, because the missing tax revenues must be financed by more taxes on somebody else. Like any other form of deficit spending, a targeted tax break without a revenue offset simply means more deficits (and ultimately more taxes); a targeted tax break coupled with a specific revenue “payfor” means that one group of Americans is required to pay (in the form of higher taxes) for a subsidy to be delivered to others through the mechanism of the tax system. … Tax expenditures dissolve the boundaries between government revenues and government spending. They reduce both the coherence of the tax law and our ability to conceptualize the very size and activities of our government. (The Hidden Hand of Government Spending, Fall 2010)

U.S. Representative Mike Pompeo of Wichita recognized the cost of paying for tax credit expenditures when he recently wrote: “Moreover, what about the jobs lost because everyone else’s taxes went up to pay for the subsidy and to pay for the high utility bills from wind-powered energy? There will be no ribbon-cuttings for those out-of-work families.” See Mike Pompeo: We need capitalism, not cronyism.

So when Brownback and Moran write of the loss of income to those who profit from wind power, we should remember that these profits do not arise from transactions between willing partners. Instead, they result from politicians like these who are willing to override the judgment of free people and free markets with their own political preferences — along with looking out for the parochial interests of the home state. We need less of this type of wind power.

Strengthening our Nation’s Domestic Energy Supply

By Kansas Governor Sam Brownback and U.S. Senator Jerry Moran of Kansas.

The increasing cost of conducting business in the United States threatens innovation and investment in new technologies. In today’s unstable business environment, American industries are understandably reluctant to invest the time and resources necessary to grow their businesses. This is especially true for domestic energy production.

Energy production is one of the most highly regulated markets in the United States today. Government policies are hurting our country’s ability to compete within the global economy, limiting our domestic energy supply and driving up the cost of energy for consumers. To ensure Kansans have access to a reliable and affordable supply of energy, we must develop more of our nation’s natural resources.

One resource that is plentiful in Kansas is wind. Our state has the second highest wind resource potential in our country and leads the nation in wind production capacity currently under construction. If we expect the wind energy industry to provide for our country’s future energy needs and make long-term investments in their businesses, Congress must reauthorize the wind production tax credit (PTC) that expires this year. By extending the wind PTC, Congress will allow the wind industry to complete its transformation from being a high tech startup to becoming cost competitive in the energy marketplace. Failure to do so will result in a tax hike on wind energy companies and will only further delay this industry’s ability to compete.

There are those who view government intervention in the energy sector as picking winners and losers. But the wind PTC is a winning solution because it allows companies to keep more of their own dollars in exchange for the production of energy. These are not cash handouts; they are reductions in taxes that help cover the cost of doing business. Unlike President Obama’s failed stimulus plan that rewards individual, unproven companies like Solyndra with cash handouts, the wind PTC is an industry tax credit that has led to $20 billion in annual private investment in our energy infrastructure.

Today, the American wind industry includes more than 400 manufacturing facilities in 43 states. In 2005, just 25 percent of the value of a wind turbine was produced in the United States compared to more than 60 percent today. Because of their close proximity to wind farms, American workers can produce the critical components at a lower cost than their European and Asian counterparts. As more components are manufactured in the United States and not overseas, the cost to produce electricity from wind farms will be further driven down.

If the wind PTC is allowed to expire, local economies across our state will suffer. Kansas counties will lose $3.7 million in annual payments from wind companies. Kansas landowners will lose nearly $4 million annually in additional income they earn from leasing or selling their land for wind farms. And every Kansan will ultimately be affected because the power generated by these wind facilities contributes to our supply of electricity. By eliminating additional sources of electricity, utility rates will climb.

To meet our country’s energy needs and remain competitive in the global market, Congress must develop a national energy policy. Recent events in the Middle East have demonstrated once again the importance of having access to an ample domestic energy supply so we are less dependent on foreign sources. If Congress fails, Kansans will soon be paying much higher energy prices — for the gas to fill up our cars, for the fuel to power our farm equipment, and for the electricity to turn on our lights.

Temporarily extending the wind PTC is not about picking winners and losers — it is about preparing our country to meet our growing energy demand. Rather than make it more difficult for the private sector to develop energy sources, we should lower taxes, reduce regulations, and allow the private sector to succeed in the free market. In turn, the wind industry will grow and become fully competitive — no longer needing the wind PTC. By strengthening American energy production, our country’s future will be stronger and more secure.

Kansas and Wichita quick takes: Thursday March 8, 2012

Candidate representatives at Pachyderm. This Friday’s meeting (March 9th) of the Wichita Pachyderm Club features Republican presidential candidate spokespersons. In addition, Lora Cox, Executive Director of the Sedgwick County Republican Party will be on hand to answer questions regarding the mechanics of Saturday’s Republican Party Caucus. … The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

Sedgwick County pre-caucus rally. Friday afternoon (March 9th) Kansans for Liberty is producing a pre-caucus rally at Century II. Ron Paul is scheduled to appear. There will be other speakers and live entertainment, say event organizers. Tickets are $25. For more information, see Kansans for Liberty.

Libertarian ideals. The Winfield Courier criticizes U.S. Representative Mike Pompeo for his bill that would eliminate all tax credits for energy, writing “This is a case of putting libertarian ideals ahead — far ahead — of the interests of our region and our state.” But the libertarian ideals of personal liberty, economic freedom, and free markets ought to be all that government concerns itself with. … This is not the only way this op-ed is misinformed on facts. The anonymous author writes: “New, life-changing technologies, from the railroads to the Internet, have long had the active support of our national government.” But: Consider the railroads. The government-subsidized railroads involved in the transcontinental project went bankrupt. Only The Great Northern Railroad, which was built without government subsidy, was profitable and not a burden on the national treasury. (See Interfacing with Obama’s Intercontinental Railroad). Shame on the Winfield Courier so being so misinformed on U.S. history and the proper role of a limited government.

High Kansas taxes. Kansas Reporter covers more of the Tax Foundation’s report on the high cost of Kansas business taxes: “A new national study says Kansas business owners pay some of the highest taxes in the country. … Kansas businesses that are 3 or fewer years old pay the third-highest total taxes in the nation among all 50 states and Washington, D.C., the study found. Older businesses, such as Midway Wholesale, pay the fourth-highest totals. The findings contrast sharply with previous surveys, including some by the Tax Foundation, that put Kansas closer to the midpoint in regard to tax burden. As recently as January, for example, the foundation released its latest compilation of its Business Tax Climate Index, which put Kansas almost dead center — in 25th place — among lightest- to heaviest-taxed states. ‘Those surveys focus on tax policies, such as what types of taxes do states have or what are their tax rates,’ said Scott Hodge, the foundation’s president. ‘This new study looks at the issue from a business’ viewpoint and what they actually pay.’” … More at New study finds KS tax loads worse than reported.

Harm of individual mandate explained. In the following short video, Elizabeth Price Foley of the Institute for Justice explains the harm of the individual mandate that is the centerpiece of the Patient Protection and Affordable Care Act (Obamacare). She explains that if the U.S. Supreme Court fails to strike down the individual mandate, there will be nothing to stop Congress from forcing people into other contracts against their will — employment contracts or union membership, for example. If we still have a constitutional republic in which the federal government’s powers are limited, then the Court should strike down this law. More information on IJ’s brief is contained in this press release.

Wind energy split in Kansas

Despite the promise as a temporary subsidy when it started twenty years ago, wind energy is reliant on government handouts. Today’s Wall Street Journal brings this into focus, writing: “The truth is that those giant wind turbines from Maine to California won’t turn without burning through billions upon billions of taxpayer dollars. In 2010 the industry received some $5 billion in subsidies for nearly every stage of wind production.” (See Republicans Blow With the Wind: Another industry wants to keep its taxpayer subsidies..)

The piece also properly refutes the argument that oil and gas receives the same type of tax credits as does wind and other renewable energy forms. “The most dishonest claim is that wind and solar deserve to be wards of the state because the oil and gas industry has also received federal support. That’s the $4 billion a year in tax breaks for oil and gas (which all manufacturers receive), but the oil and gas industry still pays tens of billions in federal taxes every year.” There’s a difference between tax deductions, which reduce taxable income, and tax credits, which are government spending programs in disguise.

Despite this: Senator Jerry Moran of Kansas has joined with five other senators in urging the Senate to pass an extension of the subsidy program for wind power. Kansas, it should be noted, has a lot of wind. Our former governors Sebelius and Parkinson bought into the green energy fantasy, and current governor Kansas Governor Sam Brownback agrees, having penned op-eds in support of wind energy subsidy programs and usage mandates. Wichita Mayor Carl Brewer has been busy promoting Wichita as a site for wind energy-related industry, despite its failing economics based on government handouts.

(By the way, it’s not only wind that is receiving subsidy on Kansas. Recently the Department of Energy announced the award of a $132.4 million loan guarantee to a cellulosic ethanol plant in southwest Kansas. At the time of the award, no commercial cellulosic ethanol had been produced in America. See Kansas and its own Solyndra.)

Contrast this with U.S. Representative Mike Pompeo of Wichita, who has introduced legislation to end all tax credits related to energy production. Writes the Journal: “Here’s a better idea. Kill all energy subsidies– renewable and nonrenewable, starting with the wind tax credit, and use the savings to shave two or three percentage points off America’s corporate income tax. Kansas Congressman Mike Pompeo has a bill to do so. This would do more to create jobs than attempting to pick energy winners and losers. Mandating that American families and businesses use expensive electricity doesn’t create jobs. It destroys them.”

Republicans Blow With the Wind

Another industry wants to keep its taxpayer subsidies.

Congress finally ended decades of tax credits for ethanol in December, a small triumph for taxpayers. Now comes another test as the wind-power industry lobbies for a $7 billion renewal of its production tax credit.

The renewable energy tax credit — mostly for wind and solar power — started in 1992 as a “temporary” benefit for an infant industry. Twenty years later, the industry wants another four years on the dole, and Senator Jeff Bingaman of New Mexico has introduced a national renewable-energy mandate so consumers will be required to buy wind and solar power no matter how high the cost.

The truth is that those giant wind turbines from Maine to California won’t turn without burning through billions upon billions of taxpayer dollars. In 2010 the industry received some $5 billon in subsidies for nearly every stage of wind production.

Continue reading at the Wall Street Journal (subscription required)

Mike Pompeo: We need capitalism, not cronyism

In a guest column written for Americans for Prosperity, Kansas, U.S. Representative Mike Pompeo of Wichita explains why political cronyism, sometimes called crony capitalism, is wrong for our country. Pompeo coins a useful new term: “photo-op economics” to describe why some politicians support wasteful federal spending projects — as long as the spending is wasted in their districts. Then logrolling — the trading of legislative favors — applies, and those legislators who received votes from others to support wasteful spending must now reciprocate and support other wasteful spending.

Pompeo touches on an important aspect of public policy that is not often mentioned: “Moreover, what about the jobs lost because everyone else’s taxes went up to pay for the subsidy and to pay for the high utility bills from wind-powered energy? There will be no ribbon-cuttings for those out-of-work families.” This describes the problem of the seen and unseen, as explained by Frederic Bastiat and Henry Hazlitt in the famous parable of the broken window.

We Need Capitalism, not Cronyism

By U.S. Representative Mike Pompeo

The word “conservative” brings to mind family values, lower taxes, fiscal responsibility — and limited government. Limited government means a government limited in size, in its claim on national wealth, and — importantly — limited in the ends to which government’s power is used. It also means federal elected officials must act in the nation’s best interest and not allow their own parochial concerns to dominate their decision making. A big obstacle on the path to restoring limited government in America is cronyism.

We all know the story. A flawed system has created incentives that make it easier for some companies to succeed by hiring a lobbyist rather than improving productivity or satisfying customers. Lobbyists for these businesses and the politicians who support them want the federal government picking winners and losers across our economy — so long as they are selected as “winners.” In my first term in Congress, we have eliminated earmarks that rewarded politically connected, rent-seeking advocates for federal largesse by tucking provisions into bills without adequate vetting or thorough review. But ever clever politicians have another tool — the tax code — to accomplish much the same outcome. This form of cronyism must stop too.

“Tax earmarks” — be they deductions or credits — provide certain industries and businesses a means to gain financial advantage. Tax earmarks distort our free choices, waste tax dollars, and raise prices to provide goods and services that free markets provide more abundantly and more cheaply. They also force federal tax rates up, penalizing those who don’t receive them, because higher rates are required to capture the same revenue given all of the special interest tax earmarks now in effect. And, unlike standard earmarks, tax earmarks tend to be renewed year after year after year.

One current fight against the insidious political tool of tax earmarks involves the energy sector. I am leading the charge to eliminate over two dozen energy tax credits tucked into the Internal Revenue Code. My proposed legislation would get rid of every single tax credit related to energy — ending tax favoritism that today goes to wind and solar, algae and electric vehicles and tax credits that go to the oil and gas industry as well. Tax subsidies miscast the role of the federal government. Energy sources are either viable without subsidies or else they do not make economic sense for taxpayers.

Subsidies and giveaways redistribute wealth from productive, self-sustaining enterprises to unproductive, less efficient, albeit politically connected, ones. Although subsidies may have positive local effects, they penalize successful businesses — leading to less innovation, decreased productivity, fewer jobs, and higher prices for consumers. Cronyism also mistreats unsubsidized competitors, who wind up subsidizing their own competition to the detriment of their employees, consumers, and free-market competition.

Together with tried-and-true conservative leaders like House Budget Committee Chairman Paul Ryan (WI), and Tea Party leaders like Sen. Jim DeMint (SC), and Sen. Mike Lee (UT), I am fighting to end this form of cronyism. Conservative groups including Americans for Prosperity, Americans for Tax Reform, Club for Growth, Council for Citizens Against Government Waste, Freedom Action, Heritage Action, National Taxpayers Union, and Taxpayers for Common Sense have all rallied to the side of limited government on this issue. They understand that picking winners and losers in the energy marketplace does not create long-term economic growth, and it harms our economic and political systems.

One example of a tax earmark that should be eliminated is the Production Tax Credit (PTC) that goes to the wind industry. Yet, some Republican and Democrat members of Congress, not surprisingly from “wind states,” are pushing for yet another multi-year extension of the PTC, a multi-billion dollar handout to Big Wind. The PTC manipulates the energy market, drives up electricity bills for consumers and businesses, and creates a dangerous economic bubble. The PTC is a huge subsidy. Applied to oil companies, it would be the equivalent of giving $30 for every barrel of oil produced, according to the Heritage Foundation. The PTC has existed for the past 20 years, but it has not succeeded yet in making unsubsidized wind competitive. Politicians who pretend that a few more years of the PTC will make wind competitive could be right, but that is not a responsible bet to make with taxpayer dollars.

Supporters of Big Wind, like President Obama, defend these enormous, multi-decade subsidies by saying they are fighting for jobs, but the facts tell a different story. Can you say “stimulus”? The PTC’s logic is almost identical to the President’s failed stimulus spending of $750 billion — redistribute wealth from hard-working taxpayers to politically favored industries and then visit the site and tell the employees that “without me as your elected leader funneling taxpayer dollars to your company, you’d be out of work.” I call this “photo-op economics.” We know better. If the industry is viable, those jobs would likely be there even without the handout. Moreover, what about the jobs lost because everyone else’s taxes went up to pay for the subsidy and to pay for the high utility bills from wind-powered energy? There will be no ribbon-cuttings for those out-of-work families.

Here’s the data. The “green energy” 1603 grant program has given away $4.3 billion to 36 wind farms just since 2008. All together, these farms now employ 300 people. That’s $14 million per job. This is an unconscionable return on investment, especially for your tax dollars. Given that consumers also pay higher energy prices for electricity generated from wind, one has to wonder why some in Washington continue to push for Big Wind subsidies. Often the answer is that politicians care more about making good political investments than they do about making bad financial investments.

In this respect, the PTC handout is virtually indistinguishable from the program that led to the Solyndra debacle. The Obama Administration gave 500 million taxpayer dollars to a private solar panel company to prop up a failed business model. As soon as government money ran out, the company folded. Solyndra could not attract sufficient private capital for financing because its solar panels could not compete in the consumer market. So it turned to its lobbyists in Washington and friends in the Obama Administration for its financing. The result was a skewed consumer marketplace and the waste of taxpayer dollars. Like the earmark for the Bridge to Nowhere, political allocation of your taxpayer dollars is failed policy.

I get the game. Elected officials in Michigan want your money for electric cars. Those from California want your money for solar panels. And those from the Midwest want your money for wind turbines. In a country that has a $15 trillion national debt, annual deficits of over $1 trillion as far as the eye can see, and a $100 trillion unfunded liability in entitlement programs, this must stop.

I believe that American ingenuity will eventually bring new energy sources to market successfully. It may be wind or algae, it may be biomass or solar. It may be the enormous natural gas and oil reservoirs that can now be reached affordably right here in North America. I also believe that American families making good choices for themselves will lead the way in deciding which new energy source or technology succeeds. Trying to pick that next great source from Washington, D.C. — and with your money — just leads to more cronyism, more debt, more bad decisions, more dependence on the Middle East and a much less limited federal government — outcomes that none of us can afford.

Congressman Mike Pompeo represents Kansas’ 4th Congressional District.

Kansas Senator Jerry Moran wants to pick losers in the market: His choice is big wind

In Kansas, we have a lot of wind — no doubt about that. But the economics of wind as a source of electricity generation is another matter. There’s a split in Kansas over this. On one side are Kansas Governor Sam Brownback, who has been vocal in his support of wind power, along with Wichita Mayor Carl Brewer, who has been busy promoting Wichita as a site for wind energy-related industry. Now we see Kansas’ newest U.S. Senator Jerry Moran jumping in to promote the wind power subsidy program. Contrast this with U.S. Representative Mike Pompeo of Wichita, who has introduced legislation to end all tax credits related to energy production. It’s important to remember that the government subsidy program for wind power is in the form of tax credits, which are equivalent to grants by the government. The term “tax expenditures” is starting to see widespread usage to accurately describe the economic effect of tax credits.

Senator Jerry Moran wants to pick losers in the market: His choice is big wind

By Daniel Horowitz

If I were pressed to offer one anecdote exemplifying our failure to elect consistent conservatives to Congress last November, the story of Senator Jerry Moran and Big Wind would be at the top of the list.

In 2010, then-Congressman Jerry Moran beat former Congressman Todd Tiahrt for the Republican nomination for Senate in Kansas running as a red meat conservative. He easily won the seat in this solid Republican state and summarily joined the ‘Tea Party Caucus’ in the Senate. Nothing emblematizes the convictions of the Tea Party more than its fervent opposition to special interest handouts and government interventions in the private sector as a way of picking winners and losers. Yet, Senator Moran let the cat out of the bag last week that he has absolutely no compunction about picking winners and losers, or in the case of Big Wind, big losers.

Last week, Senator Moran announced that he is submitting an amendment to the terrible Senate highway bill (S.1813) that would extend the 2.2 cent/ per kilowatt-hour Production Tax Credit (PTC) for another 4 years. This special interest handout to Solar and Wind is slated to expire at the end of the year. What happened to Moran’s Tea Party views? Well, he unabashedly threw them under the solar-powered bus:

Asked about opposition to extending the credit expressed by Rep. Mike Pompeo of Wichita, Moran said: “There are members of Congress who feel we ought not to pick winners and losers, to let the markets decided. I believe it’s better to get this industry up and running, then let the country decide … rather than pull the rug out overnight.”

Wow! At least he’s honest. I wish we had known that before the election.

The PTC is the corporate version of the Earned Income Credit for green energy. It is among 51 ‘tax extenders’ that have either expired last December or are slated to expire this December. The PTC offers a 2.2 cent/per kilowatt-hour refundable credit for wind, solar, or geothermal. According to the Heritage Foundation, if the oil industry received a commensurate subsidy, they would get a $30 check for every barrel produced.

Headed into the November elections, one of our most potent and popular arguments we have is to paint the Democrats with the Solyndra economy — an economy where the government intervenes to pick winners and losers, at the detriment of consumers and taxpayers. How can we effectively articulate an alternative free-market vision when we have a member of “the Tea Party Caucus” supporting Obama’s policy of picking losers in the energy sector? Talk about pale pastels!

Folks, this is not how we win elections. Moreover, this type of special interest peddling — from energy subsidies to farm welfare — creates dependency in some of the reddest states. This is not a winning message for the future of conservatism, especially when it emanates from such a Republican state.

There is a better way. Congressman Mike Pompeo (R-KS) introduced legislation (HR 3308) to sunset all targeted energy tax credits and grants, including those for fossil fuels and nuclear power. The bill would use the savings from the repeal of these credits (roughly $90 billion over ten years) to lower the corporate tax rate on everyone. Senator DeMint has introduced a companion bill in the Senate (S.2064).

Every member of Congress who seeks a clean break from a centrally-planned Solyndra economy must cosponsor this bill. Additionally, as we look for more congressional candidates to endorse, it is these issues — energy and farm subsidies — that will separate the men from the boys. We must fight this election by offering voters a choice, not an echo.

Cross-posted from The Madison Project

An ill wind blows in Kansas: The politics of renewable energy

Kansas Representative Charlotte O’Hara, who represents Kansas House District 27 in southern Johnson County, offers a look at the politics surrounding wind power in Kansas. Besides O’Neal, other prominent supporters of renewable energy in Kansas include Kansas Governor Sam Brownback, who has been vocal in his support of wind power. So too has been Wichita Mayor Carl Brewer, who has been busy promoting Wichita as a site for wind energy-related industry. Contrast this with U.S. Representative Mike Pompeo of Wichita, who has introduced legislation to end all tax credits related to energy production.

An ill wind blows in Kansas: The politics of renewable energy

By Kansas Representative Charlotte O’Hara

The world of Topeka politics continue to amaze, frustrate, entertain and humor me in my second year of representing the 27th District. Case in point:

On Tuesday of this week during the Republican Caucus discussion of HB 2446 (concerning the expansion of definition of alternative energy to include storage facilities/devices) this fact came to light: The Kansas Legislature, in 2009, passed the Renewable Energy Standards Act (KSA 66-1258), which requires 10 percent of our power companies’ capacity to be from renewable energy sources by 2011, 15 percent in 2016 and 20 percent in 2020.

So, being the conservative that I am, I suggested an amendment that would freeze renewable energy standards to the current 10 percent. Rep. Dennis Hedke carried the amendment on the floor. The amendment received 43 votes.

Only 43 out of 125 representatives voted to stop strangling the Kansas economy and burdening consumers with high energy costs of these draconian requirements. According to the Heritage Foundation, just a 15% renewable energy mandate would increase electricity prices for consumers by as much as 11.3 percent!

After the defeat of the amendment, Rep. Forrest Knox introduced an amendment that would tie the freeze to licensing of the Holcomb Power Plant, which currently has been stopped by federal court and another environmental impact study has been ordered. The Knox amendment received 65 votes, a majority. However Speaker of the House Mike O’Neal (who voted against both amendments) interceded and referred the amended bill, HB 2446, back to committee (with the approval of the House members) and removing it from final action.

So, why would Speaker O’Neal oppose a freeze at the current 10% on the Kansas Renewable Standard Act? Well, let’s see. Could it possibly be that these required increased standards in Kansas law is why Siemens chose Hutchinson (O’Neal’s district) in 2009 to locate a $35 million wind turbine plant? Is this the type of crony capitalism we want to build our economic future on in Kansas?

Another wrinkle in the future of renewable energy is that extension of federal tax credits is in doubt. Those credits currently subsidize renewables by 2.1 cents per kw. Without the federal, state and local tax incentives, abatements and exemptions, the economics of renewable energy collapses.

Here is a link to Heritage Foundation on this issue of renewable energy subsidies: No More Energy Subsidies: Prevent the New, Repeal the Old.

It always puzzles me why after the fall of the Soviet Union, government mandated / subsidized / incentivized industries continue to flourish in the U.S. and, in particular, here in our own Kansas backyard.

So, if you would like to register your concerns about the Speaker’s action to circumvent final action on HB 2446, which as amended would freeze Kansas Renewable Energy Act requirement at 10 percent and stop it from going to 20 percent, call his office: 785-296-2302 or e-mail at Mike.ONeal@house.ks.gov

The Democrats continue unjustified attacks on taxpayers and job creators

The following article by U.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district, including the Wichita metropolitan area, explains — yet again — how ridiculous it is for President Barack Obama and others to attack Wichita-based Koch Industries on the Keystone XL pipeline issue. Pompeo explains that Koch has no financial interest in the pipeline, what “intervenor” status means, and who really stands to benefit if the pipeline is not built. Pompeo hints at who it is, but I’ll be more direct: Warren Buffet. A news article that explains how Warren will personally benefit from blocking the Keystone XL pipeline is Buffett’s Burlington Northern Among Pipeline Winners.

The Democrats continue unjustified attacks on taxpayers and job creators

By U.S. Representative Mike Pompeo

The President and his allies, including those in Congress, have shown what a nasty, personal, and abusive re-election campaign we are about to experience. A recent sideshow in my committee in Congress provides yet another clear and shocking example.

A recent letter from Representatives Henry Waxman and Bobby Rush, both Democrats, demanded a live witness and testimony from “a representative of Koch Industries” at a hearing on the Keystone XL pipeline, scheduled to be held just two days later. The frivolous nature of the request is proven by that plainly unreasonable deadline. But the partisan tactics go far beyond that.

Even if Koch Industries had a financial interest in the Keystone XL pipeline, what possibly could be wrong with that? Perhaps more importantly, under what circumstances would such an interest be worthy of a congressional inquisition? Charles Koch and David Koch, co-owners of Koch Industries, are citizens, taxpayers, entrepreneurs, and employers. Their companies employ nearly 50,000 people in the U.S. alone. The company maintains its headquarters in the district I represent, employing 2,600 great Kansans. The company and its employees are among the most hard-working and generous in our community. The company has never been bailed out by the American taxpayers. And given that Americans are desperate for jobs, we should be begging entrepreneurs to look for new opportunities, not attacking them simply because their companies might make a profit.

The facts are clear: Koch Industries does not have a financial stake in the pipeline — why, therefore, should its officials become part of the all-too-familiar congressional committee circus? The facts are straightforward and a matter of public record. Koch Industries has repeatedly stated that it does not have a financial stake in the pipeline: It does not own the pipeline, it has no role in the pipeline’s design, it is not one of the shippers who have signed contracts to use the pipeline, and it will not build the pipeline.

Democrats dug deep for some excuse to attempt to haul Koch officials in for a public flogging. What did they find? A 2009 attempt by a Koch subsidiary to obtain “intervenor” status in a Canadian legal proceeding, in order to track the approval process for the pipeline. Wishing to know the fate of the pipeline, and having an interest in whether or not the pipeline is built — as thousands of frustrated American workers and consumers do — obviously does not amount to a financial interest in the pipeline’s construction. Indeed, the Sierra Club of Canada applied to “intervene” in the same proceeding. Notably, no one has alleged that Congress should investigate the Sierra Club’s interest in the pipeline project. So the “intervenor” ploy is a patent sham, and provides no basis for harassing Koch Industries.

It is also difficult to believe that Members of Congress really think that a particular company’s asserted financial interest in a project is, or should be, relevant to the merits of that project. It becomes still harder to believe, given the decision to target only Koch Industries and the Kochs — and no other company or individual. Doubtless many companies and individuals stand to benefit, or to be harmed, depending on whether President Obama’s decision to delay the pipeline is allowed to stand. News accounts have mentioned a number of those who might reap financial windfalls from the pipeline’s demise, including at least one of President Obama’s most prominent supporters and donors. (Hint: His secretary was the President’s highly visible prop at the State of the Union address.) But two congressmen directed their attention exclusively toward the Kochs, who — as successful businessmen and outspoken critics of the President’s job-killing, statist programs — have been targets for the Administration and its allies for many months.

Indeed, the very first line of President Obama’s very first campaign advertisement for the 2012 election attacks the Koch brothers. And liberal blogs and publications have published countless slanted pieces on Koch Industries, heavy on innuendo and light on facts. The Obama Administration has long been criticized for maintaining a de facto “enemies list” of its perceived political opponents, whether they are respected Supreme Court Justices, disfavored reporters, or private citizens who just want to keep their own doctors. The Democrats’ obsession with the Kochs as a political target is, indeed, additional evidence of a truly Nixonian approach to politics. That the Obama Administration and its allies use private citizens as symbols to be attacked and vilified is both unfair and deeply threatening to our civic life and the rule of law.

America deserves better from its elected officials. To be sure, the serious challenges facing the country often generate heated discussion and disagreement. But there is no justification for Democrats who want to haul American citizens before Congress for the exclusive purpose of political abuse. Congressional hearings should not be hijacked by naked political opportunism; legitimate business creators should not be vilified; and Congress should focus on the many policy questions before it, rather than wasting time in an illegitimate pursuit of the Administration’s perceived “enemies.”

Mr. Pompeo represents the Fourth Congressional District of Kansas. He serves on the House Committee on Energy and Commerce, as well as the Subcommittee on Energy and Power. A version of this article appeared at Politico.

End the Economic Development Administration — Now

Following in an article from U.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district, including the Wichita metropolitan area. It provides an example of how hard it is to reduce the size of government. The legislation that is mentioned in the article is H.R. 3090: EDA Elimination Act of 2011, which would shut down the Economic Development Administration.

End the Economic Development Administration — Now

By U.S. Representative Mike Pompeo
As part of my efforts to reduce the size of government, I have proposed to eliminate the Economic Development Administration (EDA), a politically motivated federal wealth redistribution agency. Unsurprisingly, the current leader of that agency, Assistant Secretary of Commerce for Economic Development John Fernandez, has taken acute personal interest in my bill to shutter his agency.

Last week, Secretary Fernandez invited himself to Wichita at taxpayer expense and met with the Wichita Eagle’s editorial board. Afterwards, the paper accurately noted I am advocating eliminating the EDA even though that agency occasionally awards grant money to projects in South Central Kansas. They just don’t get it. Thanks to decades of this flawed “You take yours, I’ll take mine” Washington logic, our nation now faces a crippling $16 trillion national debt.

I first learned about the EDA when Secretary Fernandez testified in front of my subcommittee that the benefits of EDA projects exceed the costs and cited the absurd example of a $1.4 million award for “infrastructure” that allegedly helped a Minnesota town secure a new $1.6 billion steel mill. As a former CEO, I knew there is no way that a taxpayer subsidy equal to less than one-tenth of one percent (0.1%) of the total capital needed made a difference in launching the project. That mill was getting built whether EDA’s grant came through or not. So, I decided to dig further.

I discovered that the EDA is a federal agency we can do without. Similar to earmarks that gave us the infamous “Bridge to Nowhere” or the Department of Energy loan guarantee scandal that produced Solyndra, the EDA advances local projects that narrowly benefit a particular company or community. To be sure, the EDA occasionally supports a local project here in Kansas. But it takes our tax money every year for projects in 400-plus other congressional districts, many if not most of which are boondoggles. For example: EDA gave $2 million to help construct UNLV’s Harry Reid Research and Technology Park; $2 million for a “culinary amphitheater,” tasting room, and gift shop at a Washington state winery; and $500,000 to construct (never-completed) replicas of the Great Pyramids in rural Indiana.

Several times in recent decades, the Government Accountability Office has questioned the value and efficacy of the EDA. Good-government groups like Citizens Against Government Waste have called for dismantling the agency. In addition, eliminating the EDA was listed among the recommendations of President Obama’s own bipartisan Simpson-Bowles Deficit Reduction Commission.

So why hasn’t it been shut down already? Politics. The EDA spreads taxpayer-funded project money far and wide and attacks congressmen who fail to support EDA grants. Soon after that initial hearing, Secretary Fernandez flew in his regional director — again at taxpayer expense — to show me “all the great things we are doing in your home district” and handed me a list of recent and pending local grants. Hint, hint. You can’t say I wasn’t warned to back off. Indeed, Eagle editors missed the real story here: Secretary Fernandez flew to Wichita because he is a bureaucrat trying to save his high-paying gig. The bureaucracy strikes back when conservatives take on bloated, out-of-control, public spending, so I guess I’m making progress.

Please don’t misunderstand. I am not faulting cities, universities, or companies for having sought “free” federal money from the EDA. The fault lies squarely with a Washington culture that insists every program is sacred and there is no spending left to cut.

A federal agency run at the Assistant Secretary level has not been eliminated in decades. Now is the time. My bill to eliminate the EDA (HR 3090) would take one small step toward restoring fiscal sanity and constitutional government.

Kansas and Wichita quick takes: Monday December 19, 2011

Boeing tanker and Wichita. News reports from this morning’s press conference held by U.S. Representative Mike Pompeo of Wichita indicate that Boeing will not use Wichita as the finishing plant for work on the new air refueling tanker project. It was thought that this work would require 7,500 jobs in Wichita. Political and union leaders speak of holding Boeing accountable to what they believe was a promise Boeing made to Wichita, but I don’t know how they can do that. … Pompeo’s press release states: “… the work will be done in Washington state. Until very recently, it had been my expectation based on representations made to all Kansans, personally to me and my office, and to the United States Air Force, that Boeing would create 7,500 aviation jobs in our great state should Boeing prevail in the tanker bid. We now know that Boeing intends to walk away from that promise, which severely jeopardizes the future of the over 2000 aviation jobs currently held by Boeing employees in Kansas. … Boeing fought a long and fierce battle to build the KC-46A Tanker and secured the largest defense contract in the history of the world. Over a decade Boeing won, then lost and then once again emerged victorious over its competitor EADS. Kansas aviation workers were at the very core of Boeing’s effort that entire time. During that competition, Boeing stressed — both publicly and in its formal final bid proposal submitted to the United States Air Force — that its Wichita, Kansas facility would be critical to building the next generation tanker. For years, Kansas’ elected political leadership worked diligently to secure a contract award for Boeing. In short, Kansas workers and Kansas political leaders were central to the Air Force’s decision to select Boeing over EADS. To remove Kansas from the tanker project not only violates a public trust, but it creates risk to taxpayers and to our fighting forces. … I urge the company’s leaders to do all that they can to honor the Boeing name and to take all steps available to do right by the hard-working, talented people who build the world’s greatest airplanes here in Kansas.”

Wichita school dress code. The Wichita Eagle reports on a new dress code for teachers at USD 259, the Wichita public school district: “Mark Jolliffe, principal at Wilbur Middle School and president of the local administrators group, said the guidelines are intended to ‘enhance our professional position, and model for our students, staff and community’ the importance of professional dress.” Teachers continually complain that they are, in fact, professionals, but are not treated as such. I wonder: What does it say when you have to be told how to dress at work? What the community ought to be worried about is a school district that spends time on issues like this while students continue to receive a substandard education. … Furthermore, the mode of dress of schoolteachers ought to be something that parents decide through a market-based selection process. Those parents who believe that their children are best served by schools where the teachers dress nicely (and perhaps the students are in uniform) could choose schools like this, if we had school choice. Also, parents who believe their children would thrive in a more casual environment could select schools with this characteristic, but again, only if we had school choice.

Kansas legislator briefing book. A very useful publication produced by Kansas Legislative Research Department is now available in a 2012 edition. Its target is legislators, but anyone who is interested in understanding state government will find the 2012 Legislator Briefing Book useful. The section on education, for example, has an explanation of the Kansas school funding formula, complete with descriptions and values for the weightings that determine how much state funding districts receive.

Velvet Revolution voice has died. “Vaclav Havel, the playwright who led the Velvet Revolution that ended communism in Czechoslovakia, has died at 75. … Vaclav Havel helped Czechoslovakia make the transition from one of the most repressive Communist regimes to one of the most successful post-Communist countries.” More from David Boaz at Vaclav Havel, RIP.

Open records in Wichita. “The Wichita City Council approved a $2 million payment to the city’s convention and visitors’ bureau, GO Wichita, despite objections to the lack of transparency in how GO Wichita handles taxpayer money. The Kansas Open Records Act requires that entities receiving public money be subject to the law’s transparency provisions, but one of these provisions states that if such an organization files an annual financial statement, it has complied with the law. At issue is whether a one- or two-page financial report listing total revenues and expenditures can substitute for public access to more detailed records regarding specific expenditures of public funds.” More from Paul Sourtar of Kansas Watchdog at City of Wichita Spends $2 million, Rebuffs Citizen’s Transparency Request.

Cellulosic ethanol. The Wall Street Journal notes the debacle of cellulosic ethanol production and government involvement. This is ethanol produced from “wood chips and stalks or switch grass,” said President George W. Bush in 2006, also stating that “Our goal is to make this new kind of ethanol practical and competitive within six years.” So what has happened? “When these mandates were established, no companies produced commercially viable cellulosic fuel. But the dream was: If you mandate and subsidize it, someone will build it. Guess what? Nobody has. Despite the taxpayer enticements, this year cellulosic fuel production won’t be 250 million or even 25 million gallons. Last year the Environmental Protection Agency, which has the authority to revise the mandates, quietly reduced the 2011 requirement by 243.4 million gallons to a mere 6.6 million. Some critics suggest that even much of that 6.6 million isn’t true cellulosic fuel.” … the Journal cites a recent report by National Academy of Sciences that states “currently, no commercially viable biorefineries exist for converting cellulosic biomass to fuel.” The $132.4 million loan guarantee for a cellulosic plant near Hugoton in southwest Kansas is noted. (More about that at Kansas and its own Solyndra.) … Concluding, the Journal writes: “To recap: Congress subsidized a product that didn’t exist, mandated its purchase though it still didn’t exist, is punishing oil companies for not buying the product that doesn’t exist, and is now doubling down on the subsidies in the hope that someday it might exist. We’d call this the march of folly, but that’s unfair to fools.” See The Cellulosic Ethanol Debacle.

Overcriminilization. A new paper from Paul Larkin of of Heritage Foundation reports on the difficulties facing legislative solutions to the problem of overcriminilization. The abstract of the paper Overcriminalization: The Legislative Side of the Problem reads: “The past 75 years in America have witnessed an avalanche of new criminal laws, the result of which is a problem known as “overcriminalization.” This phenomenon is likely to lead to a variety of problems for a public trying to comply with the law in good faith. While many of these issues have already been discussed, one problem created by the overcriminalization of American life has not been given the same prominence as others: the fact that overcriminalization is a cause for (and a symptom of) some of the collective action problems that beset Congress today. Indeed, Congress, for a variety of reasons discussed in this paper, is unlikely to serve as a brake on new, unwarranted criminal laws, let alone to jettison broad readings of those laws by the courts. Therefore, the key to curbing overcriminalization is the American public: It is the people who, if made aware of the legislative issues that enable overcriminalization, could begin to head off such laws before the momentum for their passage becomes overwhelming.” … The conclusion to the report emphasizes the role of the people: “The legislative dynamic is not likely to serve as a brake on new, unwarranted criminal laws, let alone to jettison broad readings of those laws by the courts. The public needs to head off such laws before the momentum for their passage becomes overwhelming. And that can happen only if the public is aware of the legislative side of this problem.”

No Wichita Pachyderm. This week and next week (December 23rd and 30th) the Wichita Pachyderm club will not meet due to the holidays. Upcoming speakers: On January 6th: David Kensinger, Chief of Staff to Kansas Governor Sam Brownback. … On January 13th: Speaker of the Kansas House of Representatives Mike O’Neal, speaking on “The untold school finance story.” … On January 20th: Sedgwick County Commissioner Karl Peterjohn.

Stevens, Pachyderm President, honored. At last week’s meeting of the Wichita Pachyderm Club, President John Stevens received the “Tough Tusk Award.” In presenting the award, club Vice President John Todd remarked: “Once in awhile a local leader comes along who deserves recognition. From time to time The Wichita Pachyderm Club recognizes these special people. Today it is my pleasure to recognize one of our own who deserves special recognition. The Wichita Pachyderm Club awards committee would like to recognize our club President John Stevens as the recipient of our club’s ‘Tough Tusk Award’ as sponsored by the National Federation of Pachyderm Clubs. … He is a retired business owner who now spends his time volunteering with SCORE counseling small business owners and entrepreneurs. John also works as a community activist through his participation in city and neighborhood organizations. He is a past Wichita Park Board Commissioner and serves on boards and committees for Wichita Independent Neighborhoods. … In 2008 John was elected the precinct committeeman for the 101st precinct in Wichita. He has worked as a volunteer in local campaigns and has run as the Republican candidate for the 86th Kansas House of Representatives seat, concerned that Republican values, attitudes, and principles are not being represented in the 86th District. He continues to work toward having a Republican in the 86th House seat. … John has served as President of the Wichita Pachyderm Club for the past three years. Through the Pachyderm Club he is able to facilitate educating citizens about our government, our leaders and the Republican Party. … John says he is addicted to progress, and I can tell you that he works tirelessly for the betterment of The Wichita Pachyderm Club.” … I will add: Thank you, John Stevens, for a job well done.

Occupiers and crony capitalism. “They’re rightfully angry at what’s happening in the United States today. But unfortunately they have confused capitalism and crony capitalism, and they’ve misdiagnosed the cause of their frustration.” That’s Chris Coyne of George Mason University speaking of the Occupy Wall Street protesters. He explains in more detail in the following short video. This video is from LearnLiberty.org, a project of Institute for Humane Studies, and many other informative videos are available.