Voice For Liberty

Category: United States government

  • The Obama tax hike, compared to deficits

    President Barack Obama is going to ask Congress for more tax revenue. But the president’s request, as large as it is, will do little to rein in our budgetary problem.

    According to the Wall Street Journal: “President Barack Obama will begin budget negotiations with congressional leaders Friday by calling for $1.6 trillion in additional tax revenue over the next decade, far more than Republicans are likely to accept and double the $800 billion discussed in talks with GOP leaders during the summer of 2011.”

    The stage is being set for a showdown, one that both sides will surely cast as determining the future viability of America. But placing these numbers in context shows us that we’re really arguing over nothing — when compared to the size of the problems facing the budget.

    For context, the president’s most recent budget — which received zero votes when submitted to Congress — calls for cumulative deficits totaling an additional $6,684 billion from 2013 through 2022. Obama’s request for additional revenue of $1,600 billion over those years is 23.9 percent of that projected deficit. This is not what I’d call “solving the problem.”

    Further, the president’s budget may be based on unrealistically optimistic projections. One of the most important variables, the rate of growth of gross domestic product, was assumed to be 3.0 percent in 2012. But through the first three quarters, GDP growth has been at the rate of 2.0 percent, and the recent trend has been for that rate to decrease, not improve.

  • Obama II, from New York Times

    The New York Times lays out the agenda for the second term of President Barack Obama. It could be “invigorated,” the newspaper writes.

    The Times editorialists write that now the president “can make real progress on issues neglected in the first.” I wonder: Why did he neglect these issues?

    Then: Obama intends to “build on and improve the significant accomplishments of the last four years.” The problem is that these accomplishments are harmful to our country. They harm our economy, they extinguish liberty and freedom, they will lead to less prosperity for everyone.

    Here’s what a second Obama term might attempt, according to the Times

    “Address climate change with more vigor, going beyond auto-mileage standards and renewable-energy jobs to possibly advocating tougher carbon emissions standards.” I’d like to think that the Obama Administration learned from debacles like Solyndra, but there’s no evidence it has.

    “Working with Republicans to fix the immigration system.” We’re long overdue for this, and I think I can support what the president is likely to propose. We’ll see.

    “He also hinted that combating poverty might move higher on his priority list.” But Obama’s vision of fighting poverty is likely more of the same: direct payments, government job training, more spending on public schools, etc. None of this supports what is really needed: a vibrant economy.

    “In coming months, after he persuades Congress to keep taxes from rising on the middle class, he should push to restore a fair estate tax and raise the low capital gains rate to the level of ordinary income.” A pro-growth policy, one that would create prosperity for everyone, would be to eliminate taxes on capital. Raising this tax means that there will be less investment in the United States as investors seek to find more attractive grounds for investment. This is so important. Ask yourself this: Who earns the higher wage — the man digging a ditch with a shovel, or the worker operating a power backhoe? The backhoe is capital. Someone had to defer current consumption in order to save to buy the backhoe. As taxes on capital rise, people have less incentive to save and invest.

    The Times says Obama’s victory was decisive. At least they didn’t say it was a mandate, as some have said. We’ve suffered through a campaign, won by a man who showed that he would do anything to hold on to power.

    We’ve heard President Obama tell Russia that he can be more “flexible” after the election. Some might interpret this — considering domestic policy — as meaning that Obama will govern more to the left, seeking to expand government spending even more than he did in his first term.

    But there’s a possibility — small, I’m sad to reckon — that flexibility might mean that the president disregards the radical left and embraces principles of economic freedom and personal liberty. This is the way Barack Obama could rescue our economy and build a legacy that he and the country could be proud of.

  • Balanced budget requires government redesign

    “If we were to eliminate the entirety of government with the exception of social programs and the interest on the debt, we still wouldn’t be able to balance the budget.”

    This is the diagnosis of Antony Davies as he examines the components of federal spending and revenue.

    “There are no specific cuts that will solve the problem,” he says. The problem is larger than any conceivable budget cuts can solve.

    What do we do? Davies says: “Nothing less than a redesign of government will solve this problem, and that redesign should begin with the question: What is the proper role of government?”

  • The third rail

    Entitlements are the “third rail” of politics. It is this spending, and our failure to tackle the problem, that is the major factor driving our spending and debt accumulation. Bankrupting America illustrates how entitlement spending has grown.

    Bankrupting America

  • 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.

  • Three years, no budget

    From Bankrupting America: “After operating for three years without a budget, it is time that the Senate stop pointing fingers and do their job! In the past three years the national debt has skyrocketed to more than $15.5 Trillion dollars, deficits top $1 trillion dollars annually and the Senate has no plan when it comes to spending. While some in the Senate insist they can cut spending and operate without passing a budget resolution, history would say otherwise.”

  • Obama’s wasteful spending highlighted

    A new video advertisement created by Americans for Prosperity highlights wasteful government spending in the administration of President Barack Obama.

    The ad highlights billions of stimulus dollars that were given to foreign companies, mostly to subsidize their own green energy projects. AFP President Tim Phillips said “The Obama Administration continues to waste our tax dollars trying to pick winners and losers. This leads to overspending, no new job creation, and inevitably creates government cronyism. The President wasted some $530 million on Solyndra, but now we’re finding billions more given to ‘green energy’ companies overseas. The American people deserve to know the disturbing details of how their tax dollars are being wasted in pursuit of an ideological agenda.”

  • 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 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