Voice For Liberty

Tag: Barack Obama

  • Pompeo: No debt ceiling hike without structural changes

    In a press conference held yesterday, U.S. Representative Mike Pompeo, a Wichita Republican, said the country can’t risk continuing to spend at the present rate. There should be no agreement to raise the debt ceiling absent structural changes, he added.

    He called for “real short term savings” in 2012 and spending limitations. He also said he supported an amendment to the Constitution requiring a balanced budget.

    On federal spending, Pompeo said “I’ve been here six months now. If there’s one thing that’s become very clear, this town is a place that is addicted to spending.” He described the direction of spending as a “one-way ratchet,” saying the trend has accelerated in the last 24 months. The federal government should do what every state must do, which is to live on a balanced budget. The balanced budget amendment, Pompeo said, would require this.

    He criticized President Barack Obama for his “class warfare argument” against the corporate jet industry. Pompeo said the airplanes built in Wichita are business tools used by businesses all over the world. Two-thirds are sold outside of North America, he added.

    Pompeo characterized the president’s criticisms as a political statement. The tax provisions Obama criticizes have a cost of two to three billion dollars over ten years. Pompeo compared this to the current deficit for this year and for future years according to the president’s budget, which he said is $1.5 trillion each year.

    Pompeo said he sent the president a letter (text of the letter is here) inviting him to Kansas to see our aircraft manufacturing industry, noting that many of the workers are union workers. He added that if the president continues to talk down the industry, “making it politically incorrect to fly in a Kansas-built airplane, we’ll sell fewer all over the world, and we’ll build fewer in America.”

    On the possibility of Social Security checks not being sent if the debt ceiling is not raised, Pompeo said that there is money to pay the benefits, and the president has authority to pay. Obama is trying to scare seniors and Americans as a tactic to get the debt ceiling raised, he said.

    On the failure of H.R. 2417: Better Use of Light Bulbs Act to pass, Pompeo said he hopes this measure will come back in a form that requires only a simple majority to pass. This bill, which would overturn legislation that essentially outlaws ordinary incandescent light bulbs, was brought to the floor under suspension of the rules, and therefore required a two-thirds majority to pass. The bill received a simple majority, but failed to reach the two-thirds level.

  • President Obama: Just cash in the Social Security Trust Fund

    Speaking about Social Security, President Barack Obama told CBS news today that “I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it.” The issue he refers to is raising the federal debt ceiling.

    That’s a very curious statement for the president to make. Because liberals, he included, refer to the $2.6 trillion Social Security Trust Fund as money socked away, available to pay benefits for a long time.

    So couldn’t the president simply cash in a few of the bonds held by the trust fund to pay benefits in August?

    The answer is: Of course he can’t do that. The money represented by those bonds in the trust fund has already been spent. The only way for government agencies to pay them back is through some source of income of their own such as taxes or fees, more debt (which the debt ceiling would prevent), or providing fewer services.

  • Obama’s tax hikes must be resisted

    As our nation’s leaders consider the possibility of raising income tax rates, we need to be aware of the negative impact of higher marginal tax rates on the economy and make sure we resist the lure of higher taxes. This is especially important even if the new higher tax rates are confined to to the rich.

    The concept of marginal tax rates is important to understand, as it holds the key to understanding how we can drive economic growth, and how we can kill it, too. President Barack Obama believes he has already cut taxes in the name of economic growth. These tax “cuts” — I use quotes deliberately — are part of the stimulus bill passed in February 2009.

    So what are the Obama tax cuts? There was one program that qualified — sort of — as a “cut,” and several tax credit programs. The largest item that benefited most people is the Making Work Pay Tax Credit, a two-year program that rebates $400 per year to individual taxpayers, or $800 per year for married couples.

    It’s important to note that this is not a reduction in marginal tax rates, which is the tax rate that people pay on the next dollar they earn. That’s what people focus on. The program will, however, reduce the average tax rate that people pay.

    This bears repeating: People can’t control the tax on income they’ve already earned. But they can decide whether to submit themselves to the marginal tax rate: The tax rate the government charges on the next dollar they may — or may not — earn.

    So why isn’t Obama’s Making Work Pay Tax Credit a stimulus boon to the economy? It’s not associated with any positive effort or activity by the recipients other than doing what they already do. (This applies to the Bush tax rebate in 2008, too.)

    For tax cuts to be productive in growing the economy, they have to be associated with something positive, namely with work, saving, or investment. What many people positively respond to is a reduction in marginal tax rates, that is, the tax that must be paid on the next dollar earned.

    Programs that reduce the average tax rate like Obama’s Making Work Pay Tax Credit and the Bush tax rebates of 2008 aren’t effective because they don’t affect the marginal rate — the rate paid on the next dollar earned. This is not to say that I am not in favor of these programs. Anything that reduces the burden of taxes is welcome. But they are not the type of tax cuts that spur economic growth.

    Why are low marginal tax rates important to economic growth? First, high marginal tax rates discourage people from producing. As people get to keep less and less of what they produce after they pay higher tax rates, many decide to produce less. Some stop producing anything.

    Second, high marginal tax rates encourage people to invest in economically unproductive investments like tax shelters simply to avoid tax, without regard to the underlying wisdom of the investment. Or, people decide that since government takes so much of the money they earn, they might as well spend it on tax-deductible expenses that they might not buy otherwise. A company might hold an engineering conference at an expensive luxury resort instead of a modestly-priced facility — or instead of holding it electronically.

    Who responds most positively to reductions in marginal tax rates? First, with about half of American households paying no federal income tax at all — although they do pay payroll taxes — the idea of marginal tax rates doesn’t apply to them. That leaves high-income workers, or as Jeffrey A. Miron explains, the most economically productive members of society that are positively affected by marginal income tax rates:

    The Bush cuts provided lower taxes on ordinary income, especially for taxpayers at the high end of the income distribution. These are some of the most energetic and productive people in society; raising tax rates would discourage their effort and entrepreneurship. High-income taxpayers also have multiple ways of avoiding high tax rates, so any revenue gain from raising rates would be modest. The Bush cuts also lowered taxes on dividend and capital gains income; maintaining these lower rates is even more important for economic performance. Capital is mobile: when it is taxed heavily here, it flees somewhere else, meaning lower investment and employment in the United States. And because capital income taxes discourage investment or drive it overseas, they generate little if any tax revenue. (Jeffrey A. Miron, “Why the Bush Tax Cuts Worked”)

    It is these “energetic and productive” people that are responsible for a great deal of economic activity and job creation. When these people take steps to avoid taxes it means less productive economic activity and more unproductive tax shelters.

    In Slaying Leviathan: The Moral Case for Tax Reform, author Leslie Carbone explains the harm of high marginal taxes, especially progressive taxes, where rates become higher as more income is earned:

    The discouragement of earning money by working, saving, or investing inherent in any income tax is exacerbated by progressivity. While any high tax rates are economically destructive, high marginal rates are even worse, because high marginal rates particularly discourage productivity and inhibit economic growth. … By lowering potential pay off, high investment taxes especially discourage risky investment. Discouragement of risky investment squelches technological advancement, because new technologies are the most risky. This means our progressive tax system actually reduces progress and inhibits improve quality of life.”

    If the goal of the Obama Administration is to create private sector economic growth instead of growth in government, it needs to keep the Bush tax cuts in place and avoid increases in marginal tax rates for everyone, especially the most productive members of society. A better strategy would be to reduce these tax rates farther to create even more economic growth.

  • Kansas and Wichita quick takes: Monday July 11, 2011

    TIF in Louisiana. Randal O’Toole recently examined the use of tax increment financing in Louisiana. He finds this: “Property tax TIFs are limited to that portion of property taxes that are not already obligated to some specific purpose — and most property taxes are so obligated, so most if not all Louisiana TIFs rely on sales and hotel taxes instead.” This is different from Kansas, where all the property tax, except for the usually small base, benefits the TIF district exclusively. … He describes sales-tax TIFs, which we in Kansas call community improvement districts or CID. While describing them as the least objectionable form of TIF, he notes problems: Why don’t stores just raise their prices? Stores that charge extra sales tax don’t have warning signage. And: “In the end, TIF is still just a way for elected officials to hand out favors to selected developers and other special interests. There is no reason to think that cities in Louisiana that use TIF grow any faster than ones that do not. Instead, all the TIFs do is shuffle new developments around, favoring certain property owners in the TIF districts over owners outside of the TIF districts. TIF may even reduce growth as developers who don’t get TIF subsidies may decide to build elsewhere where they won’t have to compete against subsidized developments.” … All these warnings have been raised before the Wichita City Council. … California has new legislation designed to kill redevelopment districts there, which are like TID districts in Kansas. … The full article is A Different Kind of TIF.

    Overland Park may see tax hike. Ben Hodge reports that Overland Park, the second largest city in Kansas and the largest in Johnson County, may increase its property tax rates. Hodge quotes a Kansas City Star editorial: “One plan from [Overland Park City Manager Bill] Ebel would boost the city’s mill levy by 46 percent and bring in more than $10 million a year in new revenue. The other option, a 41 percent increase, would create an extra $9 million annually.” To which Hodge replies: “So, those are the innovative ideas of today’s Overland Park Council: either a 41% increase, or else a 46% tax increase.” … The Overland Park Chamber of Commerce supports the proposal, which is simply more evidence of the decline of local chambers of commerce. … Hodge’s article is Between a Rock and a Tax Hike.

    Medicinal cannibis to be topic. This Friday’s (July 15th) meeting of the Wichita Pachyderm Club features Dr. Jon Hauxwell, a physician from Hays, speaking on “Medicinal Cannabis.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. Upcoming speakers: On July 22, Steve Anderson, Director of the Budget for Kansas. On July 29, Dennis Taylor, Secretary, Kansas Department of Administration and “The Repealer” on “An Overview of the Office of the Repealer.”

    Employment on a long slow, slide. Wichita’s Malcolm Harris takes a look at the dismal employment numbers from last week. But, there is some better news for Wichita regarding airplane orders.

    We already know it’s hot in Wichita. But now here’s proof. The Weather Channel ranks Wichita as fourth hottest city in the nation — and that’s based on weather, not economic growth or something really desirable. Wichita is also ranked as “Midwest” hottest city.

    Pursuing happiness, not politics. That’s the title of the prologue to the recently-published book The Declaration of Independents: How Libertarian Politics Can Fix What’s Wrong with America by Nick Gillespie and Matt Welch, both of Reason, the libertarian magazine of “Free Minds and Free Markets.” So far, the prologue is all I’ve read, but I can tell — okay, I already knew — that these guys get it. Here’s what I mean: “In 2011, we do not equate happiness with politics; the mere juxtaposition of the words feels obscene. And for good reason: Politics, John Adams’s great-grandson Henry famously observed, ‘has always been the systematic organization of hatreds.’ Every election cycle — and we are always in an election cycle — we are urged to remember that deep down inside we really despise the opposing gang of crooks. We hate their elite (or Podunk) ways, their socialist (or fascist) economics, their reliance on shadowy billionaires with suspect agendas. In a world where mutual gains from trade have lifted a half billion people out of poverty in just the past half decade, politics is one of the last remaining zero-sum games of I win, you lose, where the victor gets to spend everyone else’s money in ways that appall the vanquished, until they switch places again after the next election. We instinctively know that our tax dollars aren’t being spent efficiently; the proof is in the post office, or the permitting offices at city hall, or the neighborhood school. We roll our eyes when President Barack Obama announces a new national competitiveness initiative in his State of the Union address just five years after George W. Bush announced a new American Competitiveness Initiative in his, or when each and every president since Richard Milhous Nixon swears chat this time we’re gonna kick that foreign-oil habit once and for all. And yet, the political status quo keeps steering the Winnebago of state further and further into the ditch.”

    More ‘Economics in One Lesson.’ Tonight (Monday July 11th) Americans For Prosperity Foundation is sponsoring a continuation of the DVD presentation of videos based on Henry Hazlitt’s classic work Economics in One Lesson. The event is Monday from 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. The event’s sponsor is Americans for Prosperity, Kansas. For more information on this event contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415.

  • Kansas and Wichita quick takes: Tuesday July 5, 2011

    Kansas can choose its future path. Kansas has a choice to make, writes Dave Trabert, President of Kansas Policy Institute: “‘Rich States, Poor States’ is loaded with good policy advice but perhaps the greatest takeaway is that economic prosperity is a matter of choice. Some states choose to create an environment that encourages economic activity; others choose to put a higher value on government growth, which discourages job creation.” The choice we have to make is based on Kansas’ middle-of-the-road ranking in Rich States, Poor States: The ALEC-Laffer Economic Competitiveness Index, a new edition of which was recently released. It is, writes Trabert: “We can either choose to continue the tax-and-spend mentality that continues to drive jobs away or we can choose to become prosperous.” More is at Rich State or Poor State — It’s a Matter of Choice . … Trabert will be speaking in Wichita on this topic this Friday, see the next item.

    Kansas budget to be topic. This Friday’s meeting (July 8th) of the Wichita Pachyderm Club features Dave Trabert, President of Kansas Policy Institute, speaking on the topic “How Kansas ranks in the Rich States, Poor States Economic Competitive Index, and how our state’s ranking can be improved by stabilizing the Kansas budget.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … Upcoming speakers: On July 15, Jon Hauxwell, MD, speaking on “Medicinal Cannabis.” On July 22, U.S. Representative Mike Pompeo of Wichita on “An update from Washington.” On July 29, Dennis Taylor, Secretary, Kansas Department of Administration and “The Repealer” on “An Overview of the Office of the Repealer.”

    Year of school choice. The Wall Street Journal, in a Review and Outlook piece, notes the progress made throughout the country in advancing greater freedom for parents in educational opportunities for the children. Of particular note is expansion of existing programs in Milwaukee and Indiana. … Schools choice is important, writes the Journal, but alone is not sufficient: “Choice by itself won’t lift U.S. K-12 education to where it needs to be. Eliminating teacher tenure and measuring teachers against student performance are also critical. Standards must be higher than they are. But choice is essential to driving reform because it erodes the union-dominated monopoly that assigns children to schools based on where they live. Unions defend the monopoly to protect jobs for their members, but education should above all serve students and the larger goal of a society in which everyone has an opportunity to prosper.” … In Kansas, reform measures such as these are rarely mentioned, as the state’s education establishment is content with keeping inner-city and disadvantaged kids in poor schools. While Kansas has some good schools, these are largely located in well-to-do suburbs in Johnson County and surrounding Wichita. Families with money, therefore, have opportunities for school choice (of a sort). Poor families don’t have this choice. … In Kansas, tinkering with the teacher tenure formula is all that has been accomplished this year regarding school reform. This is in a state that ranks very low among the states in policies relating to teacher effectiveness, according to the National Council on Teacher Quality. … Kansas Governor Sam Brownback campaigned with an education platform, but it contained mostly weak measures that appeared to be designed by the education establishment. So far Brownback has not come forth with proposals for meaningful reform of schools in Kansas.

    How much does a stimulus job cost? According to the Council of Economic Advisors, all appointed by President Barack Obama, $278,000. If that’s not bad enough, analysis from The Weekly Standard finds that now, the stimulus program is working in reverse: “In other words, over the past six months, the economy would have added or saved more jobs without the ‘stimulus’ than it has with it. In comparison to how things would otherwise have been, the ‘stimulus’ has been working in reverse over the past six months, causing the economy to shed jobs.” Why might the stimulus not be working? Borrowing the money and then “spending it mostly on Democratic constituencies” is to blame, writes Jeffrey H. Anderson.

    More ‘Economics in One Lesson.’ Next Monday (July 11th) Americans For Prosperity Foundation is sponsoring a continuation of the DVD presentation of videos based on Henry Hazlitt’s classic work Economics in One Lesson. The event is Monday from 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. The event’s sponsor is Americans for Prosperity, Kansas. For more information on this event contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415.

  • Social Security Trust Fund: Why no truth?

    Regardless of one’s attitude towards the Social Security system, the refusal by liberals to admit the fraud of the system’s trust fund remains an obstacle to honest discussion of the system’s future.

    Here’s an example from a prominent defender of the myth of the Social Security Trust Fund, Sen. Bernie Sanders of Vermont. In an editorial from earlier this year, Sanders said those who tell the truth about the Social Security Trust Fund are a “barrage of misinformation.” He went on to describe the trust fund: “Social Security invests its surpluses, as it should, in U.S Treasury bonds, the safest interest-bearing securities in the world. These are the same bonds that wealthy investors and China and other foreign countries have purchased. The bonds are backed by the full faith and credit of the U.S. government, which in our long history has never defaulted on its debt obligations. In other words, Social Security investments are safe.”

    Closer to home, and typical of many hometown newspapers, a recent letter in the Wichita Eagle read: “There is $2.5 trillion in the trust fund as U.S. Treasury bonds. These bonds are just as real as those held by mutual funds and foreign banks.”

    The debate over the nature of the trust fund is important. It strikes at the trust we should have — or not have — in government.

    So: Is there $2.6 trillion in treasury bonds in the trust fund, and will the bonds be repaid?

    Yes, I believe it is true. These bonds, all $2.6 trillion, will be repaid.

    That simple belief, however, is an example of what economist Thomas Sowell calls “stage one” thinking. This mode of thinking looks at only the immediate effects or implications of something. It doesn’t ask the question: “And then what will happen?”

    Simple as this seems — “What happens next?” — we find this to be an afterthought in politics. Writes Sowell: “Most thinking stops at stage one. In recent years, former economic advisers to presidents of the United States — from both political parties — have commented publicly on how little thinking ahead about economic consequences went into decisions made at the highest level. This is not to say that there was no thinking ahead about political consequences. Each of the presidents they served (Nixon and Clinton) was so successful politically that he was re-elected by a wider margin than the vote that first put him in office.”

    In the case of the Social Security Trust Fund, the bonds it holds will be repaid. But we need to ask the “stage two” question: “What must the government do to pay back the bonds in the trust fund?” First, we must recognize that the federal agencies that received the proceeds of these bonds promptly spent the money. They didn’t spend it on income-producing assets that might generate a stream of cash flows that could be used to pay off the bonds. Instead, the money was spent on the day-to-day-operations of the federal government. This represents money that Congress and the president spent without specifically raising taxes or borrowing through the normal process.

    At some time when the Social Security Administration wants to redeem the bonds, there are three choices: Raise taxes, reduce services, or create new money through the Federal Reserve System. Each robs us of wealth — either by paying more taxes, paying the same taxes for fewer services, or having the value of our money stolen through inflation.

    It’s not just me who says this. Here’s a cautionary note from the Social Security Administration Performance and Accountability Report (PAR), fiscal year 2010, page 111: (OASI and DI trust funds are the two major components of Social Security that are financed by the payroll tax deduction.)

    The U.S. Treasury does not set aside financial assets to cover its liabilities associated with the OASI and DI Trust Funds. The cash received from the OASI and DI Trust Funds for investment in these securities is used by the U.S. Treasury for general Government purposes. Treasury special securities provide the OASI and DI Trust Funds with authority to draw upon the U.S. Treasury to make future benefit payments or other expenditures. When the OASI and DI Trust Funds require redemption of these securities to make expenditures, the Government finances those expenditures out of accumulated cash balances, by raising taxes or other receipts, by borrowing from the public or repaying less debt, or by curtailing other expenditures. This is the same way that the Government finances all other expenditures.

    There it is: “This is the same way that the Government finances all other expenditures.” There are no economically valuable assets in the trust fund. There is simply the realization that the U.S. government will tax more, provide less, or inflate the currency in order to make good on its promises. If you need any other proof, here’s another passage from the same report:

    Treasury special securities are an asset to the OASI and DI Trust Funds and a liability to the U.S. Treasury. Because the OASI and DI Trust Funds and the U.S. Treasury are both part of the Government, these assets and liabilities offset each other for consolidation purposes in the U.S. Govemmentwide financial statements. For this reason, they do not represent a net asset or a net liability in the U.S. Govemmentwide financial statements.

    It is as if I lend my wife $20 and accept her promise to repay. The financial position of my family has not changed.

    The question is: Why do so many not want to face the facts about the Social Security Trust Fund?

    The reason is that we’ve been lied to by politicians of both parties, and by politicians both conservative and liberal. Politicians like Sanders are still lying to us. The sham of the trust fund is an indication of the failure of government, and politicians of all parties do not want to admit this.

    We must realize that no matter how bad the behavior of past politicians, the reality of the Social Security Trust Fund is the hand we’ve been dealt, and the basis on which decisions about the future must be made. The continuing refusal by most liberal politicians, starting with President Barack Obama, to accept this reality is harmful and is an obstacle to forging a solution.

  • Corporate jet incentive, or tax dodge, or kids’ safety?

    Yesterday President Barack Obama denounced the tax breaks given to owners of corporate jets. Described by MSNBC Television program host Rachel Maddow as a “corporate tax loophole” that allows “giant corporations to dodge their taxes,” Obama cast the issue as corporate fats cat vs. kids: “You go talk to your constituents — the Republican constituents — and ask them, are they willing to compromise their kids’ safety so that some corporate jet owner continues to get a tax break?

    (Yes, I sometimes watch the leftist television news programs — so that you don’t have to.)

    Maddow, if you’ve ever watched her show, is given to snarky exaggeration as her style. The use of the term “dodge” is an example. Most people would think that “to dodge” means to avoid completely, and that’s what Maddow would like her viewers to believe: that these giant corporations are paying no taxes at all when they buy these planes.

    The reality, however, is different and much less sensational. Since the tax in question is an income tax, we must first calculate income. That means accounting for the expenses incurred in running the business. For assets with a long lifespan, depreciation is used, whereby a portion of an asset’s cost is deducted each year from income. With the U.S. corporate income marginal tax rate at 35 percent, being able to deduct one dollar in depreciation saves 35 cents in taxes.

    The issue in question, as identified by Lachlan Markay is an economic incentive implemented in the form of accelerated depreciation for purchasers of corporate jets. This provision allows companies to deduct depreciation costs from their income sooner, so they save on taxes now rather than later.

    Accelerated depreciation doesn’t increase the total amount of depreciation that can be deducted from income. Of course, taking a deduction this year rather than in a later year is valuable.

    So it’s not a “dodge,” as Maddow told her viewers. But it is a benefit to the companies that take advantage of it.

    The real question is whether these manipulations of the tax code are harmful or beneficial. Certainly Congress did not believe they were harmful when it passed the legislation that created this special accelerated depreciation, available for only a short time for purchasers of specific assets. It was designed to provide a stimulus to a specific industry. And if that term “stimulus” seems familiar, the legislation that created this accelerated depreciation incentive was part of H.R. 1: American Recovery and Reinvestment Act of 2009, also known as ARRA, also known as the stimulus bill, and one of the first legislative initiatives by President Obama.

    Now the president, evidently, feels this wasn’t such a good idea. Or he has decided that purportedly rich corporations are a convenient and politically expedient opponent. Attacking them fires up his base, as evidenced by Maddow’s over-playing of this matter.

    This is also an example of using the tax code in order to achieve an economic or social policy goal. In this case, one industry benefits, but others don’t. The remaining taxpayers have to make up the difference in lost tax revenue. Or, the country simply goes deeper in debt, and the cost is passed on to future generations.

    A further effect is that by making corporate jets cheaper (because of the accelerated depreciation), companies are induced to spend in this area when — absent the incentive — they might make alternative investments. So the question is: Are discounted corporate jets a wise investment for companies who otherwise might not buy them, at least not this year? Are Congress and the president smart enough to know that investment should be directed to this area? Todd Tiahrt, who represented Wichita at the time, thought so. That city, of course, is home to several companies that manufacture the types of airplanes targeted by Congress.

    But what benefits one city or one industry is not necessarily good for the rest of the country. A better course is to simply cut tax rates and let each company decide how to direct its capital investment.

  • Kansas and Wichita quick takes: Wednesday June 22, 2011

    RightOnline, Netroots Nation. The past weekend featured two conferences for online activists: Americans for Prosperity Foundation’s RightOnline and Netroots Nation, sponsored by labor unions. I attended and made two presentations at RightOnline, the conference for those in favor of liberty and economic freedom. 1,655 people attended, according to AFP. I saw some events of the Netroots conference on C-SPAN, including a session with President Barack Obama’s White House Communications Director Dan Pfeiffer. In the session, Obama was criticized many times, and at one point the audience booed. More coverage is at A tale of two political conferences, PICKET: Right Online and Netroots conferences wrap up with few run-ins, Digital Conferences, Blue and Red, in Minneapolis

    The Atlantic Magazine’s Lies: Of Breitbarts, Kochs, and RightOnLine. Warner Todd Huston of Publius’ Forum examines a piece in The Atlantic that covered the recent RightOnline conference in Minneapolis and found it to be lacking. He found: “Unfortunately, the whole thing was filled with opinions stated as fact, misconstructions of facts, and outright lies. Sadly, along with the rest of the Old Media, it seems as if the veracity of The Atlantic has taken a hit in this bad Obama economy. … Now, what would have made Dupuy’s piece actually informative would have been a discussion of the real differences between the Nutrooters and RightOnLine. And there are quite a few. Netroots Nation is chock full of some very wonky programs. The lefties drill down to the deepest Internet facts, figures, and capabilities. On the other hand, RightOnLine has since day one sufficed with Twitter 101, blogging 101, and other beginner’s programs meant to help their local activists learn how to use the Internet to further conservative ideas. RightOnLine has not made arcane wonkiness a part of its programs like Netroots Nation has. The fact is the two conferences are very different in character in this respect.” More at The Atlantic Magazine’s Lies: Of Breitbarts, Kochs, and RightOnLine.

    Fed downgrades economic outlook. Wall Street Journal: “Federal Reserve officials downgraded their assessment of the U.S. economy’s performance Wednesday, but gave no indication they intend to take new steps to boost growth and jobs. … The recovery is continuing at a moderate pace, though ‘somewhat more slowly’ than previously expected, officials said in a statement following the Federal Open Market Committee meeting, echoing remarks made by Fed Chairman Ben Bernanke in a speech earlier this month.” Further: “Though the Fed is less comfortable with the economic outlook, it has less leeway to take new steps to fix it. That’s because underlying inflation also has crept up, making the central bank leery of injecting more money into the financial system.”

    Tax the rich. Burton Folsom: “Economist Alan Reynolds has recently called attention to the latest pronouncement from Robert Reich, the former Secretary of Labor. ‘A 70 percent marginal tax rate on the rich’ is Reich’s solution for the cash crunch in the federal government today. Let the rich pick up the tab. That assumes, of course, that the rich will continue to work hard if they have to send almost three-fourths of their earnings to Uncle Sam. They won’t. They never have. And you wouldn’t either.” … Reynolds’ article in the Wall Street Journal is Why 70% Tax Rates Won’t Work. In it, Reynolds writes: “All this nostalgia about the good old days of 70% tax rates makes it sound as though only the highest incomes would face higher tax rates. In reality, there were a dozen tax rates between 48% and 70% during the 1970s. Moreover — and this is what Mr. Reich and his friends always fail to mention — the individual income tax actually brought in less revenue when the highest tax rate was 70% to 91% than it did when the highest tax rate was 28%.”

    Wichita speaker list announced. The Wichita Pachyderm Club has announced its lineup of speakers for July. The club, which is a Republican club, seeks to provide programs that are informative and that provide members with a variety of viewpoints on important contemporary issues, and historical issues, too. Sometimes this leads to controversy, as there are those who believe that only Republicans and those who parrot the “official” party line should speak at Pachyderm. Although I am not a Pachyderm officer or board member, this month features a speaker, Dr. Jon Hauxwell, who is speaking based on my recommendation and invitation, and whose topic is likely to generate controversy again. The speakers for July: On July 8, Dave Trabert, President, Kansas Policy Institute, on “Stabilizing the Kansas Budget.” On July 15, Jon Hauxwell, MD, speaking on “Medicinal Cannabis.” On July 22, U.S. Representative Mike Pompeo of Wichita on “An update from Washington.” On July 29, Dennis Taylor, Secretary, Kansas Department of Administration and “The Repealer” on “An Overview of the Office of the Repealer.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

    FairTax meeting in Wichita. This Thursday (June 23) supporters of FairTax will meet in Wichita. According to event organizers, attendees will hear “new information about the status of the FairTax movement at the national level and how it might affect the Presidential race in 2012.” More from organizers: “The FairTax is a unique solution to the urgent need to create jobs and grow the economy. America now has 35 million Americans under employed or unemployed. The economic disaster was unnecessary and can be reversed by completely repealing our horrible and destructive tax system and replace it with the FairTax.” … While I am sympathetic with their cause, I am not enthusiastic about the FairTax — a national sales tax — for one important reason: it doesn’t address the real problem of a government that is too large and collects too much tax revenue. One of the main platforms of Fairtax is that it would collect the same revenue as the existing tax regime: “dollar-for-dollar federal revenue neutrality.” I quote Murray N. Rothbard on this: “But the libertarian must never support any new tax or tax increase. For example, he must not, while advocating a large cut in income taxes, also call for its replacement by a sales or other form of tax. The reduction or, better, the abolition of a tax is always a noncontradictory reduction of State power and a significant step toward liberty; but its replacement by a new or increased tax elsewhere does just the opposite, for it signifies a new and additional imposition of the State on some other front. The imposition of a new or higher tax flatly contradicts and undercuts the libertarian goal itself.” … The meeting is at 7:00 pm Thursday at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. The event’s sponsor is FairTaxKC.org.

    Obama: Technology seen as job killer. “The story goes that Milton Friedman was once taken to see a massive government project somewhere in Asia. Thousands of workers using shovels were building a canal. Friedman was puzzled. Why weren’t there any excavators or any mechanized earth-moving equipment? A government official explained that using shovels created more jobs. Friedman’s response: ‘Then why not use spoons instead of shovels?’ That story came to mind last week when President Obama linked technology to job losses. ‘There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers,’ he said. ‘You see it when you go to a bank and you use an ATM, you don’t go to a bank teller, or you go to the airport and you’re using a kiosk instead of checking in at the gate.’ The president calls this a structural issue — we usually call it progress.” … Russell Roberts goes on to explain that productivity — doing more with less, including less labor — leads to lower costs to business. The Left, of course, says this simply means more profits for business. But in competitive markets, businesses will find they must lower their costs, and that means a higher standard of living for consumers. New jobs get created as people now have more money to spend on new products and services that didn’t exist before, or were so expensive that only the rich could afford them. More at Obama vs. ATMs: Why Technology Doesn’t Destroy Jobs.

    Even quicker. Rasmussen: Just 8% Approve of Job Congress Is Doing: “Voter approval of Congress’ job performance has now fallen to a near five-year low.” … How to Run Public Schools in the 21st Century: Our current models are bad for taxpayers — and calamitous for kids. … The dignity of personal choice: Choosing lifesaving care — or not — shouldn’t be left to bureaucrats. … The Fiscal Pledge We Need: Cut, Cap, Balance: Congress has never failed to increase the debt limit. This makes having a debt limit functionally useless. … Initiative and Referendum under attack, says John Fund: “Politicians always claim to support democracy, but they often come up with creative ways to limit the influence of pesky voters. Now members of the political class in several states are going after voters’ most powerful tool.” See Fund: Power to the People? How Déclassé. … A Shovel-Ready Punch Line: “This is a staggering indictment of the president, the team he assembled, and the journalists who accepted this administration’s arrogant assertions that they knew exactly what to do, how to do it, and what would happen as a result.”

  • Pompeo updates constituents on spending, debt, government interventionism

    This week provided an opportunity to catch up with U.S. Representative Mike Pompeo as he conducted a public forum in Andover Monday evening, and on Wednesday at a meeting in his east Wichita office. Pompeo, a Wichita Republican, is in his first term representing the Kansas fourth congressional district, which includes the Wichita metropolitan area and surrounding counties.

    As has been the case with his other forums or town hall meetings I’ve observed, it’s standing room only, and popular topics are federal spending and debt. At the forum in Andover, Pompeo presented charts showing the course of federal spending and debt under President Barack Obama’s plans, and under alternatives proposed by Republicans, specifically Paul Ryan, the Wisconsin representative who is chair of the House Budget Committee and architect of the budget that recently passed the House of Representatives, but not the Senate.

    Historically, the U.S. government has spent about 18 to 19 percent of the country’s gross domestic product (GDP). But the Obama budget calls for that percentage to rise, and that’s what causes the projected increase in debt, he said. Republicans have proposed a budget that gets the country back to historical levels of spending.

    On raising the federal debt limit, Pompeo said he voted against it once, and “I will vote no absent radical change in our spending behavior.” A questioner pressed him to vote no under any circumstance. Pompeo said that there is money that has been obligated but not yet been actually spent, so the only option is default if the debt limit is not raised at some time. “We have to acknowledge that the Congresses before us and the folks who voted them in have put us in this place.” To get us off our spending addiction, Pompeo said we need significant and real short-term spending cuts, real spending caps (he recommended 18 percent of GDP), and a balanced budget amendment to the Constitution.

    In telling the audience how the country got to this position, Pompeo said there has been a culture of “yes” in Washington. When someone walked into a Congressman’s office over the last 70 years and said I’ve got a good program, the answer was yes.

    On Medicare, Pompeo said that the president’s plan for fixing health care costs is to have a board of “really smart people” (the Independent Payment Advisory Board) be in charge of prices. But “price control isn’t cost control,” he said. Costs can’t be forced down by law, and if we try this, we’ll have worse access to care and lower quality care, he said.

    On Social Security, a questioner asked if Pompeo would support removing or increasing the limit on income which is subject to the FICA payroll tax. Currently that limit is $106,000, and income earned beyond that is not taxed under FICA. Pompeo would not agree to that, telling the audience that Social Security, as a program, has grown far beyond the original intent. It was originally designed as an anti-poverty insurance program, but now has grown to become a much larger portion of people’s retirement income. He said that this is because people have already been taxed too much, leaving them with less resources of their own for their retirement.

    Although the Republicans have not yet presented a plan for Social Security, Pompeo said he thought the plan would include no change to the present system for those 55 and over, a rise in the age at which benefits start for those presently under 55, and a change in the way cost of living adjustments are calculated. He said he would support such a plan.

    Pompeo told the audience that the practice of earmarking — allocating money to be spent on specific projects and the source of much “pork barrel” spending — is over. But he warned of a “clever creature” back in Washington, which he said is using the tax code to spend money: “Instead of earmarking money for someone, you give them a tax credit. Same effect, but different mechanism.” Pompeo said he has been at the forefront of pushing back on this practice. Engaging in social policy through taxes is disastrous, he said, because the people who will win are those with the best lobbyists, and that success in business should not depend on a benefit gained through government tax policy. He said that something like the FairTax (a tax on consumption spending rather than income) or lower marginal income tax rates with far fewer exceptions would boost the economy. Pompeo has introduced a resolution declaring that it is the “sense of the House” that no new energy subsidies or credits should be created, and that all existing should be repealed.

    In an interview in his office on Wednesday, he said that he twice voted against tax credits for ethanol production, even though ethanol is fairly important to his district. Also, he said he would vote against the tax credits for wind energy production. (Wichita Mayor Carl Brewer is courting wind power equipment manufacturers to locate in Wichita. Without the wind power production credit, industry representatives have said its future would be much smaller.)

    On natural gas, a product for which energy investor T. Boone Pickens is seeking to obtain federal subsidies to boost its use as a transportation fuel, Pompeo said that government should not pick that — or any other fuel — as a winner with taxpayer dollars. Consumers, he said, will be able to decide on which fuels are best.

    In his office, he said that what he found most disturbing about the scandal involving Representative Anthony Weiner is he did not tell the truth to the American public. Had Weiner admitted his behavior early on, events might have taken a different course, he said.

    I asked about the level of knowledge of civics among citizens today, and Pompeo said he thought that people are paying a lot of attention to what elected officials are doing, with a significant number of citizens are very well informed. Today, he said that the Internet has greatly reduced the cost of obtaining information about government, which he said is an important change in our political process.

    On the legislative process, Pompeo said that over the last 25 or 30 years Congress has been unwilling to create “substantive markers” in legislation. Instead, it creates vague laws and funds administrative agencies to implement them. These agencies are less accountable than elected officials, and Congress has handed over much authority to them.

    I asked about the deficit, which is a topic of much current interest, but also about the existing federal debt: Are we talking about paying off that debt as a goal, or is getting to a balanced budget a tough enough goal for now? Pompeo said that the debt-to-GDP ratio is the most important debt measure, and we must work to bring that down to sustainable levels.

    (According to a recent U.S. Treasury report, the debt-to-GDP ratio is now expected to rise to 1.02 this year, meaning that in order to pay off the debt, it would require all the income earned by Americans working for one year and seven days.)

    The only way to pay down the debt is to run surpluses — “and we’re not there,” Pompeo said, noting that the deficit this year is $1.5 trillion. The Ryan budget plan, which he said he voted for, still has deficits in the hundreds of billions. Growing the economy — the other part of the equation — will help get the debt-to-GDP ratio under control, and he said we need to work on both spending reduction and economic growth.

    Talking about a budget surplus brings back memories of the last time there was a budget surplus, which was the final years of the Clinton administration. Since Clinton raised income taxes during his term, liberals often argue that we should do the same now as a way to cut the deficit. But Pompeo said the foundation for the prosperity of the Clinton years — which lead to the surplus — was built during the Reagan and the first Bush presidencies. Also, Clinton faced a Republican Congress, which applied some restraint on the growth of spending. We also forget that some of the Clinton-area prosperity was due to the Internet dot-com bubble, which, like the housing bubble later on, proved to a false and unsustainable prosperity.

    On the current housing crisis, Pompeo laid its blame on many years of bad federal government policy, including the government’s goal of increased home ownership as an “article of faith,” without recognition of the economics of home ownership. He said he believes that the federal government is still propping up home prices in certain markets, so the problems with the housing market are not behind us, as markets have not been able to discover the correct prices for homes.