Tag Archives: Paul Ryan

Kansans vote for and against Ryan-Murray budget

U.S. Representatives from Kansas split on voting for the budget bill produced by Rep. Paul Ryan and Sen. Patty Murray. Lynn Jenkins and Kevin Yoder voted in favor, while Mike Pompeo and Tim Huelskamp voted against the bill. It passed 332 to 94.

In a statement from his office, Pompeo said:

Washington — Congressman Mike Pompeo, R-Kansas, voted today against adopting a budget that would increase spending in 2014 and 2015 over the hard-fought Budget Control Act’s (BCA) limit.

“Despite opposition at the time, I supported the Budget Control Act because it was a compromise that represented the first real cut in discretionary spending in over a generation. While I agree Congress should replace cuts to national security with reforms of mandatory spending, we cannot abandon the progress we’ve already made in cutting spending. I greatly respect Chairman Ryan’s efforts to reach a bipartisan agreement to fix our spending problems, and agree with many of its provisions, including protecting doctors’ payments against needless reductions, ensuring hospitals are paid fairly in Medicare, and requiring federal employees to contribute more to their pension plans. But this new budget would stymie the progress we’ve made in reducing spending through sequestration. Kansans understand the need to budget fairly and live within our means. Washington must be held to the same standard.”

(@RepMikePompeo, pompeo.house.gov)

Huelskamp issued this statement:

“Just two years ago, Congress and the President made a promise to cut spending through the sequester. With this bill, they are abandoning this promise with a massive $63 billion in new deficit spending. So much for ‘if you like your spending cut, you can keep your spending cut.’ But no worries, after the 2022 election, a future Congress and President are certain to do what Washington refuses to do today. Sure.

In addition to this bipartisan agreement to raise spending for all sides and violating their own sequester, it would also assist Senator Harry Reid in passing tax increases through the Senate. It further also divides the House Republican Conference by abandoning our agreement reached in Williamsburg last January, rejects nearly all of the provisions passed by the House in three successive Ryan budgets, and does nothing to oppose ObamaCare.

Washington insiders are fond about saying, ‘this must be a good deal if I didn’t get everything I wanted.’ The real solution would be — the American people getting what they want.”

(@CongHuelskamp, huelskamp.house.gov)

Kansas and Wichita quick takes: Thursday September 6, 2012

Debbie Wasserman Schultz lies about lying

During these convention weeks, advocates on both sides have been fact-checking the other side, and charges are being made about which side is the biggest, boldest liar. But when people lie about lying … that’s a whole new level. Human Events reports on DNC chair Debbie Wasserman Schultz and sums up this way: “It was already common knowledge that Wasserman Schultz is a serial liar — on one memorable recent occasion, when CNN host Wolf Blitzer called her out for lying about Paul Ryan’s Medicare reform proposals, she essentially insisted that the urgency of her political agenda gives her the right to lie as necessary.” See Debbie Wasserman Schultz Caught Lying about Lying.

Speaking of facts and Politifact

What happens when the fact checker of record isn’t reliable? That’s the situation Politifact finds itself in, according to reporting by Jon Cassidy in Human Events: “Once widely regarded as a unique, rigorous and reasonably independent investigator of political claims, PolitiFact now declares conservatives wrong three times more often than liberals. More pointedly, the journalism organization concludes that conservatives have flat out lied nine times more often than liberals.” More at PolitiFact bias: Does the GOP tell nine times more lies than left? Really?

Your share of the debt

Now that the U.S. national debt has passed $16 trillion (or $16,000,000 million as I like to say) you might be interested in learning the magnitude of your personal liability. The Economic Freedom Project has a calculator to tell you. Click on What’s Your Lifetime Share of the National Debt?

Pachyderms to host House candidates

This week the Wichita Pachyderm Club features Republican candidates for the Kansas House of Representatives. Scheduled to appear are: Jim Howell (District 81), John Stevens (86), George F. “Joe” Edwards II (93), Benny Boman (95), and Phil Hermanson (98). The public is welcome and encouraged to attend Wichita Pachyderm meetings. Meetings are Fridays at noon, in the Wichita Petroleum Club on the top floor of the Bank of America Building at 100 N. Broadway. The meeting costs $10, which includes a delicious buffet lunch and beverage. For more information click on Wichita Pachyderm Club.

Even garage sales can’t escape the regulatory regime

Kansas Policy Institute comments on garage sale regulations in Wichita.

Apply for Wichita’s civilian sign corps

Related to garage sale signs, Wichitans can now apply to be part of the civilian sign enforcement patrol. The city has made these documents available on its website: Overview of the Volunteer Sign Removal Program and Sign Removal Volunteer Application. If you want to participate in this program, you’ll need to complete a volunteer sign removal application, complete the required training course, sign a liability release, sign an oath or statement agreeing to abide by city codes and the program rules, submit to and successfully pass a background check, have valid Kansas drivers license, have a currently registered vehicle in good operating condition, have current vehicle insurance, commit to a geographic area and time, commit to safety first; appropriately use provided vests and tools, commit to provide required reports, commit to dispose of signs as directed, commit to wear the provided identification badge, and commit to allowing only authorized (city trained and approved) persons to remove signs. The city also advises applicants to check with their insurance agents for coverage relative to the use of vehicles in this program. I can’t imagine most auto insurance companies will be happy that their customers are using their cars in a quasi-law enforcement application. … For more on why this law is a bad idea, see Proposed Wichita sign ordinance problematic.

Activists organize!

As a result of an excellent day-long training session recently produced in Wichita by Campaign for Liberty, activists that support limited government and free markets are meeting regularly. For information about the Wichita meetings, contact John Axtell.

The seven rules of bureaucracy

In this article, authors Loyd S. Pettegrew and Carol A. Vance quote Thomas Sowell: “When the government creates some new program, nothing is easier than to show whatever benefits that program produces. … But it is virtually impossible to trace the taxes that paid for the program back to their sources and to show the alternative uses of that same money that could have been far more beneficial.” In order to understand the foundation of America’s morass, we must examine bureaucracy. At the root of this growing evil is the very nature of bureaucracy, especially political bureaucracy. French economist Frédéric Bastiat offered an early warning in 1850 that laws, institutions, and acts — the stuff of political bureaucracy — produce economic effects that can be seen immediately, but that other, unforeseen effects happen much later. He claimed that bad economists look only at the immediate, seeable effects and ignore effects that come later, while good economists are able to look at the immediate effects and foresee effects, both good and bad, that come later. … Both the seen and the unseen have become a necessary condition of modern bureaucracy. (Bastiat: That Which Is Seen, and That Which Is Not Seen.) The first rule? “Maintain the problem at all costs!”

Democracy, or majority rule?

A new video from LearnLiberty.org, a project of Institute for Humane Studies is titled Should Majorities Decide Everything? To me, the most important part is near the end, when the speaker says that without a properly limited government, rule by majority “substitute[s] the tyranny of a king with the tyranny of a larger group.” LearnLiberty also explains: “According to Professor Munger, democratic constitutions consist of two parts: one defining the limits within which decisions can be made democratically, and the other establishing the process by which decisions will be made. In the United States Constitution, the individual is protected from majority decisions. Professor Munger warns, however, that these protections are slowly being stripped away as American courts of law fail to recognize the limits of what can be decided by majority rule.”

Kansas and Wichita quick takes: Tuesday April 3, 2012

Arts funding. For a view of government arts funding from an actual artist, please read The Government, art funding and Sam Brownback in KS by Christopher Allen. He makes an important point: “The government not paying for you to make something is NOT censorship.” I haven’t heard government arts funding advocates use the “censorship” word yet, but you can tell it’s on the minds of those who feel they should be receiving taxpayer money to support their work. … Allen also draws attention the incredible freedoms we in America and the free world enjoy regarding art: “If you want to make art, nobody’s stopping you. In some countries of the world, you get beheaded for making art that others disapprove of.”

Arts censorship. I thought that no one in Kansas had used the “Censorship” word regarding government funding of arts, but I now realize I spoke too soon. Reporting on a recent visit by Rocco Landesman, National Endowment for the Arts Chairman, the Lawrence Journal-World reported: “Kevin Willmott, a KU film professor, asked Landesman if he was concerned about what Willmott called ‘corporate censorship’ of the arts, saying if a movie he created wasn’t perceived as being able to make money it wouldn’t get seen. Landesman replied with a line that drew applause from the audience. ‘The reason we have public funding of the arts, and the reason we have the NEA at all, is so the marketplace is not the sole determinant of what is seen and what is excellent,’ he said.” … I think Wilmott ought to be more concerned that the people of Kansas will continue to fund university film departments at the same time our universities are having trouble producing graduates equipped for a modern economy.

Comparison of state comparisons. There are a number of studies that have ranked the states based on economic competitiveness. Emily Washington of the has looked at three reports produced by organizations that favor free markets and reports on the differences. Included are State Business Tax Climate Index by Kail M. Padgitt of The Tax Foundation, Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index from American Legislative Exchange Council, and Freedom in the Fifty States: An Index of Personal and Economic Freedom from Mercatus Center at George Mason University. Washington’s report is at A Comparison of Indices that Rank State Economic Competitiveness.

Ryan tax plan. Cato Institute’s Chris Edwards comments: “The goal is to simplify the tax code and spur economic growth, and you can do that without changing the total revenue raised or who it is raised from. Ryan’s strategy is to eliminate tax deductions and credits while replacing the current six-rate income tax structure with two rates of 10 and 25 percent. The result would be less tax paperwork, more jobs and more investment, which would be good for everybody. Liberals rail against the idea of cutting the top income tax rate from the current 35 percent, but Ryan’s lower 25 percent rate was not picked out of thin air. IRS data show that taxpayers with the highest incomes currently pay an average of about 25 percent of their income in income taxes. At the same time, middle-income taxpayers pay an average of roughly 10 percent. That is why Ryan’s two-rate tax structure of 10 and 25 percent would collect about the same amount of money from the same income groups as the current code if we got rid of the deductions and credits.” See The Truth about Paul Ryan’s Tax Plan.

Are earmarks returning? “After just 14 months at the levers of power of the House, it appears that some House Republicans are ready to admit that they have been unsuccessful in kicking their spending addictions. Rep. Mike Rogers (R-AL) is suggesting to House Republicans that the ban on earmarking be lifted so that members of Congress could ‘grease the wheels’ of legislation in an effort to pass bills faster. The ban was put in place shortly after Republicans, backed heavily by Tea Party conservatives calling for more fiscal responsibility in Congress, won the majority in the House during the Fall 2010 midterm elections. The ban is set to automatically expire at the end of this session of Congress at the end of the year. Bill Wilson, President of Americans for Limited Government, said, ‘This is an open acknowledgement that earmarks are nothing more than legislative bribery to buy votes. But what it represents is a further repudiation by leadership of the principles that got them in power in the first place. In 2010, Republicans pledged to ‘put us on a path to balance the budget and pay down the debt.'” See Are earmarks returning?

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.

Pompeo at Pachyderm on economy, budget

Last week U. S. Representative Mike Pompeo of Wichita addressed members and guests of the Wichita Pachyderm Club. As might be expected, major topics that members were interested in were the economy and budget issues.

As an introduction, club vice-president John Todd played a video of a recent meeting of the House Energy and Commerce Subcommittee on Oversight where Pompeo interrogated a Department of Energy official concerning the loan guarantee made on behalf of Solyndra, a company that has ceased operations and filed for bankruptcy. That video may be viewed here.

In his brief opening remarks, Pompeo described the Solyndra matter as just one example of the problems inherent when government — of either party, he added — tries to allocate capital. He described this problem as pervasive, existing throughout all areas of government.

Pompeo said that President Obama’s policies are simply wrong and have been a disaster. He said the current Congress has made progress in stopping the worst of what the president wants to do.

In response to a question, Pompeo said that while the House has been busy passing legislation, the Senate has not. The Senate has not passed a budget for three years.

I asked a question about federal grants: If local governments refuse federal grants, could legislation already introduced by Pompeo be expanded so that all returned grant funds would be used for deficit reduction, rather than being spent by someone else? This is an important issue, as many officeholders rationalize the acceptance of grants by arguing that someone else will spend the money, and it’s our tax money.

Pompeo said that anytime money from Kansas is returned to Washington, he will move to make sure it is used for deficit reduction, and not to go someplace else. He said these decisions are difficult ones for local officials.

Pompeo said that citizens would “fall off their chair” to learn of the huge magnitude of grant monies that flow from Washington. Each grant comes with restrictions on the use of the funds. He mentioned the Economic Development Administration, an agency which has a budget of over $400 million per year in earmarks.

On federal spending, Pompeo said that we think we’ve done good when we reduce the rate of growth of spending by an agency from eight percent to three percent. While it is possible to gain support for cutting grants and spending on projects in other Congressional districts, Congressmen soon find out that their constituents have benefited from federal spending programs. Support for cutting programs then fades.

But he said that the idea of giving back grant funds for deficit reduction is an idea that might catch on. It’s an idea that is discussed everywhere, he said. The problem lies in Washington, in that the programs exist.

On the need for tax reform, Pompeo said there is broad consensus that it is necessary. But it may not happen very quickly, especially under the current president. Tax reform under Obama, he said, would likely result in higher taxes. But when we tackle tax reform, he said everything will be impacted.

On energy policy, he reiterated his position that government should not be trying to select which form of energy will succeed. He also repeated his opposition to the NAT GAS Act, formally known as H.R. 1380: New Alternative Transportation to Give Americans Solutions Act of 2011, which would provide subsidies to use natural gas as a transportation fuel. If natural gas is destined to be a transportation fuel, the industry will be able to figure out how to make it work, he added.

He declined to name who he favors among the Republican presidential candidates, but he implored the audience to work hard for the eventual nominee, saying we can’t tolerate four more years of the current president.

On foreign trade, Pompeo said we need more trade, not less. On jobs lost to foreign producers, he said it is the federal government that has created policies that make investment more effective in foreign countries, and we should not fault companies for responding these policies and the realities of the global marketplace. He said that the Kansas fourth congressional district is the third most trade-dependent district in the country, with airplanes and agricultural products being the reason. “We are enormous beneficiaries of foreign trade,” he said.

Pompeo explained his vote for raising the debt ceiling as realizing the necessity to pay the bills for money we had already spent. Once that was realized, the goal was to get the best deal possible. The two best things that emerged, he said, was the fact that there was no tax increase, and that there will be a vote on a balanced budget amendment in both the House and Senate before the end of the year.

He mentioned that the budget plan developed by House Budget Committee Chairman Paul Ryan will take 20 years to balance the budget, and will require raising the debt ceiling seven times by then. Ryan also voted to raise the debt ceiling.

The votes this summer affected discretionary spending, when it is entitlements that are the “true elephant in the room.” Pompeo said we must tackle the problems of Social Security, Medicare, and Medicaid.

[powerpress]

Kansas and Wichita quick takes: Thursday May 19, 2011

Kansas growth clusters. H. Edward Flentje, Professor at the Hugo Wall School of Urban and Public Affairs at Wichita State University: “For starters, the Brownback economic plan sends a mixed message; it argues against state policies that target incentives to the lucky few but then proceeds to target individuals moving to ‘rural opportunity zones’ for special income-tax breaks and payoffs of student loans.” The hope of the governor is that counties that have been losing population can be revived. But Flentje tells of the difficulties these rural counties face: “Rural Kansas relies much more heavily on state and federal assistance, and the cost of delivering essential public services to sparsely populated areas is substantially higher. Brownback’s preferred counties will be hammered disproportionately by his reductions in school finance and social services, and the limited amenities available in these areas will be further diminished by his cuts in public broadcasting and the arts, among other programs.” … The nostalgia for the glory days of small-town Kansas may not be in our best interests. In his paper Embracing Dynamism: The Next Phase in Kansas Economic Development Policy, which has influenced Governor Brownback’s economic policy, Dr. Art Hall wrote that productivity, which should be our ultimate goal, is related to population density: “Productivity growth is the ultimate goal of economic development. Productivity growth — the volume and value of output per worker — drives the growth of wages and wealth. Productivity growth results from a risky trial and error process on the front lines of individual businesses, which is why Kansas economic development strategy should focus on embracing dynamism — a focus virtually indistinguishable from widespread business investment and risk-taking. Productivity growth tends to happen in geographic areas characterized by density. This pattern shows up in Kansas. The dense population centers demonstrate superior productivity growth.”

Obamacare waivers go to Pelosi district. From Daily Caller: “Of the 204 new Obamacare waivers President Barack Obama’s administration approved in April, 38 are for fancy eateries, hip nightclubs and decadent hotels in House Minority Leader Nancy Pelosi’s Northern California district. … Pelosi’s district secured almost 20 percent of the latest issuance of waivers nationwide, and the companies that won them didn’t have much in common with companies throughout the rest of the country that have received Obamacare waivers.”

SRS chief to speak in Wichita. This Friday (May 20) the Wichita Pachyderm Club features Robert Siedlecki, who is Secretary of Kansas Social and Rehabilitation Services (SRS). His topic will be “The SRS and Initiatives.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … Upcoming speakers: On May 27, Todd Tiahrt, Former 4th District Congressman, on the topic “Outsourcing our National Security — How the Pentagon is Working Against Us.”

Kansas welfare money gets around. From NBC Action News: “At a time when the number of people relying on public assistance continues to grow, millions of dollars worth of Missouri and Kansas welfare money is being spent all over the country, including states like California and Florida, and even as far away as Hawaii and Alaska.” Kansas funds were withdrawn from ATM machines on and near the Las Vegas gambling district, and there were “back-to-back withdrawals totaling $363 at a Disney World gift shop.” Kansas Watchdog’s Earl Glynn contributed to the NBC story, and offers his own reporting at Kansas out-of-state Electronic Benefit Transfer payments .

Kansas Bioscience Authority contract. Kansas Watchdog: “Tom Thornton’s contract as president of the Kansas Bioscience Authority shows a total pay, bonus and benefit package potentially worth more than $463,200 for fiscal year 2010. That’s more than four times Governor Sam Brownback’s $99,636 salary and $63,200 more than President Barack Obama’s salary. Media reports pegged Thornton’s pay and bonus at about $365,000, but a copy of his contract obtained through multiple sources by KansasWatchdog shows several incentive opportunities and a full breakdown of benefits.” … Thornton resigned from his position in April under criticism from legislators, and the local district attorney is conducting an investigation into unspecified matters. The legislature passed a bill divorcing funding of a federal project in Kansas from the KBA, so that questions about the KBA’s activities don’t jeopardize this funding.

Medicare reform explained. A video from Center for Freedom and Prosperity Foundation features Dan Mitchell explaining the necessity for reform of Medicare, and how it should proceed. Reform of Medicare is necessary, and it can go one of two ways: “Obama’s bureaucrats decide whether you get care” or we can put seniors in charge of their care and let markets — not government — lead reform. A market-based solution, as advanced by Paul Ryan, would let seniors select their own insurance, paid for by a voucher from the government. “Programs like Medicare are akin to a all-you-can-eat restaurant with someone else picking up the tab.” That’s a recipe for disaster, says Mitchell. Competition through markets — capitalism, in other words — can provide an increasing array of services of all kinds at lower prices, including health care for all. But capitalism is not allowed to flourish in health care markets, especially for seniors. … The voucher program for seniors has been characterized by liberals as “killing Medicare.” The present system will kill itself, as even President Obama acknowledges. The end of Medicare is not the end of health care for seniors, contrary to the lies of liberals. The benefit of market competition for seniors’ health care business promises better outcomes. For Wichita, which is betting on economic development through industry using composites to create products such as replacement hip joints, it is essential that such surgeries remain affordable enough that they are commonplace. The future of Obamacare, which is rationing, is not favorable for these prospects.

Reisman: Social Security, Medicare must end

Last week George Reisman published an article that should be required reading for all who care about the future of our country. Titled How to Eliminate Social Security and Medicare, it will take more than a few minutes to read, but it holds the type of information we need to know as we consider reform of government entitlements. Reisman is the author of the monumental work Capitalism: A Treatise on Economics.

Reisman lays out a plan that would gradually, over time, end the Social Security and Medicare systems. It’s a detailed plan, and I don’t pretend to know enough to tell if the plan would work. But it seems like it would, and the important thing is that Reisman’s plan calls for an end to these programs. Most plans call for merely bringing these programs “under control” — whatever that means. And for all the courage attributed to House Budget Committee chair Paul Ryan and his Path to Prosperity Plan, he left the Social Security program for solution some other day.

What’s important about Reisman’s article is his explanation of the harm that these two programs have caused. Here I take the liberty of rewriting two sentences of his into one: Many of the elderly and infirm are incapable of caring for themselves in large measure simply because they had been promised that the government would care for them and thus that it was not necessary for them to save.

Social Security has reduced the need to save for one’s old age, Reisman writes: “The effect of Social Security and Medicare has been to remove the apparent need for much of that saving. Not surprisingly, in the conviction that the government was now providing for people’s old age, the rate of saving in the United States has declined precipitously over the years, falling all the way to zero in some years.”

The saving of individuals for their retirement would greatly increase our capital stock, which is vital for economic competitiveness. In fact, Reisman writes that if American industry had access to greater capital, it would be able to operate with lower costs, allowing it to compete more effectively with foreign countries that pay lower wages. But because government diverted Social Security taxes into consumption rather than saving, that capital has not been accumulated. Instead, our capital stock is becoming depleted.

It will become worse as young people learn they must pay off the national debt — not only the debt figures we see reported in the media, but the debt implicit in the promise of Social Security and Medicare. This debt, as we see, has been accumulated over the decades as politicians of all stripe have carried out what Reisman accurately calls embezzlement:

Two major lessons to be learned from the financial disaster constituted by Social Security/Medicare are that the government should be prohibited from incurring any significant national debt and that a governmental promise of pensions or provision of future medical care is a category of national debt. All levels of government should be constitutionally prohibited from incurring significant amounts of debt beyond a very short term, including, above all, pension obligations of any kind.

Hopefully, there is a special place in Hell reserved for all the political con-men and intellectual shysters of the last generations who endlessly dismissed the significance of national debts with such glib phrases as “we owe it to ourselves” and asserted that national debts need never be paid. These, of course, were the same con-men and shysters who again and again ignorantly denounced saving as cash hoarding and the cause of depressions and mass unemployment.

And in the case of all the government officials who over a period of decades and decades knowingly used the proceeds of Social Security taxes to finance current government spending, these con-men and shysters descended to the status of major criminals, guilty of the crime of embezzlement on a scale unprecedented in all of human history. They diverted literally trillions of dollars of what people were led to believe were their savings, set aside for their future benefit, into current government spending. The spending was for projects desired by these officials and designed to keep them in office by fostering the illusion that the officials had performed the miracle of providing seemingly valuable current benefits at no corresponding cost. Of course, the reason for the apparent lack of cost was that the costs were covered by the proceeds of embezzlement.

Besides dim prospects for the young, the mass of old people faces a grim future, too. While it is the individual who has the greatest motivation to see for their provision in old age, government has assured us that it will care for us in our old age. The individual versus the collective, in other words. While nearly every politician insists that the elderly will be cared for (“we’re not going to throw Grandma under the bus”), the political reality may become different some day as demographics shift towards a country with a higher proportion of elderly and fewer young people:

The actual fact is that while the lives of the elderly are of inestimable value, when taken one at a time, to the individual elderly person concerned, they are of no actual value to politicians and government officials. Indeed, from the perspective of the self-interest of all-powerful officials, contemplating the land and the people of their country as their personal possessions, existing for no purpose other than their — the officials’ — glorification, the existence of the elderly stands as an actual impediment. For the elderly consume substantial amounts of the resources of the collective that the officials control, and at the same time they produce little or nothing, and no longer have any prospect of ever doing so. If they ceased to exist, the officials would have resources available to put to other uses that they would certainly judge to be more important.

Could this lead to the “death panels” that some fear but ObamaCare supporters deny? Reisman cites a recent New York Times article titled When Ailments Pile Up, Asking Patients to Rethink Free Dialysis. The title is almost self-explanatory.

This is just scratching the surface of Professor Reisman’s article. Reading it and understanding what government has done under the guise of caring for us, I alternate between anger and depression. For me, the saddest realization is that Social Security and Medicare have not only reduced the motivation of Americans to save, their taxes have reduced the ability of people to save, even if they want. I recommend a full reading so that all may understand what the future looks like.

Kansas and Wichita quick takes: Friday April 8, 2011

Kansas Meadowlark blog recast. Earl Glynn of Overland Park has reformed his Kansas Meadowlark site from a blog to a news site along the lines of the Drudge Report. Glynn’s full-time job is working for Kansas Watchdog.

Economics in one lesson next week. On Monday, four videos based on Henry Hazlitt’s class work Economics in One Lesson will be shown in Wichita. The four topics included in Monday’s presentation will be The Lesson, The Broken Window, Public Works Means Taxes, and Credit Diverts Production. The event is Monday (April 11) at 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 [email protected] or 316-312-7335, or Susan Estes, AFP Field Director at [email protected] or 316-681-4415.

Government shutdown guide. Americans for Limited Government reports on What happens if the government shuts down? :Well, nothing really, and the consequences of a shutdown are really rather mundane. The worst part of it all, Congress would still be working, oh, and all government museums and tourist sites will close.” Tourist sites closing: that’s the “Washington Monument Strategy,” where any threatened cuts to the National Park Service will first cause a closing of the Washington Monument. Instead of looking for the ways to save money with the least impact, agencies propose cuts with the most impact first. … The Washington Post has more, noting that only essential government employees would work during the shutdown. Which causes me to ask: Why do we have non-essential government employees?

Halve the deficit by doing nothing. Writes Ezra Klein: “Just let the Bush tax cuts expire in 2012, as they’re currently scheduled to do.” But this is not “doing nothing.” It’s government taxation at a higher level than present, which is far from nothing. It’s redirecting resources from the productive private sector to government, which almost always means less effective application of these resources. The Wichita Eagle editorial board approved enough of this that they mentioned it — favorably, I think — on their blog.

State debt worse than federal. While many are aware that the U.S. federal government is awash in debt and that any plan to forcefully deal with this problem is denounced by liberals, the states, collectively, are in worse shape. Washington Examiner explains: “House Budget Committee Chairman Paul Ryan of Wisconsin talked Tuesday about cutting federal spending by a staggering $6 trillion in the next decade and in the process eliminating the $14.3 trillion national debt. As incredible as these numbers are, all 50 states face perilous fiscal times as well, but they are less able to cope than the federal government. States can’t print money, as the federal government can, and they are far more limited in whom and how much they can tax. There is one common factor here, though: Washington and the state capitals are drowning in red ink largely because professional politicians promised excessive entitlement benefits without making provisions to pay for them. … These liabilities are coming due as the baby boomers begin to retire, which means entitlement reform — at the federal and state levels — is likely to be the defining political issue for the next decade.”

This Week in Kansas. On “This Week in Kansas” Chapman Rackaway, Kenneth N. Ciboski, and myself discuss local elections in Kansas, and then the Kansas Legislature. Tim Brown is the host. “This Week in Kansas” airs on KAKE TV 10 Sundays at 9:00 am in Wichita, and 11:30 am Saturdays on WIBW in Topeka.

Federal spending on autopilot

Federal spending trends

Many people know that a large portion of the federal budget is effectively out of lawmakers’ hands. Together Social Security, Medicare, Medicaid, and interest on the debt presently consume about 48 percent of federal spending. But if nothing changes, these programs will grow to consume 90 percent of federal spending by 2084.

This is the conclusion of Mercatus Center Senior Research Fellow Veronique de Rugy. Her analysis is based on data from the Congressional Budget Office, which makes forecasts in its Long-Term Budget and Economic Outlook. Her report is Defense and Non-Defense Spending Programs Squeezed as Autopilot Programs and Debt Interest Explode.

The key is this is a forecast if nothing changes. The spending on entitlement programs that drive this forecast are under federal legislators’ control. They can act to make changes over the long term, if they wish to.

But before last year’s elections, few politicians, even Republicans, were willing to confront the problem head-on. One of the few officeholders willing to do so is Wisconsin Congressman Paul Ryan, who is now chair of the House Budget Committee. His Roadmap for America’s future is a plan that recognizes the seriousness of the current situation, not only with Social Security, but in other areas of the federal budget.

His recommendations, specific as they are, cause consternation among some Republicans who would rather talk about problems in general terms rather than specifics. A recent Washington Post profile of Ryan referred to “… many Republican colleagues, who, even as they praise Ryan for his doggedness, privately consider the Roadmap a path to electoral disaster. Unlike most politicians of either party, he doesn’t speak generically about reducing spending, but he does acknowledge the very real cuts in popular programs that will be required to bring down the debt.”

Many of the new members of Congress are eager to take on the long-term problem illustrated in de Rugy’s chart. Let’s hope they have success.

Goyle on Social Security protection

Raj Goyle, candidate for U.S. Congress from Kansas, pledges to protect Social Security from changes, including partial privatization and increases in the retirement age. On his campaign website, he says we must work in a “bipartisan, responsible way to adjust Social Security to ensure its long-term stability.” Goyle’s website doesn’t say this, but the only way to make these adjustments is to increases taxes or the deficit — which pushes taxation off to the future.

Goyle’s opponents in the campaign for United States Congress from the fourth district of Kansas are Reform party candidate Susan Ducey, Republican Mike Pompeo, and Libertarian Shawn Smith.

In his pledge, Goyle promises to “work for real solutions that strengthen Social Security for the long term.” Specifically, he pledges to oppose all efforts at privatization and raising the retirement age to 70.

The problem is that after ruling out reforms like these, there’s not much left to do except to raise taxes or borrow more. Evidence of this can be found in an editorial from the Los Angeles Times recently printed by the Wichita Eagle. Titled Ignore fearmongering on Social Security, it mostly looks back at opposition to the formation of the Social Security system 75 years ago.

But the article recognizes that the system needs “minor adjustments” to remain solvent. The authors write: “Economists say that raising the income ceiling on the payroll tax, applying the Social Security tax to nonwage income or adding a modest increase to the payroll tax could add decades to the health of the Social Security trust fund.”

Each of these policy changes is a tax increase. The article lists no other solutions than these.

These recommendations are not Goyle’s. He hasn’t said what he would do to place the system on a sound financial footing, although he uses the same term — “adjustments” — as does the Times editorial.

But the reality is there’s not much that we can do except raise taxes or increase the deficit if we want to keep the current system.

We need to do something quickly. Social Security will pay out more in benefits this year than it receives in contributions from payroll taxes. It had been thought that this milestone would not be reached until 2017 or later.

There are those who cite the Social Security trust fund and its large balance of over $2 trillion as evidence that the system is doing well. Goyle himself recently mentioned that Social Security would be solvent for the next 30 years. Goyle didn’t mention the trust fund, but that is the source of the system’s purported solvency.

The problem is, as Thomas Sowell explains, the trust fund is merely an illusion. The money in the fund has already been spent by government agencies. The only way they can pay back the fund is through tax revenues or additional borrowing, which increases the deficit and pushes taxes to future generations.

It’s not as though most Republicans are confronting the problem head-on. One of the few officeholders willing to do so is Wisconsin Congressman Paul Ryan, who is ranking member of the House Budget Committee. His Roadmap for America’s future is a plan that recognizes the seriousness of the current situation, not only with Social Security, but in other areas of the federal budget.

His recommendations, specific as they are, cause consternation among some Republicans who would rather talk about problems in general terms rather than specifics. A recent Washington Post profile of Ryan referred to “… many Republican colleagues, who, even as they praise Ryan for his doggedness, privately consider the Roadmap a path to electoral disaster. Unlike most politicians of either party, he doesn’t speak generically about reducing spending, but he does acknowledge the very real cuts in popular programs that will be required to bring down the debt.”

That frank talk about the budget and government spending might be an electoral disaster is a bad sign for America. We need Raj Goyle to be specific about his plans for Social Security adjustments, too.

Social Security: A good and moral deal?

Social Security and its future have been in the news lately. Supporters promote it as one of the best examples of successful government programs, and denigrate its critics as pessimists.

Locally in the campaign for United States Congress from the fourth district of Kansas, one candidate promises to defend the current system, while another has spoken approvingly of Wisconsin Congressman Paul Ryan and the reforms recommend in his Roadmap for America’s future.

Many of the arguments in favor of Social Security and strengthening the system revolve around the issue of fairness, even casting a moral tone. So what about the fairness of the Social Security system?

In Slaying Leviathan: The Moral Case for Tax Reform, author Leslie Carbone looks at the economic impact of Social Security and its payroll taxes on middle income people:

Payroll taxes actually have the bizarre effect of leaving families less able to ensure what they are specifically purported to provide — security in old age. According to The Heritage Foundation, Social Security’s inflation-adjusted rate of return is a paltry 1.2 percent for an average household of two 30-year-old earners, each making just under $26,000, with children. This family will pay about $320,000 in Social Security taxes (including their employers’ share) and can expect to receive about $450,000 back in payments (1997 dollars, before taxes, assuming that they begin collecting at age 67). Had this typical family allocated the same amount to conservative private investment vehicles, such as traditional retirement accounts, they could expect to enjoy a real rate of more than 5 percent per year before taxes, or $975,000 (1997 dollars). Social Security taxes of $320,000 cost this family $525,000.

Social Security is not a very good investment, as we now see. It’s even worse — cruel and unfair, we might say — when workers pay into the system for years and then die shortly after starting to receive benefits. If people owned their own retirement savings, they could pass these assets on to their heirs or anyone else they choose.

An argument often used against privatizing the Social Security system is that people will have to make investments in stocks and bonds. Securities markets sometimes go down, as they have recently, and sometimes do not perform very well for long periods. So the Social Security supporters ask: Do we want Americans’ retirement security dependent on such uncertain investments?

It’s true that markets go up and down. But over the long term, the direction has been up. Young workers do not need to be concerned about the performance of the market over the next few years. Their time horizon is measured in decades.

Furthermore, over long periods of time, the performance of securities markets is closely tied to the performance of the American and world economies. If markets do not perform well over time, it is almost certain that the economy is underperforming too. Such a poor economy makes it even more difficult for young workers to pay the taxes necessary to pay the Social Security benefits that retirees will demand. Those young workers will have to pay, as there is no Social Security trust fund that can be drawn upon, despite the claims of its backers.

It’s contrary to economic freedom and personal liberty for the government to force Americans to participate in a retirement program. Forcing us to participate in one that performs as poorly as Social Security is a tragedy, not a mark of kindness and moral superiority.

Goyle’s social security protection pledge is a tax increase pledge

Raj Goyle, candidate for Congress, has pledged to protect social security. He doesn’t mention the tax increase that will be required to fulfill this pledge.

Goyle’s opponents in the campaign for United States Congress from the fourth district of Kansas are Reform party candidate Susan Ducey, Libertarian David Moffett, and Republican Mike Pompeo.

In his pledge, Goyle promises to “work for real solutions that strengthen Social Security for the long term.” Specifically, he pledges to oppose all efforts at privatization and raising the retirement age to 70.

The problem is that after ruling out reforms like these, there’s not much left to do except to raise taxes. Evidence of this can be found in today’s Wichita Eagle, which carries an editorial from the Los Angeles Times. Titled Ignore fearmongering on Social Security, it mostly looks back at opposition to the formation of the Social Security system 75 years ago.

But the article recognizes that the system needs “minor adjustments” to remain solvent. The authors write: “Economists say that raising the income ceiling on the payroll tax, applying the Social Security tax to nonwage income or adding a modest increase to the payroll tax could add decades to the health of the Social Security trust fund.”

Each of these policy changes is a tax increase. The article lists no other solutions than these.

These recommendations are not Goyle’s. He hasn’t said what he would do to place the system on a sound financial footing.

But there’s not much that we can do except raise taxes if we want to keep the current system.

We need to do something quickly. Social Security will pay out more in benefits this year than it receives in contributions from payroll taxes. It had been thought that this milestone would not be reached until 2017 or later.

There are those who cite the Social Security trust fund and its large balance of over $2 trillion as evidence that the system is doing well. But as Thomas Sowell explains, the trust fund is merely an illusion. The money in the fund has already been spent by government agencies. The only way they can pay back the fund is through tax revenues.

It’s not as though Republicans are confronting the problem head-on. One of the few officeholders willing to do so is Wisconsin Congressman Paul Ryan, who is ranking member of the House Budget Committee. His Roadmap for America’s future is a plan that recognizes the seriousness of the current situation, not only with Social Security, but in other areas of the federal budget.

His recommendations, specific as they are, cause consternation among some Republicans who would rather talk about problems in general terms rather than specifics. A recent Washington Post profile of Ryan referred to “… many Republican colleagues, who, even as they praise Ryan for his doggedness, privately consider the Roadmap a path to electoral disaster. Unlike most politicians of either party, he doesn’t speak generically about reducing spending, but he does acknowledge the very real cuts in popular programs that will be required to bring down the debt.”

Also: “House Minority Leader John A. Boehner (R-Ohio) has alternately praised Ryan and emphasized that his ideas are not those of the party.”

The fact that frank talk about the budget and government spending might be an electoral disaster is a bad sign for America.