Voice For Liberty

Tag: United States Congress

  • Kansas and Wichita quick takes: Wednesday July 20, 2011

    Kansas budget director to be in Wichita. This Friday’s meeting (July 22) of the Wichita Pachyderm Club features Steve Anderson, Director of the Budget for Kansas. The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … Upcoming speakers: On July 29, Dennis Taylor, Secretary, Kansas Department of Administration and “The Repealer” on “An Overview of the Office of the Repealer.” … On August 5, the three newest members of the Wichita City Council will appear: Pete Meitzner (district 2, east Wichita), James Clendenin (district 3, south and southeast Wichita), and Michael O’Donnell (district 4, south and southwest Wichita). Their topic will be “What it’s like to be a new member of the Wichita City Council?” … On August 12 Kansas Representative Marc Rhoades, Chair of the Kansas House of Representatives Committee on Appropriations, will speak on “The impact of the freshman legislators on the 2011 House budgetary process.” … On August 19, Jay M. Price, Ph.D., Associate Professor and Director of the public history program at Wichita State University, speaking on “Clashes of Values in Kansas History.” His recent Wichita Eagle op-ed was Kansas a stage for “values showdowns.” … On August 26, Kansas State Representatives Jim Howell and Joseph Scapa speaking on “Our freshmen year in the Kansas Legislature.” … On September 2 the Petroleum Club is closed for the holiday, so there will be no meeting. … On September 9, Mark Masterson, Director, Sedgwick County Department of Corrections, on the topic “Juvenile Justice System in Sedgwick County.” Following, from 2:00 pm to 3:00 pm, Pachyderm Club members and guests are invited to tour the Sedgwick County Juvenile Detention Center located at 700 South Hydraulic, Wichita, Kansas. … On September 16, Merrill Eisenhower Atwater, great grandson of President Dwight D. Eisenhower, will present a program with the topic to be determined. … On September 23, Dave Trabert, President of Kansas Policy Institute, speaking on the topic Why Not Kansas,” an initiative to provide information about school choice. … On September 30, U.S. Representative Mike Pompeo of Wichita on “An update from Washington.”

    All Kansans voted for “Cut, Cap, and Balance.” From Americans for Prosperity, Kansas: “Americans for Prosperity Kansas applauds Representatives Lynn Jenkins, Tim Huelskamp, Kevin Yoder, and Mike Pompeo for standing up to solve America’s debt crisis by voting ‘Yes’ on H.R. 2560, the Cut, Cap and Balance Act. The Cut, Cap, Balance Act directly addresses the nation’s staggering $14.3 trillion debt by immediately cutting spending, capping the federal budget and sending a strong balanced budget amendment to the states for ratification. … ‘Runaway spending has buried the United States Government in debt, causing us to hit our statutory ceiling at $14.3 trillion,’ said James Valvo, Americans for Prosperity Director of Government Affairs. ‘It is time for Washington to rein it its out-of-control spending and implement real spending reforms. The Cut, Cap, Balance Act provides necessary fiscal restraint that would get America back on the path to prosperity.’ … ‘Families and businesses alike in Kansas are tightening their belts and making tough choices to make ends meet, while Washington has continued to spend with no end in sight as if there are no limits,’ said Derrick Sontag, Americans For Prosperity Kansas State Director. ‘I thank the Kansas Representatives for safeguarding the future of America and demanding Washington tighten its belt.’”

    Foreclosed homes: the maps. We hear about the large number of foreclosed homes, but until you see them on a map, it’s sometimes difficult to comprehend the scope of the problem. For a tour of satellite photographs with indications of foreclosed homes, click on Satellite view of U.S. Foreclosures.

    Kansas certificates of indebtedness. Kansas Watchdog: “Without the state’s most recent internal borrowing, a $600 million certificate of indebtedness (COI) issued June 30, the state general fund (SGF) would have been out of money on July 5, just five days into the new fiscal year, and wouldn’t have a positive balance again until June 21, 2012.” Reporter Paul Soutar goes on to explain how these certificates — a loan to the state to be repaid with funds collected later in the fiscal year — are commonly used year after year. But this is just the start of the state’s problems, writes Soutar: “That’s just the tip of an off-balance iceberg according to the Institute for Truth in Accounting, an advocate for more open and honest accounting for government finance. If all financial obligations, including promised pension payments and health care benefits for retirees, are added up the Kansas state budget was actually $5.2 billion out of balance by FY2011 according to Truth in Accounting.” State accounting practices mask the true magnitude of the problem, too: “Accountants familiar with government and private accounting standards told KansasWatchdog the practice is called double counting and would not be allowed in a private business because it represents a fraud intended to deceive whoever reads the financial report. The double counting approved by the Legislature and Sebelius in 2003 continues in Kansas.” … The full article, well worth reading and understanding, is Certificates of Indebtedness Symptom of Bad Budget Choices.

    Why more regulation is not the answer. Brad Raple of the adverse possessor explains: “Many people associate pure free-market capitalism with a complete lack of regulation. This is not the case. Regulation is the primary reason free-market capitalism works so well. But in a capitalist system, the regulations are market-based instead of based on politically motivated bureaucrats telling people what they can and can’t do. … Bailouts, government guarantees, subsidies, and all other methods of socializing private risk undermine the regulation imposed by free-market forces. … The FDIC is even a huge example of moral hazard. For example, people pay practically no attention to the financial condition or solvency of their banks. After all, why would they? They’re FDIC insured! In other words, no one cares if their deposits are in a bank that is over-leveraged because if it fails, the FDIC will bail out the depositors. Without the FDIC, people might pay a little more attention to the financial condition of their banks. Banks would probably compete based on financial security, as opposed to free toasters, interest rates, and how quickly they can rubber stamp a home equity loan to finance a boat.” … More at Why more regulation is not the answer.

    Myths of the Great Depression. “Historian Stephen Davies names three persistent myths about the Great Depression. Myth #1: Herbert Hoover was a laissez-faire president, and it was his lack of action that lead to an economic collapse. Davies argues that in fact, Hoover was a very interventionist president, and it was his intervening in the economy that made matters worse. Myth #2: The New Deal ended the Great Depression. Davies argues that the New Deal actually made matters worse. In other countries, the Great Depression ended much sooner and more quickly than it did in the United States. Myth #3: World War II ended the Great Depression. Davies explains that military production is not real wealth; wars destroy wealth, they do not create wealth. In fact, examination of the historical data reveals that the U.S. economy did not really start to recover until after WWII was over.” This video is from LearnLiberty.org, a project of Institute for Humane Studies, and many other informative videos are available.

  • 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.

  • Kansas and Wichita quick takes: Friday June 24, 2011

    RightOnline may not follow Netroots. The Netroots Nation conference, tired of having the free market-based RightOnline follow them each year, has maneuvered to block RightOnline from following them to Providence next year. Will it work? More at Netroots Nation Strives To Keep Right Online Away From Next Year’s Convention.

    Ann McElhinney. Speaking at last week’s free market-based RightOnline conference in Minneapolis, filmmaker Ann McElhinney addressed the general session and spoke against CINOs: Conservatives In Name Only, which she defined as anyone who thinks we should subsidize industry, anyone who believes that humans control the weather, anyone who thinks we should not explore and exploit ANWR, anyone who thinks we should not be drilling for oil off our coasts, anyone who thinks it’s okay to terrorize schoolchildren that the world is about to end, anyone who is talking nonsense about fracking, anyone who is against exploiting the oil sands in Alberta — bringing oil from a country that doesn’t believe in stoning women, and anyone who believes we can power our incredible dream with wind or the sunshine. … She criticized those feminists who talk about solar panels and windmills, saying that across Africa and India there are women who “devote a lifetime to washing clothes … a complete waste of time when you could have a washing machine.” She said it is a human rights abuse to deprive a woman of a washing machine. … Video is at Ann McElhinney at 2011 RightOnline.

    Presidential candidate white papers. Club For Growth is an organization that works to “promote public policies that encourage a high growth economy,” believing — as do I — that “prosperity and opportunity come through economic freedom.” To advance this end, it has created a “white paper” for most of the declared Republican presidential candidates, and it’s working on papers for the rest. The papers draw on a variety of sources for data, and seem to be balanced — and tough, too. They’re available by clicking on Club For Growth’s Presidential White Papers: How do the candidates rate as pro-growth economic conservatives.

    Budget briefing book, volume one. Bankrupting America, “an educational project that explores the policies hindering economic opportunity and growth in America,” has released the first volume of its budget briefing book. It’s full of useful information: fact and figures, how much is spent on what, what does “debt ceiling” mean, what is the Ryan budget plan, etc. Volume one is available at Budget Briefing Book: Volume One, with further volumes to come. (sign up for an email notification, if you want.) I found the book easiest to read in full-screen mode.

    Pompeo events. This Sunday (June 26) U.S. Representative Mike Pompeo, a Wichita Republican serving his first term, will hold a public forum at Tri-City Senior Center, 6100 N. Hydraulic in Park City. This event starts at 2:00 pm, and based on my past experience, will last one hour and maybe a little more. … On Tuesday, June 28, 2011, Representative Pompeo and Mrs. Pompeo, along with staff, will host an open house at his congressional district office in Wichita from 3:00 pm to 6:00 pm. The address is 7701 E. Kellogg, Suite 510. It’s the tall office building near the southwest corner of Kellogg and Rock Road.

    Kansas tax competitive position slipped in 2011. Kansas Reporter: “Kansas current tax policies dropped one gauge of the state’s economic competiveness two spots this year, to 27th place among the nation’s 50 states, according to a new survey to be formally unveiled this week in Topeka. The latest reading marks the third time since the annual survey began four years ago, that Kansas has slipped in the rankings, which are compiled by researchers Arthur Laffer, Stephen Moore and Jonathan Williams for the Rich States Poor States rankings on behalf of the American Legislative Exchange Council, or ALEC, a group of 2,000 state legislators that generally advocates for free-market legislative approaches. Kansas’ economic competitiveness, as measured by a blend of 15 indicators of higher or lower tax burdens, was rated 25th best in the nation last year, down from 24 in 2009, but higher than 29th, which the researchers calculated the first year the three compiled their list.” … Jonathan Williams, one of the authors of Rich States, Poor States: The ALEC-Laffer Economic Competitiveness Index made a presentation in Wichita today. A report is forthcoming.

    Redistricting in Kansas. Chapman Rackaway: “This week one of the most contentious processes in politics began in Kansas: redrawing the lines of our U.S. House, State House, State Senate, and State Board of Education districts. After each census, every state must redraw its legislative boundaries to ensure a roughly equal population.” It’s an important process. John Fund of the Wall Street Journal says redistricting is when politicians get to choose their voters. Rackaway believes it will be a struggle in Kansas: “The only certainty is that redistricting will be as contentious a fight in the 2012 legislative session as the budget has been for the last few years. Every constituent group will have a chance to be angered, because the process is a twisty one with numerous stops. The legislature is responsible for drawing and passing redistricting plans, and the Governor has the opportunity to veto.” Concluding, he writes: “Redistricting isn’t the most exciting thing to follow for most people, but the elections they influence are. The research clearly tells us that the best way to ensure safe or competitive legislative districts is to design them that way.” The full article is Insight Kansas: Drawing a Line.

    The price system. A short video explains how prices work in free markets and how important is the information conveyed by prices. This is part one; I’m looking forward to part two. This video is from LearnLiberty.org, a project of Institute for Humane Studies, and many other informative videos are available.

    Even quicker. Cantor Pulls Out of Biden-Led Budget, says Wall Street Journal: “House Majority Leader Eric Cantor Thursday said he was pulling out of the bipartisan budget talks headed by Vice President Joe Biden for now because the group has reached an impasse over taxes that only President Obama and Speaker John Boehner could resolve.” … Rasmussen: 51% now recognize most federal spending goes to defense, Medicare and Social Security. Knowledge is the first step. … CommonSense with Paul Jacob: “Taxpayers fund about half of all medical industry transactions, and governments regulate that as well as a huge chunk of the rest. No wonder medicine is in chaos.” … Michael Petrilli in EducationNext: “As if the teachers unions need another reason to hate charter schools, here’s one: The finding, from a new Fordham Institute report, that when given a chance to opt out of state pension systems, many charter schools take it. Furthermore, a fair number of these charters replace traditional pensions with nothing at all.”

  • Huelskamp at RightOnline: Debt is the problem

    At the RightOnline conference in Minneapolis, U.S. Representative Tim Huelskamp of the Kansas first district told the general session audience that federal spending and debt is a threat to the future of America, and that we must use the opportunity of the upcoming debt ceiling vote to force spending cuts.

    Introduced by Alan Cobb of Americans for Prosperity as someone who — in his first race for the Kansas Senate — beat the best kind of Republican to beat: “one of those squishy ones.” Huelskamp served 14 years in the Kansas Senate, and was elected to the House of Representatives last November.

    A leader in technology, he was the first Kansas legislator to have a laptop computer in the chamber, and was instrumental in passing Kansas’ online transparency bill. And, Cobb said, he was the first member of Congress to bring an Ipad to the speaker’s podium.

    In his remarks to the audience, Huelskamp said he was one of those new “testy freshmen.” He said he spent the first few months wondering around Washington wondering how he got here, then he started to wonder how those other guys got here.

    He described listening to budget debate on the House floor. In response to what a leftist Member said, he turned to a senior Republican and said “Do they really believe what they just said, or are they lying?” The response: They really believe what they’re saying. They really believe that government can do better with your money than you can, and that the stimulus didn’t work because it was too small, he said.

    Washington is about hypocrisy, he told the audience. They have a plan for themselves, and another plan for the rest of us. ObamaCare and the health care waiver process is an example of this. Dozens of labor unions spent hundreds of millions to elect President Obama and to push his health care plan through, only later to receive an exemption from its provisions.

    Huelskamp said he had held done 58 town halls this year so far. One thing people ask him, he said, is if he’s living under the rules they set for everyone else. He also asks the question “Do you think the next generation of Americans will be better off than your generation?” The American Dream is in jeopardy, he said. We are sitting at the precipice of our nation’s history. “Are we going to go the direction of our Founders — freedom and liberty — or are we going to go the direction of slavery and socialism? That’s the choice we have today.”

    In Washington, Huelskamp said that Ben Bernanke, the Chairman of the Federal Reserve System, says we can “use the debt ceiling as a lever to change America.” Huelskamp said that despite the risk of being accused a contrarian, that’s exactly what we need to do. Calling the debt ceiling an “opportunity of a lifetime,” he said that we must keep on the pressure to extract spending cuts. The votes are very close, he said.

    Huelskamp said we must “act as if we have no time left.” We must face our debt crisis now. We can’t put off decisions. It is a spending problem, he said, a power problem. It is Washington telling us what to do with our own money.

  • 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.

  • Pompeo on energy tax simplification

    In an email alert sent to members, Americans for Prosperity–Kansas calls for support for a Kansas Congressman who is fighting for free markets in energy. AFP–Kansas State Director Derrick Sontag wrote: “U.S. Representative Mike Pompeo (R-Kan.) is getting attacked for standing up for the free market principles that Kansas voters sent him to Washington to defend. You may have seen that T. Boone Pickens is trying to use out-of-state pressure from Oklahoma to lean on Pompeo. Pickens wants Pompeo to end his opposition to Pickens’ effort to get special tax treatment for natural gas vehicles. But Pompeo has it exactly right; Washington shouldn’t be picking winners and losers in the energy industry.”

    The bill in question is H.R. 1380: New Alternative Transportation to Give Americans Solutions Act of 2011, or NAT GAS act. The bill provides a variety of subsidies, implemented through tax credits, to producers and users of natural gas. Last week the Wichita Eagle printed an op-ed from T. Boone Pickens which unsuccessfully attempted to make the case that these credits are not the same as subsidies.

    Pickens also criticized Pompeo for failure to come out against all subsides, a criticism which is false and uninformed. On May 12th Pompeo introduced H. Res. 267, which is subtitled “Expressing the sense of the House of Representatives that the United States should end all subsidies aimed at specific energy technologies or fuels.”

    The summary of the bill as provided by the Congressional Research Service is: “Declares that the House of Representatives should: (1) provide by refusing any legislative proposal that includes new energy subsidy programs of any kind; (2) prohibit the expansion or extension of existing energy subsidies; (3) eliminate existing energy subsidies; and (4) begin tax simplification and reform by eliminating energy tax credits and deductions and reducing income tax rates.”

    That sounds clear and unequivocal to me: refusing … new energy subsidy programs — prohibit the expansion or extension — eliminating existing energy subsidies — eliminating energy tax credits and deductions.

    (The full text of the Pompeo resolution is below.)

    In yesterday’s Wichita Eagle, oilman Wink Hartman, who ran against Pompeo in last year’s primary election, argued against removal of tax credits currently in place for oil companies: “First, removal of tax credits for energy companies will not only hurt the intended political scapegoats — large oil companies — but will also hit small energy companies, too, including the dozens of Kansas oil producers fighting hard to find much-needed additional oil reserves and compete with the larger oil companies for their survival.”

    But as argued recently in Forbes Magazine, these oil industry subsidies, like all subsidies, “make the economy less — not more — efficient.”

    Authors Jerry Taylor and Peter Van Doren also argue that “Many conservatives argue that the elimination of these energy tax provisions and others like them for other sectors are tax increases. They are correct in a narrow sense. But in a larger sense they are incorrect because the elimination of such tax provisions makes the tax code more neutral and a more neutral tax code is a more conservative tax code.”

    They also write that these tax favors “direct private investment to the favored businesses and away from the unfavored” and that “such favors are as much a part of big government as explicit appropriated spending. Tax breaks like this constitute big government on the sly.”

    To the extent that the oil business — and any other industry — has incorporated special tax treatment into their business plan, we can support a phase-out of all tax favors instead of overnight elimination. This will give the companies time to plan for the transition. But aside from this consideration, we must end all such preferential treatment if we are to have a truly sound and robust economy.

    Those wishing to express support for Pompeo can do so at AFP’s Action Center.

    The resolution by Mike Pompeo and co-sponsors Raúl Labrador and Tom McClintock:

    Expressing the sense of the House of Representatives that the United States should end all subsidies aimed at specific energy technologies or fuels.

    Whereas companies continue to innovate and adapt to a growing and volatile energy market;

    Whereas the primary role of the Government in the energy markets is to create an economic climate where companies can continue to innovate and compete, and thereby provide value and affordability to families and businesses;

    Whereas it is not the role of the Government to favor one fuel source or energy sector over another;

    Whereas taxpayers have subsidized the energy industry with grants, direct loans and loan guarantees, and tax credits aimed at specific industries for decades;

    Whereas deductions and cost-recovery mechanisms available to all energy sectors are different than credits, loans and grants, and are therefore not taxpayer subsidies;

    Whereas a deduction of costs and cost recovery with respect to timing is not a subsidy;

    Whereas the current system of energy subsidies is opaque and unduly complex;

    Whereas energy subsidies have consistently failed to bring down the price of gasoline for consumers, and electricity and natural gas for industrial users; and

    Whereas eliminating energy subsidies from the Internal Revenue Code of 1986 will allow us to lower the overall rate of corporate income tax without increasing deficits: Now, therefore, be it

    Resolved, That the House of Representatives should —

    (1) provide no new energy subsidies by refusing any legislative proposal that includes new energy subsidy programs of any kind;

    (2) prohibit the expansion or extension of existing energy subsidies;

    (3) eliminate existing energy subsidies; and

    (4) begin tax simplification and reform by eliminating energy tax credits and deductions and reducing income tax rates.

  • Social Security trust fund: a problem in disguise

    A situation that must be resolved soon first requires some understanding and an honest assessment of the facts: Social Security and its trust fund.

    Over the years, the Social Security Administration has collected more in payroll taxes than it has needed to spend on benefits. (Last year that wasn’t the case.) The surplus represents the trust fund.

    But there is disagreement as to the economic meaning of the trust fund. From a naive and uncritical accounting perspective, there seems to be no problem. SSA purchases a special series of bonds from the U.S. Treasury, and these bonds make up the investments of the trust fund. What could go wrong with holding government bonds?

    To answer that question, we have to look at what the government did with the proceeds of selling the bonds. The answer is that government spent the money. There are no bills in a vault. There are no bank deposits. There is only the promise of the U.S. Government to repay the bonds when the SSA needs them. A recent publication by Veronique de Rugy and Jason J. Fichtner of the Mercatus Center (Can We Trust the Social Security Trust Funds?) explains:

    However, the way the federal government accounts for the trust funds masks the true size of costs passing on to future generations. While bonds are real assets to the private market, future generations of taxpayers or borrowers will have to cover the future redemptions of bonds issued today because the federal government has used the money it has received from Social Security to pay for education, wars, and other items. In other words, the government has already spent the money it received in exchange for the IOUs. This is explained in the president’s 2011 federal budget: “The existence of large trust fund balances, therefore, does not, by itself, increase the government’s ability to pay benefits.” (emphasis added)

    But not everyone believes or understands the meaning of having spent the money in the trust fund. The SSA itself seems to, at least a little bit. A document titled Trust Fund FAQs produced by the SSA states: “As stated above, money flowing into the trust funds is invested in U.S. Government securities. Because the government spends this borrowed cash, some people see the current increase in the trust fund assets as an accumulation of securities that the government will be unable to make good on in the future.” So here we have the U.S. Government admitting that the money in the trust fund has been spent.

    So is this a problem? No, says the SSA as it continues: “Far from being ‘worthless IOUs,’ the investments held by the trust funds are backed by the full faith and credit of the U.S. Government.” What the SSA doesn’t tell us here — and it’s not really its job to do so — is that the way these investments will be repaid is by one of three means: more taxes, less spending, or more borrowing.

    It’s good to see the federal government at least starting to recognize the truth behind the trust fund, even if it can’t bring itself to recognize its implication. Most liberal — “progressive,” excuse me — organizations refuse to see the truth. An example is The Center for American Progress, which produced a 72-page report last December titled Building It Up, Not Tearing It Down: A Progressive Approach to Strengthening Social Security. The document mentions the trust fund many times and that the fund is invested in safe government bonds. Never does the report mention that these funds have already been spent on something other than Social Security benefits.

    I can understand how CAP doesn’t want to mention this. The funds have been spent — under both Republican and Democratic administrations — to support the government spending programs that CAP supports. The fact that the spent funds in the trust fund will have to be paid back, possibly through higher taxes? High taxes and progressive taxation don’t bother CAP — that’s its platform.

    Paul Krugman of the New York Times also doesn’t think the trust fund presents a problem: “The Social Security system won’t be in trouble: it will, in fact, still have a growing trust fund, because of the interest that the trust earns on its accumulated surplus. The only way Social Security gets in trouble is if Congress votes not to honor U.S. government bonds held by Social Security. That’s not going to happen.”

    And how does Congress honor the bonds? More taxes, less spending, or more borrowing. Or some combination.

    This is the future we face if we don’t recognize the problem and take steps to start reform now.

  • Less spending, not more taxes, is required to balance the budget

    Last week the Congressional Budget Office estimated that President Obama’s budget will cost more than first thought, leading to larger deficits than originally forecast. If we hadn’t received the news by now, we need to cut federal spending.

    In commentary made available through the Mercatus Center, Antony Davies notes that there are proposals to cut spending, but even proposals by Republicans aren’t enough: “The President initially offered to cut the budget by $6.5 billion, and Republicans responded by asking for 10 times that amount. The truth is, we need 100 times that amount before we come close to balancing the budget. On any given day, the government spends $6.5 billion before lunch.”

    The president estimates this year’s deficit at $1,645 billion. The deficit, of course, is not the total amount of federal spending. It’s the part of federal spending that isn’t being paid for by current year revenue.

    Spending needs to be cut, but the cuts don’t have to be overwhelming, as liberals contend they must. Jason J. Fichtner writes in The 1 Percent Solution that reducing real federal spending by one percent each year would balance the federal budget by 2016. This requires actual cuts in spending, not just cuts in budget requests.

    It seems inconceivable that we can’t cut spending by one percent each year. But if we could hold down the rate of spending growth to one or two percent per year, we could still balance the budget in less than ten years.

    Raising taxes won’t work

    There are many who call for raising taxes, especially on the rich, as a way to generate more revenue and balance the budget. But try as we might, raising tax rates won’t generate higher revenues (as a percentage of gross domestic product), due to Hauser’s law. W. Kurt Hauser explains in The Wall Street Journal: “Even amoebas learn by trial and error, but some economists and politicians do not. The Obama administration’s budget projections claim that raising taxes on the top 2% of taxpayers, those individuals earning more than $200,000 and couples earning $250,000 or more, will increase revenues to the U.S. Treasury. The empirical evidence suggests otherwise. None of the personal income tax or capital gains tax increases enacted in the post-World War II period has raised the projected tax revenues. Over the past six decades, tax revenues as a percentage of GDP have averaged just under 19% regardless of the top marginal personal income tax rate. The top marginal rate has been as high as 92% (1952-53) and as low as 28% (1988-90). This observation was first reported in an op-ed I wrote for this newspaper in March 1993. A wit later dubbed this ‘Hauser’s Law.’”

    People react to changes in tax law. As tax rates rise, people seek to reduce their taxable income, and make investments in unproductive tax shelters. There is less incentive to work and invest. These are some of the reasons why tax hikes usually don’t generate the promised revenue.

    The subtitle to Hauser’s article is “Tax revenues as a share of GDP have averaged just under 19%, whether tax rates are cut or raised. Better to cut rates and get 19% of a larger pie.”

    Hauser's LawHauser’s Law illustrated. No matter what the top marginal tax rate, taxes collected remain an almost constant percentage of GDP.

  • Kansas’ Huelskamp leads in the House

    By Russ Vought. From RedState.com.

    Yesterday, Heritage Action for America (my employer), Club for Growth, and Family Research Council released a joint statement announcing their opposition to the three-week continuing resolution on floor of the House of Representatives next week, and their decision to “key vote” the extension on their respective scorecards. In doing so, they joined Mark Levin, Erick Erickson, and others, who are calling for conservatives to step up and lead by blocking this legislation.

    Freshman Rep. Tim Huelskamp of Kansas just answered that call. In a bold statement late last night, Huelskamp announced his opposition to the short-term resolution:

    We were elected to make bold changes to federal spending and to reverse our unsustainable deficits. … By allowing President Obama and Senator Reid to stall a budget they should have completed 6 months ago, we are being distracted from even bigger tasks: tackling the $1.1 trillion deficit in the President’s reckless 2012 budget and negotiating real budget reform, such as a balanced budget amendment, within a debt ceiling debate.

    Additionally, this CR omits many of the priorities the American people demanded we pass in H.R. 1: stopping job-killing EPA regulations, defunding Obamacare, and denying taxpayer funding of Planned Parenthood and abortion. By allowing continued funding of these liberal priorities, we are ignoring the mandate of the American people.

    Quite frankly, this is a stunning display of leadership by any member, let alone a freshman. Declaring your opposition publicly this quickly both plants a flag and ensures that you have less of a chance of being picked off in the days ahead. It reminds me of when Pat Toomey got out early to rally his colleagues against the Medicare prescription drug bill, and when Mike Pence sent out an early release to do the same against TARP.

    This is how you lead in the House of Representatives, and Huelskamp deserves a ton of credit for showing how it’s done in his first few months. Let’s see who joins him.