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GOP Favors Free Markets (Not)

April 27, 2011 in Oil, US Politics by DJ | No comments

Calwest photo (via Flickr)

When Speaker Boehner (R-OH) commented that it might be time to reconsider repealing the multi-billion-dollar tax breaks given to oil companies, President Obama quickly agreed.  But Boehner and his office responded with a series of anti free market comments that remind us that the GOP only favors free markets when they’re making money:

“You know, the No. 1 issue in my district and around the country is, ‘Where are the jobs?’ And I want to know what impact this is going to have on job creation here in America.”

Use government money to create jobs… which party is that again?

How would the repeals affect our economy, aside from helping to reduce the deficit by increasing tax revenue?  Gas prices would rise.  Sales of large automobiles and trucks would fall, while sales of small fuel-efficient cars would rise.  Mass transit systems would get approved and built, and those already existing would get more ridership.  Alternative energy would be competing with the actual cost of fossil fuels, not an artificially-low, subsidized price.  They would instantly become more cost-effective, and would require less (and in many instances no) subsidies to become economically viable.  Over time, the number of oil and gas jobs would decline, while the number of alternative energy jobs would increase.

It is also likely that as the price of oil rises, domestic production would be favored over imports.

Would higher gas prices hurt?  Of course!  But free markets are free markets – or else they aren’t.  The price of food is on track to double this year, yet no Republican I know of wants to use government money to stabilize food prices.

More to the point, much like the budget deficit, we’ve kept our economy afloat by keeping energy prices artificially low, stimulating consumption, and picking up the cost  on the national credit card.  No one wants to admit they’ve run out of money.  That requires admitting that there’s a problem, followed by painful restructuring.  It’s easier to live in denial and keep using the card!

Perhaps the most important effect of repealing oil subsidies would be to continue our nation’s recent moves toward an economy that is not based on spending more than we earn – at all levels from consumer to central government.  And for the health of our nation and our households, that would be a good thing.

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Sen. Hatch Trumpets Major Spending Cut

April 20, 2011 in US Politics by DJ | No comments

“Forcing Washington to live within its means like Utah families do every day won’t be easy, but cutting $5 billion in redundant federal programs is a no-brainer. We need to do even more to cut wasteful government programs, but this is a  good start.”

So says Sen. Orrin hatch (R-UT) in a press release.  By my math, that proposed $5 billion cut represents a massive 0.13% of the 2012 federal budget.  Bravo, Senator!

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Voting Dem or GOP is Supporting Terrorism

April 15, 2011 in US Politics by DJ | No comments

d.eris at Polizeros comments on an article in the Guardian, which concludes that our federal government is in collusion with both mega-banks and drug cartels.

The war on drugs supported by the Democratic and Republican parties sustains the international drug cartels.  These international drug gangs sustain the global banking system.  The global banking cartels, in turn, support the Democratic and Republican parties with massive amounts of campaign contributions.  It’s a pretty tidy system the Republicans and Democrats have created for themselves.

Given the facts as we know them, it’s hard to argue otherwise.

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The Budget Cut That Wasn’t

April 14, 2011 in US Politics by DJ | 1 comment

While both parties posture publicly on a compromise federal budget that trims $38 billion in spending, consider this point made by the venerable New York Times:

According to a Congressional Budget Office comparison, the bill would produce only $350 million in tangible savings this year, in part because cuts in domestic programs were offset by an increase of about $5 billion for Pentagon programs. When projected emergency contingency spending overseas is figured in by the budget office, estimated outlays for this year will actually increase by more than $3 billion.

Congratulations to our fearless leaders for trumpeting a decrease that is actually an increase!

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The Budget Train Wreck

April 13, 2011 in capitalism, Economics, US Politics by DJ | No comments

Celeste Hutchins photo.

You can download the gory details of the 2012 federal budget here in all its $3.7 trillion glory.  Projected revenues?  $2.6 trillion, for a deficit of $1.1 trillion.  Yes, 42% of expenditures are unfunded.  And if you look closely, personal income taxes are projected to rise 20% over 2011 levels, a neat trick without raising tax rates.  I suspect that they’re counting on a Hail Mary economic recovery that isn’t likely to happen.

Elsewhere, CNN reported yesterday that the fine print of Rep. Paul Ryan’s Medicare proposal makes permanent the Bush tax cuts for the super wealthy. Meanwhile, the Hatch-Cornyn balanced budget amendment being proposed would require a supermajority to raise any taxes, yet require the budget to be balanced.  The jist of the GOP agenda is to balance the budget without raising taxes – and without trimming defense.

What would that look like?  In 2011 we have $2.1 trillion in income. If you cut everything but security-related expenses (defense, law enforcement, and veterans benefits), basic infrastructure maintenance, mandatory liabilities, general government (i.e. congressional salaries), Social Security, the Postal Service, and interest on the national debt, that’s $1.9 trillion in outlays. That’s pretty much what can’t be cut.  I’ve left in Social Security because it currently contributes $221 billion more than it costs; cut it and we’re in even worse shape.  But if Medicare goes, we have to cut $209 billion in Medicare taxes.  Unless of course we’re going to pay taxes for a program that no longer exists, which seems unlikely.  That would drop revenue to $1.9 trillion, the same amount as the bare-bones budget items listed above.

Everything else gets cut. Everything.  That includes:

  • Non-military foreign aid, from food to business development to disaster relief
  • Departments of Agriculture, Commerce, Education, Energy, Health, HUD, Interior, Labor, and Transportation
  • Medicare & Medicaid
  • Environmental Protection Agency
  • Food and Drug Administration
  • Federal Housing Authority
  • Fannie Mae and Freddie Mac
  • Library of Congress
  • NASA
  • Small Business Administration
  • The Smithsonian
  • Welfare

No student loans, school lunches, farm subsidies, NPR, public school support, new highways, disaster relief, FDIC, small business loans, nuclear power plants, national parks, unemployment insurance, farm loans, food safety enforcement, pharmaceutical regulation, pollution controls, automobile safety, meat inspections, energy research — nothing but the bare minimum.

That’s what our current level of taxation funds: security and mandatory obligations.   And while I would quibble with the necessity of many of the things the federal government spends money on, I really don’t understand this minimalist vision of the federal government. Taxes stay the same, and the benefit we get from it is… what exactly?

Let’s be clear: no one wants to pay more taxes.  But we can’t borrow or cut our way out of this mess, unless we’re willing to return to a society without safety nets or consumer protection, and without a leg up for those who need it. This approach says those with money get to make more money, while politely screwing those who don’t.

That isn’t libertarianism, or even anarchy – it’s feudalism.  Welcome to the new Dark Ages.

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Economists: Shutdown Would Prolong Recession

April 8, 2011 in US Politics by DJ | No comments

AP quotes a number of economists who believe that a government shutdown could prolong the recession.  With concerns about inflation and disruptions in the oil supply, forecasters are already dropping expectations.  Says an economist from Moody’s:

“”I think the economic damage from a government shutdown would mount very quickly.”

Generally one can tell why something is happening by who benefits.  But it’s difficult to see that anyone benefits from a shutdown… which suggests that it may be averted by a last minute deal.  Commentator Jaimie Dupree cites rumors to the effect that a deal has been settled for days, though even he has doubts.  If so, we’re being treated to a show that has no basis in reality.

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Furlough Facts

April 8, 2011 in US Politics by DJ | No comments

If a budget agreement is not reached in time to avoid it, a government shutdown will idle many federal workers at midnight tonight.  Here are some interesting facts about the impending shutdown:

  • Roughly 800,000 federal workers would be furloughed, or about 18% of the federal workforce.
  • Some 82% of the federal workforce would continue to work, though no paychecks will be issued until the shutdown is over.
  • In 1995, furloughed employees spent 27 days out of work – and were later paid for that time, making the furlough essentially a paid vacation.  But the decision on whether to pay employees for furlough days is up to Congress– it’s not guaranteed.
  • It’s not guaranteed that those workers who aren’t furloughed would be paid for their work, either.  Obama says yes, but it’s Congress that has to appropriate the funds.
  • One union of federal workers has filed suit, claiming that it is a violation of the Constitution to force federal employees to work without a guarantee of pay.
  • Federal employees idled by the furlough can collect unemployment if the shutdown lasts for more than a few days.
  • A shutdown would also mean that federal funds would stop flowing into state treasuries, in effect stopping some federally-funded programs.

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It’s Only Right When We Do It

April 8, 2011 in Economics, US Politics by DJ | No comments

From the CreativeAid blog.

So-called Obama-Care resurrected a 1993 GOP proposal to expand private health care coverage, cut back medicare, and use taxpayer dollars to fund private insurance for low income Americans.  Strangely, Republicans who supported the idea in 1993 opposed it in 2010.   And Democrats who hated the idea in 1993 loved it in 2010.

Now things get even stranger: the GOP is proposing a plan that would cut back Medicare, expand private insurance, and pay for it with tax dollars.  Democrats, predictably, are squealing.  Both sides seem to agree that it’s a bad idea except when you’re the one proposing it.

(By the way, did you notice how according to Ryan, the solution for “the safety net for the poor [...] coming apart at the seams” is to cut the safety net?  How “common sense reforms” are needed, meaning cutting costs, to “prevent reduction in benefits” from social security?  Welcome to the new doublespeak.  I’m not insensitive to the need to balance the budget, but let’s tell the truth: cutting spending means less benefits.)

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Enemy of the State

April 1, 2011 in Tax Issues, US Politics by DJ | 4 comments

United States of Corporate America

I’ve been preparing tax returns for over 20 years.  Throughout that time I have been of the opinion that taxes are a dislikable but necessary burden of a civilized society.  It is our right to take every deduction available so that we do not overpay, but at the same time we must pay what is due.  Render unto Caesar, as it were.

I find myself changing that view.  When huge and profitable companies pay no federal income tax, why should a struggling small business?  When the tax law has been gamed to favor the wealthy such that a taxpayer with $250,000 in income may pay less tax than a taxpayer earning 1/3 of that, why should the latter taxpayer comply?  When the current President and his predecessor have presided over a massive transfer of wealth from individual and government hands into corporate hands, why should Americans give the government more money to be transferred?

I conclude that the taxpayer should not.

If one cannot morally participate in a legally required system, what are the alternatives?  Civil disobedience is one that suggests itself.  In civil disobedience, one publicly refuses to obey the law, and accepts the consequences of that action.  This was the strategy adopted by Dr. Martin Luther King, by Gandhi, and even by many of the early Christians.  It is a moral and patriotic approach, celebrating the right to protest and to determine one’s own destiny.

There is some question, however, about whether this is a valid strategy in all situations, or only when dealing with a moral adversary – and whether the Federal government could possibly be considered a moral adversary.  And, secondary from a moral perspective but more important from a practical perspective, can a person risk themselves in such a way when they have an obligation to support their family?

The alternative would seem to be failing to pay taxes in an act of secrecy – relying on dishonesty and deception.  True, our government has stooped to this level.  But if I adopt their tactics believing that such tactics are abhorrent, am I not at least as evil?

Deception is, from a moral standpoint, an act of violence.  An act of violence against the State is seditious.  Whatever reason I give, if I cheat on my taxes, that makes me an enemy of the state.  At what point is such a course of action justified?

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Utah Closer to Immigration Compromise

March 10, 2011 in US Politics by DJ | No comments

Deseret News reports that a compromise bill on immigration reform will advance to the floor of the House.  The bill includes enforcement, demanded by conservative politicians, coupled with a guest worker program.   DN quotes Senate Majority Whip Wayne Niederhauser:

“If we can’t compromise on some things here, it will be the status quo.  And the status quo doesn’t work.”

There are just two problems with the bill: it will require a federal waiver to be legal, and it is probably unconstitutional.

The bill reflects the dueling influence of Utah’s political conservatism in the one hand, and strong religious influence that demands welcoming and generosity on the other.  Both see themselves as representing GOP values, but the manifestations on an issue like this are quite opposite.

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