Does the U.S. Government Need More Taxes?

To hear Hillary Clinton and Barrack Obama speak, you would think that the Federal Government is in Dire Straights. “The Rich need to pay their fair share” and “we need to invest Oil Profits”. Last year the federal government spent almost 2.8 Trillion Dollars. That figure is a just over a 13 fold increase since 1970. What you don’t hear, is that the government has also had an almost 13 fold increase in recipients as well. Think about this for a moment, in that same time span, the median household income in the U.S. has grown at only half that rate, and while the deficit has definitely gone up, to the tune over 300 Billion a year, it’s still relatively small compared to total inflows.

The reason the Government has been able to get away with this is simple, they utilize politics of class warfare and envy. While the bottom 50% of income earners share of taxes has gone down to a historic low of less than 4% of all personal taxes collected, the wealthy in this country, or at least those in the top 50% of income earners are paying over 96% of all personal income taxes collected, with the top 1% of income earners paying almost 40% of all personal income taxes collected. To top it off, Corporate taxes in the U.S. are at an all time high of 35 to 39%, the 3rd highest in the industrialized world. Only Japan and Germany are higher, and both of those companies have record numbers of factories moving overseas, so the next time people talk about NAFTA and China taking away jobs, we here in the U.S. make it very difficult for companies to make money, and then once they do make money, they have to hand over a third of it to the government. They then wonder why the companies want to move offshore? Most other countries throughout the world tax their corporations at anywhere from 12 to 25%! Ever since Ireland had adopted a low corporate tax of just 12.5%, it has seen an economic boom that has powered it's economy twice as fast as other European nations. Obviously, going the route that Clinton and Obama are espousing would cause more companies to take Intel and Dell's lead and move more operations to Ireland and other low corporate tax nations.

The chart below shows the overall budget between 1970 to 2007, 75&76 are a bit skewed because of accounting changes, but has you can clearly see the amount of cash being collected by the government is at an all time high. According to Pig Book, 17.2 Billion of the deficit spending, was attributed to Pork Barrel spending alone, both the Senate and theHouse are guilty of indulging their constituents.

On Nov. 7^th, 2006 voters across the country signaled their disgust for the system and the status quo with a mandate for the Democrats to clean house. Unfortunately, it doesn’t seem that they’re listening. Spending between 2006 and 2007 is up by a 4%, adjusted to inflation a 1% increase, but no cuts. Considering the fact that the deficit is only 13% of the budget, a simply slowing spending to say, half of inflation coupled with eliminating Pork Barrel spending would have brought the deficit down by 8%, a few years like that and the entire deficit could be wiped out, without too much pain. The worst part is that we blew a golden opportunity between 2004 and 2007, while the economy was booming, receipts increased by an average of 11% a year, this would have been a perfect opportunity to balance the budget, but instead, spending each year, exceeded receipts. Bush, once again offered more of the same, instead of leadership on this issue, when he issues his proposed budget of 3.1 Trillion Dollars, that had 2.9 Trillion in spending.

Congress Needs To Show Us They Care

By congress' own actions, I would say that they agree with the findings of the Economic Policy Institute, in their assessment is that "Higher gas prices .. incentivize conserving". In other words, they seem to believe that higher Gas prices are "good" for the country, because the force people to conserve and use less gas. The sad part is that by my conversations with people in Coffee shops and people I meet in stores, many American's, or at least Rich American's (I live in one of the wealthiest areas in the country), feel the same way. The biggest problem with this line of thinking is that, as the Economic Policy Institute so astutely observed, it affects the bottom half of income earners the hardest; not to mention the devastating effects these policies have on the world's poor. Gas and corn prices have gone up at least 50% and 100% respectively, since Congress was taken over by the Democrats almost 2 years ago. In other words, we're building this brave new "Green World", on the backs of the ones who can afford it the least. Everyone talks about about oil as if it's passe technology, like we don't need it anymore. We should just move on. NewsFlash! The world still runs on oil, and we still don't have any alternative that is as economically viable as oil.
This morning President Bush expounded on Congress to do something to increase domestic drilling to help the economy. His comments were dismissed mostly because Congress, despite the high prices, seems to feel that we need to focus more on Green Fuels. Unfortunately, they know that Green Fuels can't compete with cheap gas and so they are reluctant to act, even if it's what the American People want. Popular Mechanics did a great story last year, where they show that Green Fuels have a long way to go be competitive with Gas, this is still true even with the recent run up in prices, especially corn based ethanol, which is about 50% higher than last year, due to increases in oil and corn.
On January 28th 1981, Reagan, faced with gas at 3X what it was when Carter stepped into office, decided that the government tried and failed in their attempts at regulating the Oil and Gas business. He decided to let the free markets dictate the price. In the book Envy of the World: A History of the US Economy and Big Business by Timothy, J. Botti, on page 392, the author talks about how, "Reagan dropped all price controls on the industry for the first time since 1971. In addition, he cut Carter's windfall profits tax of 30% on new oil exploration in half". Later, in 1988, after the ensuing Oil Glut, Reagan was able to eliminate the tax entirely, since the Oil industry was just barely making a profit. The U.S. consumer benefited with lower gas prices for the next 20 years! This my friends is what is called Leadership, something sorely needed by our so called leaders today. The reason it worked was simple, unshackled by excessive taxation and regulation, the industry found so much oil, that our reserves during the 80's increased by over 29%. To top it off, in order to compete with the U.S. massive oil output, OPEC, ended up cutting prices to the point to where Oil was as low as $8.00 a barrel!
Instead of following the example of what worked, set by Reagan, here's what congress is doing:

1. Subsidizing millionaire farmers.
2. Restricting Oil Exploration and production.
3. Ignoring Maryland's call to restart the 'Synthetic Fuels Corporation'.
4. Focusing on Corn based Ethanol, which only benefits Agribusiness.

How did we get here? After the Oil collapse of 1985, Oil companies started to consolidate the industry through mergers and acquisitions to become more profitable, and in many cases to stem huge losses. At the same time, OPEC seeing a threat from a more energy independent U.S. Started cutting prices to the point to where it costs less for us to buy our oil, than to go out, try to find it, extract it and so forth. The U.S. not only had excess capacity of Oil, we had a HUGE excess gas capacity as well. If gas prices had stayed high, they could still make money, but by the end of 1985, gas prices bottomed out at about .89 cents a gallon, too low for them to make any money. Through merger's acquisitions (and explosions) we cut the number of gas refineries down do about half today of what we had during the Reagan years, but unfortunately, congress used the Exxon Valdez spill as an excuse to once again, shower the industry with regulations, most of which had nothing to do with Shipping, and environmental spills, and more to do with protecting the industry from newcomers getting into the business. This had the effect of allowing the industry to continue to consolidate, and cut costs, while at the same time preventing any newcomers installing new refineries or oil drilling to compete with the existing business. In other industries, such as Airlines, smaller carriers like Spirit or Jet Blue enter the market to provide low cost choices, where Mergers caused those low cost choices to disappear, not so in the Oil industry. The past few years has seen the merger of Exxon and Mobile, Chevron and Texaco, British Petroleum and Amoco. Where are the new startups to challenge these guys?

Of course, the other White Elephant in the room is Global Warming. Too many of congress' decisions are based upon the whole "Carbon Footprint" theory, that somehow we are causing Global Warming. Before you dismiss me outright, let's keep in mind that the Southern Hemisphere has been cooling about as much as the northern hemisphere has been warming over the last decade or so. Also, 3 of the 5 or 6 hottest days on record since 1890, happened over 70 years ago. There's absolutely no proof that we are outside of normal variations. In addition, the tales of the oceans rising, it turns out were falsified. Even a British judge has said that Gore's movie, needed to be shown with Guidance notes to point out the "Political Indoctrination" and "Factual Errors".

But here we are betting our entire future that this is all correct, when in reality it's nothing more than the latest political fad du jour. A hundred years from now, when the next Glaciation Cycle starts, historians will be saying, "What the hell were those people thinking? Didn't they have the technology to study history back then?" I'll get into that in another post.
Back to the subject at hand, if congress really cares about us, here's what they need to do to lower prices on Gas.

1. Realizing the Industry is cleaner than it's ever been, streamline the EPA process required to get a new site up and running.
2. Reform the EPA to actually allow more Gasoline Refineries to be built in the U.S. (without it costing Billions to do)
3. Restart the Synthetic Fuels Corporation.
4. Offer tax breaks to companies to switch Power Generation from Oil to Coal.
5. Mandate higher fuel efficiency for vehicles.
6. Mandate all new homes be built with Solar Hot Water Heaters at the bare minimum.
7. Mandate higher energy efficiency in Homes and appliances.
8. Mandate to all electric utilities that they MUST buy any available electricity at the same cost, that it costs them to generate that electricity (this way if someone builds a Garbage powered generator, he can sell the electricity back to the utility.

If these policies are announced on the SAME DAY that they announce a stop in Emergency Reserve purchases until the end of the summer driving season, AND a stop to interest rate cuts, believe it would be enough to burst the current Oil bubble that is powering oil up even higher every day.

So there you have it congress, now show us you care!

Recap of references used in this Story on Diigo.

The Democrats Have a Nominee: It's Clinton!

WSJ Reported... "The Democrats Have a Nominee: It's Obama! Other than ensuring the Greatest Show on Earth will continue, does it matter that Hillary Clinton defeated Barack Obama Tuesday in Pennsylvania by nine-plus points? Barack Obama is the nominee."

This reporting though, fails to take certain things into account. The first is the entire reason why the 'Super Delegates' were created in the first place. It wasn't to mirror what the party wanted, it was created for exactly the reasons that the WSJ stated about the Democrat Party Primary Process, "No centrist can secure the party's nomination in a primary system dominated by left-liberal activists". Which is fine, if left leaning leberals are electable, but as the past has shown us, they are not. Obama, is nothing more than a modern day McGovern, completely unelectable, or did the newspaper not get the news? They wrote in this same article that McGovern (1972), Mondale ('84), Dukakis ('88), Gore ('00) and Kerry ('04), were exactly the types of far leaning left liberals that Middle America won't vote for. Obama is no different.
North Carolina is a perfect example of the massive problems the Democrats have if they side with Obama, According to Rasmussen, even though as of April 5th, Obama leads Clinton by 20 points, over half of Clinton Supporters say they won't vote for Obama against McCain, if he wins the nomination. North Carolina is just one of the 30 States that went with Bush in the 2000 General election against Gore, and they're also one of the 31 States that went with Bush in the 2004 General Election vs Kerry. The WSJ fails to see that in addition to having a huge block of voters that won't vote for Obama in the general election, Clinton has also won the states with the Most Electoral College votes. Ultimately most Obama voters would vote for Clinton in the General Election, which makes her the more electable of the two candidates. Also, Obama voters tend to be younger and less likely to vote than the Older voters that Clinton has.
One last thing that the WSJ fails to see is that both Florida and Michigan's vote WILL count in the general election, and if the Democrat Party fails to take them into account, they will lose the general election.
If the Super Delegates don't see this or won't act on it, then why have the Super Delegate system in the first place? They might as well adopt the same system the Republicans have and avoid all these headaches in the future.

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Bush Answers - How Presidential Candidates Would Handle a Zombie Threat

I found this story about how the Candidates would handle the issue of Zombie's but, Apparently, only Bush has answered this question so far. Bush again shows leadership in an issue where there are few leaders to be found.

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(Just a bit of a comedy break guys, don't take it too seriously)