Short Post on Public Sector Unions

In regards to my last post:  Lest we forget, public sector unions use taxpayer money to lobby the government for taxpayer money, and use taxpayer money to bargain contracts for more taxpayer money.  Limits on this by government are perfectly reasonable.

The Mandate of the 112th Congress

This week, a new Congress has been sworn in (well, mostly), with higher expectations by conservatives than any Congress in at least 2 years.  And the first week has been full of a couple of  good things, and a lot of good symbolism.  One of the first things to happen was a reading of the Constitution on the floor of the House.  One of the first bills that the House will pass is a repeal of Obamacare.  A new House rule will require every bill to refer to the part of the Constitution where they were authorized, and other House rules will open up debate on amendments and expand floor debate in general.  I support all of these things, but I don't care that much.  While they are either small positive steps or good symbolism, they don't mean that much. 

We have a $14 Trillion national debt, and a $1.3 Trillion national deficit.  Japan and China, our two major creditors, are fighting their own fiscal issues, and have been unwilling or unable to buy very many of our bonds.  The deficit has been financed by major US banks buying Treasury bonds, with money borrowed from the Fed at 0.25% interest rate, and the Quantitative Easing by the Fed itself.  Both of these are inflationary measures with slow effects, because the money goes to the Government first.  The debt and the deficit is doing major harm to the economy.  Republicans have promised to cut $100 Billion in discretionary spending. Let's say that they do, and that the economy really starts to pick up steam, and grows by 3% in 2010 (increases tax receipts by about $65 Billion).  And lets say that Obama has a rare fit of sanity and brings all the troops home from Iraq and Afghanistan (saves $100 Billion).  Even with all of that, and the wailing and gnashing of teeth from the media about lost medical science grants and bridges falling down and dumb children who can't learn without grants from the Department of Education, we'd still have $1 Trillion deficit.

And you can't solve the problem with taxes either.  It is unlikely that the new Congress will recommend any tax increases (even those that involve lower, simpler tax rates, like Reagan signed into law), but even if so, the historical revenue limit says that would be limited to about 19% of GDP, and they're about 17% of GDP now.  So the maximum increase in tax receipts would be about $300 Billion.  If they did all of that, plus the reductions in spending mentioned above, there's still a $700 Billion deficit, and it's getting worse with every retired baby boomer.  A country with a $14 Trillion debt and a $700 Billion deficit is in better shape than one with a $1.3 Trillion deficit, but it is still headed for default.

The new Republican-led house must pass major reforms to get the country's checkbook in order.  They must get Social Security and especially Medicare on the table.  They must start talking about things like Medicare vouchers, and admitting to baby boomers that they won't be able to give them what was promised.  This won't be easy, but with everyone from Ron Paul to Paul Ryan to Paul Volcker talking about the dire situation of the national debt (in Paul Krugman bizarroland, we need a bigger deficit and I don't know what RuPaul thinks), it is possible.  It will take compromise, but any compromise must still lead to financial solvency. 

To the 112th Congress, I must say that I like the talk so far, and I like the symbolism.  But if the American people wanted great talk and symbolism, we would have elected Glenn Beck and Lee Greenwood.  Let's see some results.

Pat Buchanan: Pitchfork Time

When one of the Pitchfork and Musket Junta's favorite public figures, Pat Buchanan, writes an article called Pitchfork Time, the Junta takes notice. This article is a good one. Here is an excerpt:

In his campaign and inaugural address, Barack Obama cast himself as a moderate man seeking common ground with conservatives. Yet, his budget calls for the radical restructuring of the U.S. economy, a sweeping redistribution of power and wealth to government and Democratic constituencies. It is a declaration of war on the Right. The real Obama has stood up, and lived up to his ranking as the most left-wing member of the United States Senate....
...Where the U.S. government usually consumes 21 percent of gross domestic product, this Obama budget spends 28 percent in 2009 and runs a deficit of $1.75 trillion, or 12.7 percent of GDP. That is four times the largest deficit of George W. Bush and twice as large a share of the economy as any deficit run since World War II. Add that 28 percent of GDP spent by the U.S. government to the 12 percent spent by states, counties and cities, and government will consume 40 percent of the economy in 2009.
We are not "headed down the road to socialism." We are there.

Buchanan concludes his article this way:

The president says he is gearing up for a fight on his budget.
Good. Let's give him one.

I'm with you, Pat. My pitchfork is ready.

Cow Fart Tax

The EPA wants to apply Title V regulations from the Clean Air Act to agriculture. According to the Florida Farm Bureau, who ran the numbers, the Environmental Protection Agency want to make all ranchers with more than 50 head of cattle, dairy farmers with more than 25 cows, and rice farmer with more than 35 acres (plus others) file a Title V emissions report for the methane their livestock or crops release. That's right, ranchers will have to report their cow farts to the government, and pay a tax based on them.

Most of the published outrage has been about taxes, which are significant, but as anyone who has worked in refineries or chemical plants will tell you, the taxes are a small part of the Title V problem. Title V permitting is a long and tedious process that requires submitting a permit proposal to the government, who then sends it back to the company with their suggestions, and the process repeats itself until they can come to an agreement. One facility where I worked had 5 people who worked full time on Title V permitting for several years. This process would bankrupt all but the large corporate ranchers and farmers. If it passes, it will put all of the remaining independent for-profit farmers and ranchers out of business. Only corporate agriculture and really small-scale agriculture by hobbyists will remain.

God save the American Farmer!

Socialism and the Very Wealthy

Shannon over at Chicago Boyz has a great post about how socialism benefits the very wealthy. It is based on a revealing article by the Tax Foundation about how the United States already has the most progressive income tax system among the wealthiest nations. And it goes back to a fundamental truth about socialism and it's sloppier brother Progressivism: While Marx's ideals were about worker empowerment, every time a nation becomes more socialist, the only ones who benefit are those in government and those who can influence government. It is a shame that when the Progressives claim to be fighting for the working poor and middle class, Conservatives never hit back with truth. When government grows its income, it has to spend the money somewhere. Only 60-70% of that money makes it back to the people in most governments, and 80% in the most efficient governments. The remaining 30-40% either stays in government or goes to the most favored outside of government, whether they be Wall Street bankers or Stuttgart military contractors with no-bid contracts. The same favored class lean on governments to regulate their competitors into a non-threatening position. Finally, when taxes are increased, they never destroy those producers already in power. They destroy those on the margin, which are small competitors and start-ups. Progressivism and increased central planning tends to create a small permanent upper class, and a large, poorer, more equal lower class. The only thing that allows greater class mobility is removed barriers to market entry (real deregulation), greater opportunity, and removed disincentives for investment.

The incomparable Barry Goldwater had this to say about progressive income taxes in his classic The Conscience of a Conservative: "What is a 'fair share?' I believe that the requirements of justice are perfectly clear: government has a right to claim an equal percentage of each man's wealth, and no more.... The graduated tax is a confiscatory tax. Its effect, and to a large extent it's aim is to bring down all men to a common level. Many of the leading proponents of the graduated tax frankly admit that their purpose is to redistribute the nation's wealth. Their aim is an egalitarian society -- an objective that does violence both to the charter of the Republic and the laws of Nature. We are all equal in the eyes of God, but we are equal in no other respect."