The Pepsi plant in Baltimore will no longer make soda, and the company plans to lay off 77 people as officials have decided to stop manufacturing operations — a decision they blame in part on a controversial new beverage tax in the city.
The last cans and 2-liter bottles of Pepsi-Cola, Diet Pepsi, Mountain Dew and other sodas ran through the production line Monday morning. Executives at Pepsi Beverages Co. told workers in meetings later in the day that production would be halted for good. Pepsi officials said they would work out details regarding the layoffs, including potential severance, with the local Teamsters union.
Kristine Hinck, a company spokeswoman, said, “Given the climate, making a beverage in a city where there is a beverage tax certainly doesn’t help.” – Ya think?
You would have thought that Maryland would have learned its lesson after the state lost massive revenue after it imposed its now infamous “millionaire’s tax”.
1 – Who is a big investor in Brazilian oil? George Soros, who is likely the single largest contributor to far left causes.
2 – Like many leftist academics Obama believes that America’s wealth needs to be redistributed around the world. So as long as we buy foreign energy that is our money leaving the country.
3 – Energy companies usually tend to favor Republicans when it comes to donations. An exception to that is British Petroleum which is 45% the former Amoco.
Energy Policy: While leaving U.S. oil and jobs in the ground, our itinerant president tells a South American neighbor that we’ll help it develop its offshore resources so we can one day import its oil. WHAT?!?
With Japan staggered by a natural disaster and a nuclear crisis, cruise missiles launched against Libya in our third Middle East conflict and a majority of U.S. senators complaining about a lack of leadership on the budget, President Obama decided it would be a good time to schmooze with Brazilians.
His “What, me worry?” presidency has given both Americans and our allies plenty to worry about. But in the process of making nice with Brazil, Obama made a mind-boggling announcement that should make even his most loyal supporter cringe:
We will help Brazil develop its offshore oil so we can one day import it.
We have noted this double standard before, particularly when — at a time when the president was railing against tax incentives for U.S. oil companies — we supported the U.S. Export-Import Bank’s plan to lend $2 billion to Brazil’s state-run Petrobras with the promise of more to follow.
Now, with a seven-year offshore drilling ban in effect off of both coasts, on Alaska’s continental shelf and in much of the Gulf of Mexico — and a de facto moratorium covering the rest — Obama tells the Brazilians:
“We want to help you with the technology and support to develop these oil reserves safely. And when you’re ready to start selling, we want to be one of your best customers.”
Obama wants to develop Brazilian offshore oil to help the Brazilian economy create jobs for Brazilian workers while Americans are left unemployed in the face of skyrocketing energy prices by an administration that despises fossil fuels as a threat to the environment and wants to increase our dependency on foreign oil.
Obama said he chose Brazil to kick off his first-ever visit to South America in recognition of that country’s ascendancy. He has also highlighted one of the reasons for America’s decline — an energy policy that through the creation of an artificial shortage of fossil fuels makes prices “necessarily skyrocket” to foster his green energy agenda.
In an op-ed in USA Today explaining his trip, Obama opined: “Brazil holds recently discovered oil reserves that could be far larger than ours. And as we seek to increase secure-energy supplies, we look forward to developing a strategic energy partnership.”
Solar and Wind are very expensive, harder to transmit, and inconsistent. Solar is so expensive that solar panels plants in the United States are closing and the work is going to China. China builds a coal plant every week.
All of this money going to these subsidies cannot be used for other things. Mandates on electric companies to get more energy from wind and solar are next to impossible to meet so those companies are fined, which forces energy companies to pass those fines to their customers, which helps to send more jobs overseas.
Reason TV asks, if all of these green energy mandates are going to make all of these 21st century jobs, how come in California that has totally backfired. The reasons above explain why and they are reasons that are explained in any first year macroeconomics class.
If you want to see lower energy costs and business to start coming back home there is only one solution. Throw out Democrats en mass. We have trillions in natural gas, oil and other resources that are off limits that we could use to help pay off the national debt and rebuild the economy. We also need a government that costs less than $2 trillion a year instead of the nearly $4 trillion it costs now.
The Obama administration is poised to ban offshore oil drilling on the outer continental shelf until 2012 or beyond. Meanwhile, Russia is making a bold strategic leap to begin drilling for oil in the Gulf of Mexico. While the United States attempts to shift gears to alternative fuels to battle the purported evils of carbon emissions, Russia will erect oil derricks off the Cuban coast.
Offshore oil production makes economic sense. It creates jobs and helps fulfill America’s vast energy needs. It contributes to the gross domestic product and does not increase the trade deficit. Higher oil supply helps keep a lid on rising prices, and greater American production gives the United States more influence over the global market.
Drilling is also wildly popular with the public. A Pew Research Center poll from February showed 63 percent support for offshore drilling for oil and natural gas. Americans understand the fundamental points: The oil is there, and we need it. If we don’t drill it out, we have to buy it from other countries. Last year, the U.S. government even helped Brazil underwrite offshore drilling in the Tupi oil field near Rio de Janeiro. The current price of oil makes drilling economically feasible, so why not let the private sector go ahead and get our oil?
The Obama administration, however, views energy policy through green eyeshades. Every aspect of its approach to energy is subordinated to radical environmental concerns. This unprecedented lack of balance is placing offshore oil resources off-limits. The O Force would prefer the country shift its energy production to alternative sources, such as nuclear, solar and wind power. In theory, there’s nothing wrong with that, in the long run, assuming technology can catch up to demand. But we have not yet reached the green utopia, we won’t get there anytime soon, and America needs more oil now.
You need to watch only a few minutes of cable news analysis to realize just how ludicrous our national energy policies have become. As escalating tensions and chaos unfold in Egypt, Libya and other Middle Eastern nations, one energy analyst suggested that if Libyan oil supplies were to fail, the United States would rely on Saudi Arabia for its oil needs. If that statement alone doesn’t put U.S. leaders on red alert, the looming national energy crisis may soon become reality.
The Obama administration is repeating the mistakes of President Jimmy Carter’s failed energy policies, which marred his term and stigmatized the 1970s. They are leading us straight into another national energy disaster.
Key members of the Obama administration believe this friction abroad underscores the need to move away from oil and gas entirely and shift to boutique forms of alternative energy. Their lack of political will to drill for oil and gas compromises our national security and jeopardizes economic recovery.
It skirts the colossal elephant in the room: Oil and natural gas produced here in the United States are likely to still account for at least 57 percent of domestic energy consumption by 2035. Not to mention that energy production here can relieve the U.S. from the dangerous grip of foreign petro dictators.
Unfortunately, this administration’s Department of the Interior, with the most anti-oil-and-gas record in U.S. history, is sabotaging any real chance of avoiding the pending energy crisis because of its continued hold on deepwater drilling permits in the Gulf of Mexico.
When Interior Secretary Ken Salazar heads before the Senate Energy and Natural Resources Committee on Wednesday, Americans — particularly the 9.2 million directly or indirectly working in the oil and gas industry — would be ill served if the question isn’t asked: Are the thousands, and counting, of out-of-work Americans in the Gulf region and beyond a worthwhile consequence of your department’s freeze?
Trump is right about the message Obama sends with his hubris and indifference. Trump is also correct about the overseas oil cartel. Who will get his endorsement?
Democrats called 1.5% cuts “draconian” and that is after tripling deficit spending in 2008 over 2007 levels. The yearly deficit in 2010 level was over and 6.5 times the 2007 level.
The United States is on a fiscal path towards insolvency and policymakers are at a “tipping point,” a Federal Reserve official said on Tuesday.
“If we continue down on the path on which the fiscal authorities put us, we will become insolvent, the question is when,” Dallas Federal Reserve Bank President Richard Fisher said in a question and answer session after delivering a speech at the University of Frankfurt. “The short-term negotiations are very important, I look at this as a tipping point.”
Ferguson: Chinese economic growth has been almost 10% but more importantly China’s consumer growth has been even higher.
[Editor’s Note – America’s “recovery” if that is what you want to call it is not consumer friendly, it is not investor friendly, it is not production friendly which means it is just not business friendly unless of course that business is well-connected to government, but even that is not a guarantee when one looks at Solyndra and these other “green jobs” boondoggles that have proved to be a colossal waste of money with the only people who benefitted were those who were politically connected who paid themselves ridiculously.
China and even Canada’s recovery has been more consumer and risk taker friendly. China has no capital gains tax and they are still bringing in revenue in a big way which is another indicator of the utter brokenness of our gargantuan tax code.
I disagree with Ferguson that we need to weaken our dollar even further, quite frankly enough is enough. We have weakened it plenty and we have not seen the desired/theoretical increase in manufacturing exports. Why? Confidence in America, its leadership, and as a place to do business cannot recover while we are trashing the dollar. Of course this interview was done in June 2010 so perhaps Ferguson has moderated his view on this by now. There are other reasons the consumer and the risk taker have lost confidence besides the deliberate trashing of the dollar, but it is a significant reason nonetheless.
Ferguson correctly states that what is bigger than our current economic problem is the lack of those in power to deal with our unsustainable fiscal path. The Paul Krugman/leftist idea of trillion dollar deficits for the next 70 years is ridiculous because those who by our bonds will just stop loaning us the money. The TEA Party zeal to tackle this problem combined with the genius of those like Paul Ryan/Mitch Daniels/Herman Cain etc may yet save America.]
Pardon the dopey 15 second introduction before the substance of the video begins (we didn’t edit this piece), but watch this video.
The Chinese have noticed what the rest of the worlds investors pretend not to see: The United States is on a completely unsustainable fiscal course with no apparent political means of self correction…
Have you ever heard one of those sports guys on the radio who can tell you the stats of every football and baseball game since 1940 right off the top of their head? Prof. Niall Ferguson is like that, but with history and the history of economics. Prof Niall Ferguson is accepted by many academics as the most brilliant historian alive and judging by all I have seen in recent years I have only seen one man in my lifetime who is in the same ballpark as far as ability in this area is concerned. Take a look at his bio HERE.
Ferguson said in another interview that only one time in history has a major power emerged from this kind of debt and survived and that was England after the wars of the 1800’s. It doesn’t look good unless we change course now.
The volume is low on some of the videos so you may have to adjust your speaker volume.
[Sarah Palin from April 2011. Those who say that Sarah is dumb or parrot other such elite media smears just didn’t do their homework – Editor]
It’s unbelievable (literally) the rhetoric coming from President Obama today. This is coming from he who is manipulating the U.S. energy supply. President Obama is once again giving lip service to a “new energy proposal”; but let’s remember the last time he trotted out a “new energy proposal” – nearly a year ago to the day. The main difference is today we have $4 a gallon gas in some places in the country. This is no accident. This administration is not a passive observer to the trends that have inflated oil prices to dangerous levels. His war on domestic oil and gas exploration and production has caused us pain at the pump, endangered our already sluggish economic recovery, and threatened our national security. Through a process of what candidate Obama once called “gradual adjustment,” American consumers have seen prices at the pump rise 67 percent since he took office. Meanwhile, the vast undeveloped reserves that could help to keep prices at the pump affordable remain locked up because of President Obama’s deliberate unwillingness to drill here and drill now. We’re subsidizing offshore drilling in Brazil and purchasing energy from them, instead of drilling ourselves and keeping those dollars circulating in our own economy to generate jobs here. The President said today, “There are no quick fixes.” He’s been in office for nearly three years now, and he’s about to launch his $1 billion re-election campaign. When can we expect any “fixes” from him? How high does the price of energy have to go?
Many Americans fear that President Obama’s new energy proposal is once again “all talk and no real action,” this time in an effort to shore up fading support for the Democrats’ job-killing cap-and-trade (a.k.a. cap-and-tax) proposals. Behind the rhetoric lie new drilling bans and leasing delays; soon to follow are burdensome new environmental regulations. Instead of “drill, baby, drill,” the more you look into this the more you realize it’s “stall, baby, stall.”
Today the president said he’ll “consider potential areas for development in the mid and south Atlantic and the Gulf of Mexico, while studying and protecting sensitive areas in the Arctic.” As the former governor of one of America’s largest energy-producing states, a state oil and gas commissioner, and chair of the nation’s Interstate Oil and Gas Conservation Commission, I’ve seen plenty of such studies. What we need is action — action that results in the job growth and revenue that a robust drilling policy could provide. And let’s not forget that while Interior Department bureaucrats continue to hold up actual offshore drilling from taking place, Russia is moving full steam ahead on Arctic drilling, and China, Russia, and Venezuela are buying leases off the coast of Cuba.
As an Alaskan, I’m especially disheartened by the new ban on drilling in parts of the 49th state and the cancellation of lease sales in the Chukchi and Beaufort seas. These areas contain rich oil and gas reserves whose development is key to our country’s energy security. As I told Secretary Salazar last April, “Arctic exploration and development is a slow, demanding process. Delays or major restrictions in accessing these resources for environmentally responsible development are not in the national interest or the interests of the State of Alaska.”
Since I wrote the above, we have even more evidence of the President’s anti-drilling agenda. We have the moratorium in the Gulf of Mexico as well as the de-facto moratorium in the Arctic. We have his 2012 budget that proposes to eliminate several vital oil and natural gas production tax incentives. We have his anti-drilling regulatory policies that have stymied responsible development. And the list goes on. The President says that we can’t “drill” our way out of the problem. But we can’t drive our cars on solar shingles either. We have to live in the real world where we must continue to develop the conventional resources that we actually use right now to fuel our economy as we continue to look for a renewable source of energy. If we are looking for an affordable, environmentally friendly, and abundant domestic source of energy, why not turn to our own domestic supply of natural gas? Whether we use it to power natural-gas cars or to run natural-gas power plants that charge electric cars, natural gas is an ideal “bridge fuel” to a future when more renewable sources are available, affordable, and economically viable on their own. It’s a lot more viable than subsidizing boondoggles like these inefficient electric cars that no one wants. I’m all for electric cars if you can develop one I can actually use in Alaska, where you can drive hundreds of miles without seeing many people, let alone many electrical sockets. But these electric and hybrid cars are not a quick fix because we still need an energy source to power them. That’s why I like natural gas, but we still have to drill for natural gas, and this administration doesn’t like drilling or apparently the jobs that come with responsible oil and natural gas development. They don’t have a coherent energy policy. They have piecemeal ideas for subsidizing impractical pet “green” projects.
I have always been in favor of an “all-of-the-above” approach to energy independence, but “all-of-the-above” means conventional resource development too. It means a coherent, practical, and forward-looking energy policy. I wish the President would understand this. The good news is there is nothing wrong with America’s energy policy that another good old-fashion election can’t solve. 2012 is just around the corner.
The taxes Democrats propose to “soak the rich” always seem to miss those who they demagogue for not paying their fair share. They have been “soaking the rich” for decades and keep missing the target. Why?
Veronique de Rugy is one of the most respected economists alive today.
Political Arena Editor Chuck Norton comments from June 2011:
[Note – some people who are just reading the first few paragraphs are assuming that we are endorsing any form of class warfare, actually it is quite the opposite. Class Warfare is foolish because it not only causes wealth to flee, but it eventually destroys wealth. The opposite of poverty is wealth. One cannot be against poverty and against wealth at the same time as it is as perfect an economic paradox as is possible. Class warfare spreads poverty and that is what it is designed to do, because a prospering middle class whose wealth is growing doesn’t a host of government dependence programs.]
UPDATE 10-10-2002 – I have repeatedly talked about “Consolidation” as Obama’s economic theory. Dick Morris is on Sean Hannity right now saying that Obama wants to have one big union, one big corporation in each industry, along with one big government. He is describing Obama’s merging of Corporatism and Socialism. “The left voted for socialism and got Goldman Sachs”. Anyone mind of I just gloat for a minute 🙂 I started saying this over a year ago on my old college blog. We try to always bring you the cutting edge. ]
This came as absolutely no surprise to me. As with most taxes that are “designed to target the rich” they do no such thing and the “alternative minimum tax” is no different.
The Democratic Party leadership pretends to be interested in genuine class warfare. You hear President Obama talk about “taxing millionaires and billionaires” yet the very policies he and much of the Democratic leadership advocate do no such thing.
Democrats have not been interested in taxing the genuinely rich and aren’t today. John Kerry made $5,072,000 in 2003 and had a total federal tax burden of 12.34%. The very wealthy enjoy a 60,000 page tax code that is filled with exceptions. Much of the income those like John and Teresa Kerry receive is defined as “unearned income” or earnings that are not taxable at the wage earner rate so even if the regular income tax rate was increased to 50% the percentage the Kerry’s would pay would only go up by a couple of points, if that.
Yet small business “sub-s corporations” (most domestic small businesses that have between 1-200 employees) are taxed at the wage earner rate and would be devastated by a 50% rate. Small businesses do most of the hiring in this country. Would someone care to explain how Democrats can claim to be for workers while being against their employers?
We need to be mindful of how a politician defines “The Rich”. I have a close friend who owns a small car repair business. My friend qualified as “The Rich” because his small business is an s-corp that brings in more than 250k per year. Out of that 250K he pays federal and state taxes, his employees, the payroll tax matching, rent, equipment, insurance, parts to put on cars, consumables such as motor oil, advertising etc. What is left is what he gets for his family. He drives an old Chevy truck because that is what he can afford.
The truth is that very few people make over $250k in taxable wages. President Obama talks about taxing billionaires and millionaires (defined as those who make over $250k), but the way the tax code works the wealth of George Soros like billionaires is almost perfectly protected. If George Soros and the Kerry’s paid a percentage like small businesses must, who would fund the Tides Foundation and the Democrat’s 527 groups?
As you may be aware, Google made $3.1 BILLION last year and had a federal tax burden of 2.4%. Google throws fund-raising galas for Obama and the Democrats and have given the Democrats massive donations. Where are the “liberals” condemning the Google Corps of the world? How about GE, whose former CEO now works at the White House, earned 14.2 billion dollars and not only did they have a tax bill of zero, they received taxpayer subsidies.
Yet Obama has waged a rhetorical war against the Chamber of Commerce and who do they represent, you guessed it, most small and medium-sized domestic businesses. Obama blasted the Chamber of Commerce for daring to oppose his plan to tax such businesses at a rate of 39.6%.
[Note: In some cases capital gains is double taxed in that the corporate income tax is paid before hand on the same money. Some connected corporations pay next to zero tax anyways, and if the company is overseas the corporate income tax is usually less and is paid to another country. Once again it is the case of the medium sized corporation here in America that gets creamed because we have the highest corporate income tax in the industrialized world and those American companies do not have the resources to get goodies in the tax code or how it is enforced. Japan and several other countries have lowered their corporate income tax dramatically so now the US is the highest. – Editor]
Policies such as ObamaCare, tax increases, and other actions that cause regulatory uncertainty all but force the producers and investors to stop moving their money domestically. They have the option of just parking it or investing it in China, all of which has the effect of transferring the tax burden away from the wealthy onto the working poor and middle class. Democrats are not interested in taxing the wealthy; they are interested in taxing the domestic producer class.
This brings us to Norton’s First Law: big Business loves big government because big government taxes and regulates the small and medium-sized competition out of the competition. This is a staple of modern “Alinsky” style Democrat strategy. This process is called “consolidation”. The goal of leftist philosophy is to control the wealth “rationally” from above so that less is “left to chance”. With all of these small businesses creating wealth that is chaos which is difficult to control. Through consolidation more of the wealth that is created flows through large corporations that are easier to control.
The Obama bipartisan deficit commission was tasked with the challenge of how to raise revenue, grow the economy and pay off the debt. After an exhaustive study the commission concluded that lowering tax rates, lowering the corporate tax rate and simplifying the tax code to encourage tax compliance, and to encourage more wealth to come back home (so it at least can be taxed), was the most prudent course of action. Reagan would have been pleased with those recommendations.
If you wonder why so many jobs have moved overseas and in some cases to places where governments are corrupt and workers are really exploited; now you are seeing the other side of the coin. The private sector and the jobs that go with it cannot be expected to pay for a government that costs $4 trillion a year and hope to remain competitive. If you want to see demand for American labor to rise, start by making it more economical for jobs to come home.
UPDATE – The Obama Administration is using a variation of this very theme that I wrote about last June in it’s recent effort to raise taxes. Rest assured in the 6o,000 plus pages of the tax code that those who are the Democrats biggest donors will not be impacted greatly. As we have seen with Solyndra, the Stimulus Bill, and the other spending in this administration, much of the spending is done for the purpose of Chicago style kickbacks. One can be most confident that taxes will continue to follow that same path just as the so called Alternative Minimum Tax has.
UPDATE II – Warren Buffet opposes Obama’s new “Buffet Rule” campaign trial balloon because he sees it for what it really is. Real Clear Politics (follow the link to see the video):
CNBC: “Are you happy that the way it is being described. Is the program that the White House has presented a million dollars and over your program? ”
Warren Buffett: “Well, the precise program which will — I don’t know what their program will be. My program would be on the very high incomes that are taxed very low. Not just high incomes. Somebody making $50 million a year playing baseball, his taxes won’t change. Make $50 million a year appearing on television, his income won’t change. But, if they make a lot of money and pay a very low tax rate, like me, it would be changed by a minimum tax that would only bring them up to what other people pay.”
CNBC: “Does that mean you disagree with the president’s new jobs proposal which would be paid for by raising taxes on households with incomes of over $250,000.”
Buffett: “That’s another program that I won’t be discussing. My program is to have a tax on ultra-rich people who are very tax rates. Not just all rich people. It would probably apply to 50,000 people in a population of 300 million.”
Indeed. There is a small group of people who greatly benefit from the way the tax code works which is only a small portion of who most people would consider wealthy. Among these people are among the largest political donors in the country.
I am glad that Buffet clarified (read changed his tune just slightly) on this issue because the way his close friend President Obama had presented this it was going to just as we had described it earlier, a new tax that would barely touch him but sock smaller competition and CNBC called him out on it:
This five hour series is not only very informative, it is also very entertaining. Ferguson really “gets it” and I would argue with very little of what he has to say.
This is the history of money and the ascent of man and the West. This is invaluable and everyone should watch it.
Note – In this video Klavan tells us that the USA has the second highest corporate tax rate in the world. At the time this video was made that was true, however Japan, Canada and many other countries have since drastically lowered their rates leaving the United States to have the highest business taxes in the world, which explains why so many jobs have left the country.
The crash that initiated the Great depression was not a failure of freedom or private enterprise. The great depression was initiated largely by the actions of the Federal Reserve (with some outside forces) who acted in such a way that was contrary to the ideas in which it was created.
Notice how Dr. Friedman says that government can deliberately cause inflation because it acts as a tax. Inflation brings more money to government and also makes the dollars that the government pays back to debt holders and bond holders worth less and less. This is why the Obama Administration and his lackey at the Federal Reserve, Ben Bernanke, have been deliberately driving up prices with inflation. This also makes every dollar in savings that the elderly have weaker and able to buy less, thus making them even more dependent on government, which falls in line with the current Democrat Leadership’s political strategy.
Two years ago, George Soros said he wanted to reorganize the entire global economic system. In two short weeks, he is going to start – and no one seems to have noticed.
On April 8, a group he’s funded with $50 million is holding a major economic conference and Soros’s goal for such an event is to “establish new international rules” and “reform the currency system.” It’s all according to a plan laid out in a Nov. 4, 2009, Soros op-ed calling for “a grand bargain that rearranges the entire financial order.”
The event is bringing together “more than 200 academic, business and government policy thought leaders’ to repeat the famed 1944 Bretton Woods gathering that helped create the World Bank and International Monetary Fund. Soros wants a new ‘multilateral system,” or an economic system where America isn’t so dominant.
More than two-thirds of the slated speakers have direct ties to Soros. The billionaire who thinks “the main enemy of the open society, I believe, is no longer the communist but the capitalist threat” is taking no chances.
Thus far, this global gathering has generated less publicity than a spelling bee. And that’s with at least four journalists on the speakers list, including a managing editor for the Financial Times and editors for both Reuters and The Times. Given Soros’s warnings of what might happen without an agreement, this should be a big deal. But it’s not.
Wait till you see who else on on the attendee’s list. Find out HERE.
George Soros is the number one money man of the radical left and the Democratic Party.
Years of tremendous overspending by federal, state and local governments have brought us face-to-face with an economic crisis. Federal spending will total at least $3.8 trillion this year—double what it was 10 years ago. And unlike in 2001, when there was a small federal surplus, this year’s projected budget deficit is more than $1.6 trillion.
Several trillions more in debt have been accumulated by state and local governments. States are looking at a combined total of more than $130 billion in budget shortfalls this year. Next year, they will be in even worse shape as most so-called stimulus payments end.
For many years, I, my family and our company have contributed to a variety of intellectual and political causes working to solve these problems. Because of our activism, we’ve been vilified by various groups. Despite this criticism, we’re determined to keep contributing and standing up for those politicians, like Wisconsin Gov. Scott Walker, who are taking these challenges seriously.
Both Democrats and Republicans have done a poor job of managing our finances. They’ve raised debt ceilings, floated bond issues, and delayed tough decisions.
In spite of looming bankruptcy, President Obama and many in Congress have tiptoed around the issue of overspending by suggesting relatively minor cuts in mostly discretionary items. There have been few serious proposals for necessary cuts in military and entitlement programs, even though these account for about three-fourths of all federal spending.
Yes, some House leaders have suggested cutting spending to 2008 levels. But getting back to a balanced budget would mean a return to at least 2003 spending levels—and would still leave us with the problem of paying off our enormous debts.
Federal data indicate how urgently we need reform: The unfunded liabilities of Social Security, Medicare and Medicaid already exceed $106 trillion. That’s well over $300,000 for every man, woman and child in America (and exceeds the combined value of every U.S. bank account, stock certificate, building and piece of personal or public property).
The Congressional Budget Office has warned that the interest on our federal debt is “poised to skyrocket.” Even Federal Reserve Chairman Ben Bernanke is sounding alarms. Yet the White House insists that substantial spending cuts would hurt the economy and increase unemployment.
Plenty of compelling examples indicate just the opposite. When Canada recently reduced its federal spending to 11.3% of GDP from 17.5% eight years earlier, the economy rebounded and unemployment dropped. By comparison, our federal spending is 25% of GDP.
Government spending on business only aggravates the problem. Too many businesses have successfully lobbied for special favors and treatment by seeking mandates for their products, subsidies (in the form of cash payments from the government), and regulations or tariffs to keep more efficient competitors at bay.
Crony capitalism is much easier than competing in an open market. But it erodes our overall standard of living and stifles entrepreneurs by rewarding the politically favored rather than those who provide what consumers want.
The purpose of business is to efficiently convert resources into products and services that make people’s lives better. Businesses that fail to do so should be allowed to go bankrupt rather than be bailed out.
But what about jobs that are lost when businesses go under? It’s important to remember that not all jobs are the same. In business, real jobs profitably produce goods and services that people value more highly than their alternatives. Subsidizing inefficient jobs is costly, wastes resources, and weakens our economy.
Because every other company in a given industry is accepting market-distorting programs, Koch companies have had little option but to do so as well, simply to remain competitive and help sustain our 50,000 U.S.-based jobs. However, even when such policies benefit us, we only support the policies that enhance true economic freedom.
For example, because of government mandates, our refining business is essentially obligated to be in the ethanol business. We believe that ethanol—and every other product in the marketplace—should be required to compete on its own merits, without mandates, subsidies or protective tariffs. Such policies only increase the prices of those products, taxes and the cost of many other goods and services.
Our elected officials would do well to remember that the most prosperous countries are those that allow consumers—not governments—to direct the use of resources. Allowing the government to pick winners and losers hurts almost everyone, especially our poorest citizens.
Recent studies show that the poorest 10% of the population living in countries with the greatest economic freedom have 10 times the per capita income of the poorest citizens in countries with the least economic freedom. In other words, society as a whole benefits from greater economic freedom.
Even though it affects our business, as a matter of principle our company has been outspoken in defense of economic freedom. This country would be much better off if every company would do the same. Instead, we see far too many businesses that paint their tails white and run with the antelope.
I am confident that businesses like ours will hire more people and invest in more equipment when our country’s financial future looks more promising. Laying the groundwork for smaller, smarter government, especially at the federal level, is going to be tough. But it is essential for getting us back on the path to long-term prosperity.
Mr. Koch is chairman and CEO of Koch Industries, Inc. He’s the author of “The Science of Success: How Market-Based Management Built the World’s Largest Private Company” (Wiley, 2007).
This is Dr. Walter Williams. He was the chair of the economics department at George Mason University. Recently an economics professor was fired from Indiana University at South Bend for showing students material from this man so I thought that some of you might want to see what he has to say.
Sarah Palin was attacked by a reporter for stating that there is inflation in spite of the denials of the Fed. Palin ended up being correct (and so did we). Now Jim Rodgers weighs in.
(Reuters) – U.S. government inflation data is “a sham” and is causing the Federal Reserve to vastly understate price pressures in the economy, influential U.S. investor Jim Rogers said on Tuesday.
The U.S. central bank uses inflation data that relies too heavily on housing prices, Rogers told the Reuters 2011 Investment Outlook Summit, and he criticized the Fed’s $600 billion bond-buying program.
Rogers, who rose to prominence after co-founding the now defunct Quantum Fund with billionaire investor George Soros some four decades ago, said he was betting against U.S. Treasuries. “I expect interest rates in the U.S. to go much, much, much higher over the next few years,” he said.
The core personal consumption expenditure index, which removes food and energy costs, is the Fed’s favored measure of inflation and was flat in October for the second straight month.
“Everybody in this room knows prices are going up for everything,” Rogers told the Reuters Summit.
The Fed began its $600 billion bond buying program last month, its second round of quantitative easing [this means monetizing the debt – printing more dollars and lowering the value of all of the dollars you have – Editor], to boost a sluggish U.S. economy, citing excessively low inflation and high unemployment.
More Than 8.3 Million Jobs Created Since August 2003 In Longest Continuous Run Of Job Growth On Record
WASHINGTON — Today, the Bureau of Labor Statistics released new jobs figures – 18,000 jobs created in December. Since August 2003, more than 8.3 million jobs have been created, with more than 1.3 million jobs created throughout 2007. Our economy has now added jobs for 52 straight months – the longest period of uninterrupted job growth on record. The unemployment rate remains low at 5 percent. The U.S. economy benefits from a solid foundation, but we cannot take economic growth for granted and economic indicators have become increasingly mixed. President Bush will continue working with Congress to address the challenges our economy faces and help facilitate long-term economic growth, job growth, and better standards of living for all Americans.
The U.S. Economy Benefits From A Solid Foundation
* Real GDP grew at a strong 4.9 percent annual rate in the third quarter of 2007. The economy has now experienced six years of uninterrupted growth, averaging 2.8 percent a year since 2001.
* Real after-tax per capita personal income has risen by 11.7 percent – an average of more than $3,550 per person – since President Bush took office.
* Over the course of this Administration, productivity growth has averaged 2.6 percent per year. This growth is well above average productivity growth in the 1990s, 1980s, and 1970s.
* The Federal budget deficit is down to 1.2 percent of GDP (in FY07), well below the 40-year average. Economic growth contributed to the highest tax revenues on record and a $250 billion drop in the deficit over the last three years.
* U.S. exports in October 2007 were 13.7 percent higher than exports in October 2006.
* The Administration will continue working to prevent tax increases on families and small businesses. The President’s tax relief cut taxes for everyone who pays income taxes and must be made permanent to prevent hard-working Americans from facing a massive tax hike.
* The President urges Congress to complete work on legislation to help American families keep their homes. Congress took one positive step by voting to pass the Mortgage Forgiveness Debt Relief Act. Now they should complete work on the President’s FHA modernization bill and pass a reform bill that strengthens the regulation of government sponsored enterprises, such as Fannie Mae and Freddie Mac. [Editor’s Note – The Democrats used the filibuster threat in the Senate to stop mortgage reform, and Fannie Mae and Freddie Mac reform, once again; reform that President Bush and Republicans in Congress were trying to get passed since 2001. The Democrats insisted that there was no problem while taking almost $200 million from Fannie/Freddie in campaign funds, donations to their party, 527’s, think tanks, and other partisan groups. We now live with the result.]
Former socialist and former atheist Peter Hitchens explains the foolish elitism of the progressive secular left and how they look down on anyone who disagrees with contempt and scorn as if they are sub-human.
Tell me about it.
“If you are not careful, the newspapers will have you hating the people who are being oppressed and loving the people who are doing the oppressing.” – Malcolm X
Political Arena 