With the economy sluggish and stagnating, you would think that economic growth ranks high on President Obama’s list of priorities for a second term. But of course, you would be wrong. Lefty Ezra Klein, who writes about economic policy for the Washington Post , has just published a well-sourced piece on ” what Obama would do in a second term ,” and the words “economic growth” are nowhere to be found. This is no accident. With all due respect to the president, he is dangerously ignorant about economic matters. Indeed, he knows nothing about incentives and job creation, fiscal and monetary policy. Which is why we are suffering through the worst economic recovery since the Great Depression . The most recent jobs report, in fact, found that the labor force participation rate — that is, the percentage of working-age people with a job or actively looking for work — declined to 63.6 percent in April. “That monthly decrease was the third in a row; and [it] marked the lowest level for that measure since December 1981,” reports Thomas Olson in the Pittsburgh Tribune-Review . Oh, to be sure, according to Klein, “Everyone from Obama’s closest advisers to the GOP’s top tacticians agrees that the first year of a second term — and perhaps even more than that — would be ‘fiscal.’ That is to say, it would be devoted to budget and tax issues.” But raising taxes to fund the behemoth state — which is clearly what Obama has in mind for a second term — doesn’t promote economic growth. And so, debt reduction, in itself, doesn’t necessarily help anyone. What matters is how the debt is reduced or managed. If the debt is managed in a way that incentivizes the entrepreneurial class and the free market, then that is a good thing. This will promote economic growth and job creation. But if debt reduction becomes simply a convenient excuse to punish entrepreneurs and innovators with higher taxes and ill-advised regulation, then economic growth and job creation will suffer. Yet, “beyond the deficit,” reports Klein, “Obama’s advisers see two big unfinished pieces of business from the first term: climate change and immigration reform.” Climate change and immigration “reform”? Excuse me, but the biggest piece of “unfinished business” is economic growth, without which everything else becomes impossible. And if the president doesn’t understand this, then it’s time for a new president. Now.
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A Clueless Obama Abandons Economic Growth
It’s no coincidence that the least taxed and least regulated sector of the American economy, high-tech, is also the most dynamic and successful. Think Apple, Google, smart phones, e-book readers, and electronic tablets. The economic benefits of American high-tech innovation are significant. High-tech has dramatically lowered transaction costs, while effecting a big increase in workplace productivity. So it’s not surprising that our progressive elite and other denizens of big government have high-tech in their crosshairs. They’re concerned, you see, that Apple and other high-tech companies don’t pay their “fair share” of taxes. Why, high-tech is even (brace yourself) “‘ sidestepping’ billions of dollars in taxes by setting up subsidiary companies in tax-free or low-tax states and countries .” Of course, companies have always sought to minimize their tax burden; but instantaneous communications and digital technology mean that capital today is more mobile than ever . Consequently, companies — and especially high-tech companies such as Apple — are increasingly able to move their money and operations overseas and across state lines: to places where the confiscatory arm of the state is less onerous and less burdensome. The result has been a technological boon, which has benefited people the world over. There has, however, been one big loser in all this, and that is the bureaucratic state, which can’t seem to gets it hands on elusive high-tech money. So it is that the pied piper of liberalism, the New York Times , has published a long and lengthy lament of the government’s failure to confiscate high-tech wealth. The Times editorializes against high-tech under the rubric of “objective journalism.” This means simply that it quotes the right people to give voice to its prejudices — people such as De Anza College President Brian Murphy. “When it comes time for all [of] these companies – Google and Apple and Facebook and the rest — to pay their fair share, there’s a knee-jerk resistance, Mr. Murphy said. “They’re philosophically anti-tax, and it’s decimating the state [of California]. “But I’m not complaining,” he added. “We can’t afford to upset these guys. We need every dollar we can get.” In other words, America’s high-tech sector is responsible for California’s fiscal crisis and economic decline, because high-tech companies don’t pay enough in taxes. And, worse yet, high-tech companies are holding the state of California hostage to their own selfish economic interests. That well encapsulates the liberal worldview: The problem is never that the state spends too much and over regulates; it is that entrepreneurs such as Steve Jobs, and innovative companies such as Apple, are insufficiently patriotic. Of course, this isn’t true. The truth is that Apple, Google, Facebook and other high-tech companies generate untold billions of dollars in economic activity. And these billions of dollars certainly are taxable and taxed, even if the companies themselves use legal means to avoid taxes so as to grow and prosper. But California’s liberal big-government policies are driving the entrepreneurial class away in droves, thus precipitating the state’s fiscal train wreck. “In recent years,” report economists Michael J. Boskin and John F. Cogan, “the number of upper-income earners in California has radically shrunk — by a third between 2007 and 2009 alone.” “Apparently, they note, “wealthy Californians are either fleeing to nearby no-income-tax states or have become less well-off after years of economic downturn, higher taxes, and overregulation of business.” Many Silicon Valley CEOs,” add Boskin and Cogan, “say they won’t expand in California because of high taxes and burdensome regulation.” The result: “Just 1 percent of California taxpayers are already providing 45 percent of the state’s income tax revenue,” writes Victor David Hanson. “And such income taxes now fund half the budget.” In short, contra the Times, taxing and regulating high-tech isn’t the answer; taxing and regulating high-tech is the problem. And it’s a problem created by the politicians’ inability and unwillingness to limit spending and to rein in an out-of-control state budget.
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NY Times Misfires Targeting Apple and High-Tech Sector
Never mind the fact that Obama got yoghurt splashed on him last night – that’s just an ongoing hazard of being a politician running for re-election in this country. The real story here is this: the President went to Colorado to, essentially, lie to a bunch of kids about how they can get themselves out of this mess that they’re in. And it is a mess. 50% of college graduates are unemployed/underemployed ; couple that with student loan debt levels that should really be frightening more people and we end up with a situation where millions of kids are getting out of college and staring DOOM right in the face. And while they are adults – and thus, responsible for their own fates – guess what? The people that connived to put them in this mess are adults, too. We expect twenty-somethings in this culture to make poor life choices, sometimes; what we don’t expect is for the generations above them to so ruthlessly take advantage of that. Anyway: Obama’s answer in Colorado, last night? … Entrepreneurship . That’s what he was telling the kids. Start that restaurant! Develop that smartphone app! Make your own destiny! Get slammed with a tax hike on small businesses in the form of tighter restrictions on payroll tax exemptions! …Yeah. One of these things is not like the others. For the morbidly curious, here’s the situation: there’s a bill in Congress that would freeze student loan rates. It’s stalling because, well, that’s going to cost us $5.9 billion and the money’s got to come from somewhere. So the N-dimensional geniuses over at the White House went to Congressional Democrats and found six billion worth of pork to cut… Oh, I am quite the comedian! They’re Democrats: they never cut spending. No, what Obama and the rest of his merry crew did instead was come up with a plan to generate the revenue via increased restrictions for S Corporations re: eligibility for payroll tax exemptions. If you’re wondering “So what?” …well, you’re probably not a small business owner: S-Corps are a common method by which small companies – mom-and-pop stores, individual professional workers, START-UP BUSINESSES – file their taxes. Essentially, S-Corps file as individuals – which is, by the way, why Obama’s proposed tax hike on $250K earners is actually a tax on many small business owners , despite the best efforts of his apologists to downplay that minor little detail. But never mind that right now; the point is, by making it harder for S-Corps to be exempt from payroll taxes President Obama is proposing an effective profits tax on them. You can argue whether that’s a good idea or not – it’s not – but if you are planning to hike tax rates on small businesses just starting out then basic etiquette suggests that you not also encourage people to start small businesses. Because that’s a lie : you don’t want to encourage them. You just want to get some of their money to keep things going until after the election’s over. Moe Lane ( crosspost ) PS: This issue is related to the re-authorization of the student loan rates that my RS colleague David Horowitz is criticizing : but just because we may lose the battle on the loan rates themselves doesn’t mean that we have to lose the battle on how the government plans to pay for them. [UPDATE] I have just had it pointed out to me via private email that the Obama administration has been gunning for S-Corps for years . And with very little concern over the legal niceties, either.
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President Obama: ‘encouraging’/planning to tax into oblivion start-up businesses.
Have you ever noticed that when Progressives talk about some subject, there is always some sort of exclusionary point? They want higher taxes, but, not for themselves. They want globull warming laws, but, not for themselves. They want national health care, but not for unions and other left wing groups and companies. And (Washington Post) Not Go here to read the rest: Eugene Robinson: Crazy Right Wing Talk Is Different From Crazy Left Wing Talk
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Eugene Robinson: Crazy Right Wing Talk Is Different From Crazy Left Wing Talk
Conservatives need to do a better job of explaining how they would lower gas prices. More drilling is a great piece of the pie, but there needs to be more. Governor Sarah Palin and Eric Bolling, Fox News host of of The Five, have put together a comprehensive plan to lower gas prices and they mapped out the details in the video below. The FOX gas price solution show was titled “Paying at the Pump.” Gov. Palin and Bolling rolled out some excellent ideas to combat skyrocketing gas prices. When President Obama was sworn into office, gas was priced at $1.85 cents a gallon. Clearly, the President’s energy policy has been an abject failure with gas prices hovering close to $4.00 a gallon. This show contains a comprehensive conservative means to lower gas prices. Conservatives need to make a strong case to the American people that the solution to high prices at the pump is a conservative solution. Get the government out of the business of hiking gas prices through wrong headed government policies. As usual, government has caused many of the problems leading to a massive hike in gas prices and President Obama has exacerbated the problem. It is important to note that high gas prices causes price inflation in consumer goods. Having gas prices so high is a drag on the economy in the transportation of goods and in the production of many products. The impact of gas prices doubling since President Obama was sworn into office is currently harming the economic future of the United States. High gas prices hammer the middle class and low income Americans harder than the well to do. High gas prices are a problem that needs to be addressed in the very near future or our economy shall stagnate. The first point Palin and Bolling made in the show was that gas prices cause inflation on many other products used by Americans. Anybody who has made a recent trip to the grocery store has felt the pinch of increasing prices. One of the reasons why these prices are hiking is because of high fuel prices, yet another important, and lesser known factor, is the impact of environmental regulations forcing truckers to use vehicles at increased cost. The experts on the show argued that environmentalist extremists and anti-energy policies are one of the factors hiking grocery prices. We can all thank the Environmental Protection Agency (EPA) for some of the gas price inflation. Kenneth Green of the American Enterprise Institute wrote a blog post titled EPA-Induced refinery closures linked to high gas prices . Green cited an article in Investor’s Business Daily that put responsibility on the EPA for higher gas prices. The untold story behind soaring pump prices is that major U.S. refineries are going out of business and creating at least regional shortages thanks in no small part to costly EPA rules. Over just the past six months, three refineries supplying about half the gasoline, diesel and jet fuel to the East Coast have closed, including two owned by Sunoco Inc. They say they simply cannot make money anymore. Philadelphia-based Sunoco’s refinery business in the Northeast has lost almost $1 billion over the past three years as U.S. demand for gas fell and the cost of foreign crude soared. But over the same period, it had to shell out “significant expenditures for environmental projects and compliance activities” to satisfy onerous EPA mandates, according to the company’s latest 10-K report. In fact, it’s spent more than $1.3 billion just to comply with stricter EPA rules, which carry stiff fines or penalties for violations. Sunoco fretted that these regulatory costs would grow exponentially under the Obama administration, which has hit some of its refineries with fines. The federal government has passed on a $1.3 billion tax on the American consumer in the form of EPA regulations. Regulations are a hidden tax on the American people and they limit choices. The fact that three refineries have closed is evidence that this burdensome regulatory structure is increasing gas prices. One simple solution would be to suspend these regulations to see if gas prices come down and more refineries come on line. Strip the EPA of any authority to implement the rules that are causing higher gas prices. Of the many laughable and wrong headed ideas of the Obama Administration is the President Obama’s suggestion of getting regular tune ups and inflating tires. This will have no impact on gas prices and is not a realistic means to solve our energy problems. Obama has also embraced the miracle fuel of converting Algae to gas. Yet another unproven miracle fuel idea that is not at a stage where Algae is being considered a realistic solution to our nations’ energy problems. These Obama ideas can go in the silly category and should be treated as non-serious solutions. One serious proposal that will increase gas prices is to impose higher taxes on the Oil and Gas industry. The President’s idea to raise taxes on the Oil and Gas industry was rejected by the United States Senate , because it would raise prices at the pump. The President’s idea is to single out the manufacturing tax credit extended to the Oil and Gas industry. A tax credit that applies to all manufacturers. The President acts as if the federal government is subsidizing Oil and Gas, yet fails to point out that every manufacturer is allowed a 9% deduction from revenues as part of our corporate tax code. Already, the federal government has singled out the Oil and Gas industry for a manufacturing tax credit. An increased tax on the Oil and Gas industry will be passed on to the consumer in the form of higher gas prices.; therefore the President’s removal of what he calls a tax subsidy would effectively increase gas cost at the pump for all Americans. Another problem identified by Gov. Palin’s segment on the Fox broadcast is that there are large swaths of the United States off limits to drilling. Production is up on private and state properties, yet on federally controlled lands, production is not where it needs to be. Gov. Palin made the point that in Alaska is loaded with resources that are untapped. Palin said on the show the following: In the 50s oil was discovered and the Navy set aside a petroleum reserve, the NPRA, was set aside for the development of oil and gas. That was in the 1950s, yet that unit, that land, still has never been touched. And then in the 1960s more oil was discovered and ANWR was created. It is a huge unit, 20 million acres, was set aside for wilderness for refuge and in mid-1980 it was expanded for oil and gas development in the coastal plain, the tipy top of ANWR. So we have these huge swaths of land, 20 million acres in one unit and 19 million acres in another unit, reservoirs that have proven to hold oil and gas that have not been tapped yet. If President Obama was serious about domestic oil production he would urge Congress to open up drilling in ANWR today. Yet again the environmental extremists have won the day. They have thwarted the Keystone pipeline and drilling in ANWR, as well as off the coast of Florida, the East Coast, the West Coast and many on land areas that could help reduce America’s dependence on oil. According to Rayola Dougher of the American Petroleum Institute, 87% of the acreage offshore is off limits to drilling and development. The President’s solution seems to be merely a political one. Obama has targeted individuals who trade in futures as if they are the individuals responsible for a massive spike in gas prices. This is consistent with his Class Warfare campaign, because he can blame Wall Street for high gas prices. Yet again, President Obama is trying to shift blame away from his own anti-energy policies as a means to blame somebody else for the problems he has failed to solve. President Obama needs a straw man to draw fire from his incompetent energy policy. The President has seen fit to demonize “speculators” as if they are evil people driving up the price of gas at the pump. The fact of the matter is that speculators are trading on the knowledge that the President’s energy policy is not going to produce more domestic sources of energy. As good traders they are operating on the smart bet that as President Obama thwarts more domestic oil production, gas prices will go higher. The President said earlier this week, “we can’t afford a situation where some speculators can reap millions while millions of American families get the short end of the stick.” According to the AP , the President’s proposal to bring down gas prices contains three elements, federal supervision of oil markets, increase penalties for market manipulation and empower regulators to increase the amount of money energy graders are required to put behind their transactions. According to AP the following elements are included in the President’s plan: Increase six-fold the surveillance and enforcement staff of the Commodity Futures Trading Commission to better deter oil market manipulation. Increase spending on technology to provide better oversight and surveillance of energy markets. Increase civil and criminal penalties against firms that engage in market manipulation from $1 million to $10 million. Give the Commodity Futures Trading Commission authority to increase the amount of money that a trader must put up to back a trading position. The administration officials said such authority could help limit disruptions in energy markets. Eric Bolling stated on his show that one element of the Obama proposal may make some sense – raising the energy trading margins. Bolling is a guy who has some experience on the issue of futures trading. He was on the Board of Directors (2000-2005) of the New York Mercantile Exchange (Now Chicago Mercantile Exchange) and an oil trader (1990-2007). Bolling argued that merely using existing authorities to force Wall Street banks and other institutions trading in derrivatives to put some skin in the game would insure against reckless trading. Maybe one of the problems we have today is the idea that the big Wall Street traders are considered “Too Big To Fail,” therefore they act as if they have an implicit insurance policy from the federal government to bail them out if the oil futures market collapses. One solution to the problem would be for the bailout supporting Obama Administration to pledge not to bail out big Wall Street banks and trading firms if they go belly up as a result of bad energy futures trades. That seems like a good free market solution to the problem. Although the Dodd-Frank legislation already says that financial institutions will no longer be bailed out, and will be allowed to fail, this is not necessarily true. The standard interpretation of this language on Wall Street is that no one needs to worry about failing any more, because a Federal bailout is assured. It’ll just be called by some different name. As usual, President Obama has takes the wrong tact. He refuses to drill more on federal lands, his addiction to green energy is well known and he is not expected to renounce bailouts as a legitimate policy of the federal government. Remember how much money Wall Street funnelled to his campaign after the 2008 Wall Street bailout. One should not expect him, in an election year, to stick a finger in the eye of one of the sectors of the economy expected to give him $1 billion to fund his re-election campaign. Obama is engaging in more class warfare by demonizing “Speculators” as a class of people robbing the American people. Bolling pointed out on the show out that a simple change to the margin requirements may solve the problem. That solution may preclude the over-broad response by the Obama Administration to the gas price problem. Bolling pointed out on the show that the whole world uses 83 million barrels a day. The markets move over 4 billion barrels a day in the form of derrivatives on the market. Bolling further pointed out that these futures are not being traded by the Saudi Arabians nor other middle eastern members of OPEC. Also, not Shell or Gulf or any other oil company making these future trades. The traders are the bailed out (i.e. failed) Wall Street entities that have already done lasting harm to the idea of free market capitalism with the bailouts. Bolling pointed out that these Wall Street firms don’t have to have any skin in the game if they buy and sell an oil future in the same day. He further pointed out that if they hold a future overnight, they only have to prove they have posted approximately a 5% against the margin of the position. Conservatives need to understand that this is not in the form of a new regulation. The regulations authorizing this new margin requirement already exists in the law. It is not a new additional regulation nor is it a fee. It is merely a margin account to show the companies still own the collateral used to make these trades. Now some will point to the fact that exchanges already have the ability to increase margin requirements for trading positions. They absolutely do this in volatile conditions, when they fear that traders may be taking on too much leverage, increasing their risk of failure. Additionally, futures markets have strict daily trading limits and positions are marked to market every night. This means people who bet wrong can generally get forced out of the market before they can bankrupt their counter-parties. Some will argue that if the Obama Administration comes to Congress to demand that legislation enabling regulators to impose position limits or margin requirements is pointless. The exchanges already have a self-preservation interest in enforcing these at times of stress. It is important to note that the Palin-Bolling plan did not call for more legislation, yet the Obama Administration is trying to get Congress to pass legislation to force regulators to make this decision. The President’s plan does not define “manipulation” and gives regulators the power to make subjective decisions. How will market participants prepare for regulators curtailing otherwise-legal activities. Having Congress implement all the aspects of the Obama proposal may make the markets all the more unstable. Now creating a margin requirement that is too high will stifle the market and move these trades to other markets. That would hurt the financial sector of the American economy and also do lasting harm to free market capitalism. Bolling’s idea has merit and a reasonable margin requirement may be one element of a comprehensive plan to get gas prices under control. The fact that the Obama Administration already has the authority that this Administration is not serious about gas prices. They punt all the difficult decisions to Congress, yet they refuse to do anything to “Drill Baby Drill” domestically. This Administration is firmly in support of demonizing “Speculators” and “Big Oil” by increasing taxes and comparing “Speculators” to the guys that cause the Enron scandal. Another idea that needs an airing that didn’t make the Palin-Bolling show was devolving highway programs back to the states. Right now the federal government collects $18.3 cents on every gallon of gas pumped in the United States. The feds collect the taxes then dole these revenues back to the states to pay for highway programs, bike paths and miscellaneous earmarks. The best solution would be to devolve the programs back to the states where they belong and eliminate the federal gas tax. States already collect hefty gas taxes and they could increase the state based gas taxes to cover the shortfall. Without the federal government bureaucrats wasting these tax dollars there would be measurable savings at the pump. At a minimum, conservatives need to roll out a comprehensive plan and force Congress to consider these plans over and over again. Gas prices are a big issue and if conservatives in Congress are not forcing vote after vote on good ideas, then they will lose the messaging war to the Class Warrior in Chief who is seeking to use scare tactics and class warfare to secure another term in the White House. There is a conservative solution. Governor Sarah Palin and Fox’s Eric Bolling have rolled out a conservative plan that deserves a national debate.
Excerpt from:
The Palin-Bolling Proposal To Lower Gas Prices
