Tag Archives: spending

Progressives and Taxes

Posted on by
Reply

Look no further than California for the latest example of foolishness.

That state’s latest budget counts on at least $500 million from that state’s auction of carbon credits under its cap-and-trade…business…to balance its budget.

There’s a problem with that bait-and-switch…business…though.  As California’s Supreme Court ruled in its 1997 Sinclair Paint Co opinion, regulatory fees can’t

exceed in amount the reasonable cost of providing the protective services for which the fees are charged

or be imposed for

 unrelated revenue purposes.

The cap-and-trade collection, however, explicitly is a fee and not a tax—that’s how the fees were successfully assessed in the aftermath of California’s Proposition 13, which requires a supermajority in each house of the California legislature to raise taxes.

This leads to a couple of problems that would be no-brainer deal killers for anyone but a Progressive:

First, the stated purpose of the diversion: to put the monies into the state government’s general coffers in order to balance the budget, rather than to spend the money on “green” goals, which is the stated purpose of the cap-and-trade program.  The monies can’t be diverted to the general coffers.  Not legally, anyway.

Second, the diversion of the $500 million demonstrates that the state government believes the money is not needed so much for those “green” goals: the cap-and-trade fees “exceed in amount the reasonable cost of providing the protective services for which the fees are charged” by those $500 million.

Hmm….

Farm Bill Fail

Posted on by
Reply

One of the more controversial provisions the Senate bill [a farm bill that will cost $955 billion if passed] covers is crop insurance.  In the past, farmers have been able to purchase an insurance safety net if their crops fail.  Under the bill, the government would kick in another $5 billion of insurance per year—bringing the total to $12 billion a year—which would cover the deductibles and cushion the blow farmers would have to pay.

And

The House version spends more money on crop insurance, but less for food stamps and conservation efforts.

No, the farm bill needs to eliminate the crop insurance aspect altogether (I’m ignoring here the food stamp wastage), not increase it or even maintain it.  Government has no business interfering with the private market, or protecting any business—including farmers—from the consequences of their decisions.  If the farmers want a safety net against crop failure—an eminently reasonable desire—they should be free to buy it on the open market from crop insurers competing for their business.

Americans, either as taxpayers or as farm customers, should not be forced to pay for farmers’ decisions except through market effects.

Deficit and Revenue

Posted on by
Reply

[S]enior White House officials now say they haven’t found a sufficient number of Republican partners willing to accept the revenue increases Democrats say must be part of any compromise.

In other words, Progressives’ “compromise” is for the opposition to go along with their demands for more revenue.  Never mind that revenue questions are no part of the deficit or of the resulting debt.

The shrinking of the deficit, although still too large and at any size contributory to our debt, results from already increasing revenue to the government.  The increased revenue, though, comes not from tax increases (the payroll tax holiday expiration goes to the Social Security System, not to the general Treasury, and the tax increase on those making over $400,000 totals to chump change compared to any year’s deficit) but from the slowly improving economy.  Thus, Progressives’ increased tax rates aren’t necessary to increase revenues to the government.

Spending cuts are what are needed to eliminate the deficit and so to start paying down the debt.  This graph, from The Wall Street Journal, illustrates the matter:

Revenue is up, even in Obama’s hindered recovery, but spending is up more in the projection.  The economy is producing the revenue needed (eliding the question of needing even that much); government needs to do its part and cut spending.  Drastically.

Let’s Try That Again

Posted on by
Reply

Joe Rosenberg, Loews Corp Chief Investment Strategist, has suggested that large, rich corporations should bailout a spendthrift, debt-ridden Federal government.  After all, he says, since the Federal government had bailed out some big businesses in the Panic of 2008, it’s only proper to return the favor.  As if two wrongs would make a right.

Rosenberg’s proposal is this in its essence:

Companies like Apple, J&J, Microsoft, and other US multinationals are major vendors to the federal government.  Instead of the deficit-ridden government borrowing money to buy their products, let the companies offer the government long-term, no-interest financing in lieu of cash.

In return for this no-interest loan, the companies—which would be required to source the government-purchased products in the US—would be allowed to repatriate 75 cents of every dollar they lend without incurring income tax.  The repatriated cash would pay US workers and US suppliers, increasing employment in this country.

Sadly, no.  The present problem is government spending too much, not being short of money to spend.  Moreover, the demanded vig—paying a 25% tax on the repatriated funds instead of the current 35%, and that only if the money is turned over to the government, anyway—is a money loser for the companies.  On top of which, requiring the government to buy only from American sources means denying the government the lowest prices available for the goods and services it thinks it needs—more wasteful government spending.

Here’s my proposal: companies like Apple, J&J, Microsoft, and other US multinationals should stop being major vendors to the federal government.  Since the government is so addicted to spending it can’t control itself, it’s time for an intervention: stop selling to the government and thereby force it to reduce spending.  These companies will take a hit to their bottom lines from the loss of revenue, but a) the government is paying them with soon to be depreciated—heavily—dollars (that Bernanke Inflation that’s just around the corner from all of his money printing), and b) the hit will be temporary as the companies find other buyers with which to replace the government.

Another Obama Sequester Fail

Posted on by
Reply

Recall that California’s gas and oil industry has been shrinking for years.  It’s a slow shrinkage, but in the present political clime—the green political clime—it’s been inexorable.  This graph tells the tale (ignore, for this post the loud contrast with Texas).

Now this administration’s Bureau of Land Management, the agency responsible for leasing and permitting of Federal lands to oil and gas producers, is claiming that it’s helpless to reverse this trend—the sequester, you see.  The BLM has announced that it

will stop scheduled oil and gas leasing on public lands for the rest of the fiscal year. At least two auctions of more than 3,000 acres with promising oil deposits have already been canceled.

As the WSJ put it,

The state and feds forfeit the money from the leases. The industry can’t move ahead with its planned drilling, which wastes money. And Californians—in a state where nearly one of 10 workers is jobless—lose the chance at hundreds and perhaps thousands of high-paying jobs.

Never mind that lease income, and future royalties from the extractions, are both money makers for the government.  The sequester won’t let them make the money.

Nothing circular or political here.  Mm, mm.