Tag Archives: economics

A Tax Cut

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The Wall Street Journal had a thought on one. Our gas tax should go away. Completely.

The gas tax began in 1956 as a 3¢/gal tax that was intended to fund, via the Highway Trust Fund, building…highways and bridges. Today, that tax stands at 18.4¢/gal (and 24.4¢/gal on diesel). The gas tax has roughly matched inflation over those 58 years.

However, HTF spending has not, nor has it been kept to building highways and bridges. Today, that money also gets spent on

mass transit in merely six metro areas and sundry other programs for street cars, ferries, sidewalks, bike lanes, hiking trails, urban planning and even landscaping nationwide.

None of whose riders or users pay a single red cent to the HTF.

WSJ‘s alternative?

Simply using the taxes that are supposed to pay for highways to, well, pay for highways makes the HTF 98% solvent for the next decade, no tax increase necessary.

More than that, with more than 70% of highway spending already done by the states and not the Federal government, the States can allocate their own funds (a related example: who’s paying for California’s “high speed” train boondoggle? Not just Californians), make their own decisions regarding spending priorities, without freeloading off their neighboring states’ citizens’ tax money. The Federal gas (and diesel) tax can be done away with once the HTF’s spending is refocused.

Where are the Republicans on this? The WSJ had a thought on that, too, in the same article.

Leave It To A Broker

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Robert Greifeld, CEO of Nasdaq OMX Group Inc, had an op-ed in The Wall Street Journal earlier this week that was subtitled, tellingly,

Moving too quickly amid signs of global economic trouble could damage growth and send stock and bond markets into turmoil.

December’s Fed Open Market Committee meeting minutes indicated, he said,

that the Fed believes US economic growth, which continues its long climb back, could trigger a change in monetary policy [toward raising interest rates off their near-zero levels].

This is problematic, Greifeld said:

Moving too quickly, amid persistent signs of global economic trouble, could have a damaging effect on economic growth and investors by sending stock and bond markets into turmoil.

These are two separate questions, though. The thing is, the stock markets only anticipate the underlying economy; they are not at all the underlying economy. What’s good for the markets is not at all the proper metric for assessing economic policy.

The concern about the impact of central banks raising interest rates on economies is one worth exploring in depth. The concern about the impact on the stock and bond markets (and yes, these markets have been good to me) is fluff, and should be put aside.

It’s certainly true that, aside from pure investors, the markets also are where companies get capital for expansion, R&D, and the like, whether by selling new ownership shares or by borrowing. “Turmoiled” markets can interfere with that. But with a sound economy, which consists of us ordinary citizens getting about our daily business, that turmoil resolves quickly.

The current artificially low and suppressed interest rates are future inflation waiting to explode, to the detriment of all of us. They are current suppression of income for all of us—in particular, the retired of us—who depend on fixed income instruments (read: interest paying bonds). They are an impediment to increased hiring for expansion that otherwise seems ready to start because businesses can’t borrow to fund their expansion—not because interest rates are too low for the businesses to pay, but because interest rates are too low for lenders to lend—whether those lenders be banks or company bond buyers.

It’s time to start raising interest rates to normal levels. The economy will benefit. Investors like me will take our lumps, but we’ll also do well in the longer run from that growing economy.

Keystone and Vetoes

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All the pundits are looking to the Senate for an override of President Barack Obama’s pending veto of the pending Keystone XL Pipeline legislation. The Senate, it seems, has 63 votes for passage (which implies a cloture vote won’t be a problem), but the focus is on the Senate’s lack of four more votes to produce a “veto-proof” bill.

All the pundits are skipping over two key factors.

One is that a Senate passage with 67 Senators voting “aye” is not at all veto proof. That’s just for passage. The veto override is an entirely separate vote that comes after the President has, in fact, said “No” to his Senators and to the legislation. To override in the Senate, all 13 Senators voting for passage would then have to vote against their president to override. Every single one of them.

Also lost in the “veto-proof” blather, though, is a larger hurdle. Obama’s “No” would have to be overridden in the House, too: 290 Representatives would have to vote to override. That means that 44 of Nancy Pelosi’s (D, CA) Democrats would have to vote to override their President.

Good luck with that. Good luck with either of those.

Pass the bill, anyway, with a roll call vote in each House. Then do roll call votes in each House to override. Use Obama’s veto and those Democrats’ votes to shape the ’16 elections.

The Congress and the President

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President Barack Obama is ready, willing—even eager—to work with the 114th Congress, instead of routinely bypassing it, The Wall Street Journal quoted “senior administration officials” as saying at the start of this new year.

Both Houses of this new Congress have introduced bipartisanly supported bills that would authorize construction of the Keystone XL pipeline. And Obama has said he’ll veto that legislation, never minding that 70% of Americans—Obama’s employers, as well as the employers of the new Congress—want the pipeline built.

I’m driven to the conclusion that Obama’s claimed willingness to work with Republicans is just more Obamatalk, and that “cooperate with” still means “be reasonable: do it my way.”

Carbon Footprint

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[I]n 2011, the University of Technology Sydney made a significant breakthrough by synthesizing something called graphene paper (GP), an ultra thin layer of graphite that has five to six times lower density than steel, but is two times harder with 10 times the tensile strength and 13 times higher bending rigidity.

GP also works well in lithium-ion batteries and even better in lithium-sulfur batteries. The latter kind has far greater storage capacity and is a whole lot cheaper; GP solves the sulfur degradation problem.

There’s a lot more at the link.

Of course there are practical problems yet to be solved at this early stage. A carbon fire burns hot. Get the car, or pickup, too light, and the shock absorbers will need serious redesign—a particular problem for working pickups that do off-road work. But still….

An all-carbon vehicle? Gah. The horror.