Tax Breaks For Big Oil…?

Nancy and I received a letter from President Obama today thanking us for our interest in Government spending and the National debt. He assures us that he, too, is very interested in these subjects; and that he is doing all he can to make America solvent.

He pointed out that he has repeatedly called on Congress to stop giving away $4 billion yearly in oil and gas subsides to an industry that has never been more profitable. This kind of talk always brings looks of puzzlement to the faces of tax and energy-industry experts, who ask: “What special tax breaks?”

It is true that the oil and gas business tries to pay as little money for taxes as legally possible—but…who doesn’t?

In 2004, Congress and the Senate passed with widespread bipartisan support the American Job Creation Act. That Act provided a 9% tax deduction from net income for businesses engaged in qualified production activities in the U.S. The Act was designed to encourage domestic manufacturing in the hope that the tax break could provide a competitive advantage against foreign competition and that it would create jobs.

The businesses that might benefit included the oil and gas industry, manufacturers of farm equipment, appliances, pharmaceuticals, and many others. There was one caveat—the oil and gas industry tax break was limited to 6% rather than the 9% granted to the other businesses.

Although he did not say so in his letter, I suppose that President Obama would like to eliminate the tax break altogether for the oil and gas business. These measures are most likely aimed at raising more income for the government to help pay for welfare programs and to reduce the National debt.

On April 3^rd, USA Today published a list of the 10 companies that paid the highest U.S. income taxes in 2012. Number one on the list was Exxon Mobil at $31 billion. Number two was Chevron at $20 billion. Number six was ConocoPhillips at $8 billion. Those three companies together paid more than all the other seven combined.

Hmmm…I wonder—how does President Obama define his idea of a “fair share” of income taxes. It seems to me that the oil and gas industry is certainly paying their fair share.

 

Is the U.N. Worth It?

Opposition to the United States’ membership in the United Nations is growing among conservatives. One main reason is the burgeoning influence of Iran in the organization and the increasing tendency of the U.N. to interfere with internal affairs of its 193 member states—an activity that is strictly prohibited by its organizational mandate.

The United States pays about $6 billion to the U.N. yearly for our membership in the U.N. Iran pays $9 million for its membership.

Iran is the present head of the second largest voting bloc in the U.N. General Assembly, the Non-Aligned Movement. As such, Iran wields strong influence over the other 120 countries in that bloc. Iran is the leader of that caucus and often speaks as representative of all those General Assembly voters. The Non-Aligned Movement contains countries that are supposedly not aligned with any major super powers. It often votes in opposition to the wishes of the United States.

Four times, the United Nations Security Council has sanctioned Iran for its illicit nuclear activities; and four times, Iran has ignored the sanction. Despite this, Iran has been granted seats on governing boards of many major U.N. agencies. Some of these agencies handle billions of dollars every year in funds donated chiefly by Western nations, especially the U.S. This year, Iran won a three-year seat on the 36 member executive board of the U.N’s flagship agency, the U.N. Development Program, which operates billion-dollar budgets across more than 170 countries.

It seems doubtful to me that further membership in the United Nations is in the best interests of the United States. I think we should get out and look more closely to our own interests, instead of bowing to leadership such as Iran and other rogue countries.

Let’s Escape From Spending Hell

America needs to take a good look at the methods and results Western governments have used to get over recessions. The data is in; and it is incontrovertible. Cutting spending works much better than increasing taxes and government spending.

 Alberto Alesina, a professor of economics at Harvard University and a group of co-workers have examined the efforts of 17 Western nations between 1978 and 2009 in their policy changes designed to alleviate recessions. They looked at cutting spending, raising spending, raising taxes, cutting taxes, and all kinds of combinations of these measures. They found that both spending cuts and raising taxes often cause an aggravation of economic recession. But…the recessions associated with spending cuts have caused mild, short-lived recession; and in a few cases, no recession at all was experienced. Tax increases have been associated with prolonged and deep recessions.

The Keynesian “multiplier effect,” which was proposed by John Maynard Keynes in 1931 posited that more public spending will revive a struggling economy. President Obama has bought into this aged theory more than any other President. His Keynesian economic policies have pushed federal spending up to 25% of gross domestic product; and the growth produced has been anemic. It is time we get off of that old and worn-out, theoretical program and quit all this spending.

This blog post is redacted from The Wall Street Journal of 14 March 2013, page A15.

America’s Economists Should Look at Venezuela

The death of Hugo Chávez has focused the world’s eyes on Venezuela—and for good reason. The mistakes made in managing that country’s economy are being made elsewhere—even in the U.S. Chávez was a free spending socialist who nationalized much of the nation’s industry. His political vitriol deeply divided the affections of the people. Does this sound familiar? Chávez’ policies have resulted in an inflation rate of 29.1% in 2011.

One disturbing fact about Venezuela is that a huge number of people there love him. His populist policies of spending excessive amounts of money have crippled a lot of private enterprise and caused significant  shortages of foodstuffs and sugar. It must be admitted that Chávez’ has apparently raised many in his country out of poverty; and for that many in his country deeply revere him. But…it seems to me that the huge governmental spending deficits are catching up with the country in the form of the most pernicious economic effect known, i.e., INFLATION. Inflation cuts across all sectors of an economy and hurts everyone indiscriminately.

Here in the U.S, we see government spending programs outrunning money supply despite the Federal Reserve’s printing money at the rate of $85 billion monthly. This is bound to catch up with us soon. But…liberals and other who look only at the short term benefit of spending absolutely love it. And…like Venezuelans, I fear that they will outvote the conservatives who look at the long-term dangers of high levels of government spending.

The U.S. attempt to spend our way out of the recession has cost us hundreds of thousands of dollars per job created.

Of course, liberals are also worried about inflation—in a peculiar sort of way. They cried bloody murder about the Medicare drug benefit bill passed under President George Bush’s administration (and I, also wonder at the wisdom of that program) because they did not like the overspending it entailed. But they don’t seem to mind seeing the government pay for Obamacare, which costs hugely more money. Now, liberals are hell-bent on another government spending program, i.e., universal preschool education ($25 billion/year).

It will be hard to out vote a free-spending, high-taxing, high-borrowing, inflation-producing, administration in 2016. Like Venezuelans, the voting population will likely opt for the short-term gains rather than for sound fiscal policy.

Another Great Entitlement Program—Preschool Education

President Obama is working up another governmental wonder—a pump up of preschool education. He pointed out that the Georgia program of pre-school education is well on the way to achieving the goals of reducing the teen pregnancy rate, the rate of violent crimes, and causing the graduates of these programs to earn higher wages as adults.

He pointed out that “study after study” has shown that public pre-school education for every child results in lasting academic gains and other cognitive and social improvements. Actually, there were only two studies favorable to preschool education—both of them done four and five decades ago. The studies to which he refers contained 111 and 123 students respectively, all of whom were very poor. These programs were characterized by extremely intensive, personal, involvement of the teachers. The studies featured home visits, parent counseling, nutrition, health care, and other social services. Those studies were expensive, costing $16,000 and $41,000 (in today’s dollar values) per child per year. Currently, Georgia spends $4,298/year/child in preschool.

This results of this preschool program is proposed to surpass the results of the Head Start program. Well, I hope so. The Department of Health and Human Services released a report in December 2012 that said the recipients of Head Start performed better than nonparticipants do until the third grade, when their performance matched perfectly to the performance of students who were not included in Head Start. In other words, the preschool program, Head Start, does not favorably impact student performance beyond the third grade. So, I guess, the solution to that educational program is to throw more money at it—a typical governmental solution to a failed program.

Now, let’s get serious about this Obama proposal. Are there any people out there who actually believe that a preschool program will decrease the teen pregnancy rate and decrease the violent crime rate years after the student graduates into kindergarten??! Give me a break!!

If you look at the data from Oklahoma and Georgia (the two states that now have universal preschool programs) on teen pregnancy rates, you will find that both states have teen pregnancy rates far above the national average. These studies were made after the first cohort of preschool graduates passed through high school graduation.

Consider the high school graduation rates of Oklahoma and Georgia: Oklahoma ranks 25^th in the country on graduation rates; and Georgia ranks 45^th among the states.

I wonder…. Could it be that the poor performance in reducing teen pregnancy and in increasing graduation rates might have been due, actually, to the fact that these state programs have caused the poor results?

Do you really think we need this new entitlement program?

This post was partly redacted from the Wall Street Journal 2/26/13 page A14.)

Are You Afraid of the Sequester?

The President and his mouthpieces at NPR and the rest of the public information media claim that the end of the world is coming tomorrow if the “sequester” goes into effect. All kinds of chaos will break out all the way from airport control towers into classrooms all over the country as thousands of people lose their jobs or are required to take unpaid leave.

Well, some of that may happen; but the interesting thing to note is that the $85 million, which will be cut out of government spending, is exactly the same amount the Federal Reserve is printing each month in order to pay for government deficit spending. Last year, the Fed printed $40 billion monthly. Wow! It would be terrible if the U.S. had to cut spending down to the excessive amount the government is printing every month. We might have to wait a whole month to get back into the spending spree  our government has practiced for the last four years. Poor President Obama! It really hurts him to think of any kind of significant spending cut.

If you are interested in seeing graphic information on government debt and spending practices, I would suggest you look at http://bit.ly/R9oPmU. (Control+click)

Born Again? What Is It?

With today’s blog post, I begin a short group of questions about the Christian faith which I think are interesting. These questions have been proposed, for the most part in a Bible study established at our retirement center for people from various religious disciplines—all of whom are interested in knowing more about the biblical faith of the Christian.

The question for today’s post is this: What are Evangelicals talking about when they claim that in order to follow Jesus, a person must be “born again?”

The best answer I have to this is one given by J.C. Ryle, an Anglican preacher of the late 19^th Century: “To be born again is, as it were, to enter upon a new existence, to have a new mind, a new heart, new views, new principles, new tastes, new affections, new likings, new dislikings, new fears, new joys, new sorrows, new love to things once hated, new hatred to things once loved, new thoughts of God, and ourselves, and the world, and the life to come, and salvation.”