By All Means, Drop Oil Subsidies

Frequent readers of this space understand that I am hardly in favor of the government providing any advantage to one group over another when it comes to the business of business. As a result, I am in favor of doing away with any and all subsidies. I’m sad to see that Senator Thune is still defending the subsidies he likes:

South Dakota congressman John Thune was correct when he spoke for Republicans in arguing that repealing this tax break for oil companies won’t lower gasoline prices to consumers. But it would remove an egregious government intervention in free markets that misallocates resources and makes society as a whole poorer than it would be otherwise. That is an action Republicans claim to favor.

Though some see government subsidies delivered via tax breaks as somehow morally different from subsidies delivered by writing checks, economists are united in scoffing at this, and the more conservative economists are generally the greater their scorn. So to economists, a special tax break for oil works out in almost exactly the same way as a direct subsidy to a crop producer. [emphasis added]

Indeed, the only difference between these is that a politician can make them out to be different things. Practically, however, both approaches are tilting the table.

Our illustrious Senate just made back-to-back bad decisions on oil, with our own senators canceling out each other’s votes:

The bill to end the tax breaks died, 52-48, with South Dakota Democrat Tim Johnson voting for the bill and Republican John Thune opposing it.

The bill to expand oil exploration failed 42-57, with Thune in favor and Johnson opposed.

The particularly sad thing here? Johnson voted against the tax breaks and against exploration because he seems to believe that big corporations are evil and manipulative–all the things which government is not. Thune voted for the tax breaks because he’s fine with the status quo and he voted for drilling because more oil production makes sense in terms of increasing supply to lower prices.

We might just as well have stamped CANCELED on the possibility of our at-the-pump energy costs dropping into the reasonable zone any time soon.

Johnson Focuses on Past

With his new position as chairman of the Banking, Housing and Urban Affairs committee, Senator Johnson has the opportunity to improve matters. Well, let’s say he had that opportunity, he’s already heading in the other direction:

Johnson (left) said in a statement after he was named that as the nation continues to come out of the worst recession since the Great Depression, that he’s “committed to an agenda to restore our economy, make our financial regulations world class, and ensure that consumers and investors are meaningfully protected.” From the perspective of the Banking Committee, he continued, “this will include overseeing the implementation of the Dodd-Frank Wall Street Reform and beginning housing finance reform.”

Nothing like pushing ahead with something which was described as follows:

Dodd-Frank is extraordinarily complex, appearing
to require almost a dozen different federal agencies to
complete anywhere between 240 to 540 new sets of rules,
along with approximately 145 studies that will very likely
affect rulemaking. This count does not include situations
where different agencies create different rules that govern
the same activity.  This new, expansive regulatory regime
prompted former Fed Chairman Alan Greenspan to argue
that Dodd-Frank’s “unprecedented complexity” and its
“inevitable uncertainty” will negatively impact economic
growth, inhibit financial innovation, and “render the rules
that will govern a future financial marketplace disturbingly

Let’s all hear it for rendering rules conjectural, shall we?

Johnson, however, is not going to leave off after implementing the massive mess that is Dodd-Frank. No, that would be stopping short of doing the right thing:

He noted that the Administration’s recommendations on housing finance reform are expected to be released in the near future and “that will generate discussion and help move the debate along.” Johnson said he looks “forward to an open dialogue to build consensus around a viable path forward. I do not want to further destabilize housing markets or make homeownership unaffordable for the majority of Americans.”

Senator Johnson apparently believes that he has the power to make home ownership unaffordable for the majority of Americans. But he won’t stoop to that. No, he will make the market behave and ensure that there is a home in every pot, or a pot in every home, as the case may be.

Tim Johnson for Repeal of HCR

Words you probably thought you would never hear, eh?

Tim Johnson admits health care reform is needed, but he said Friday he would like to see the law passed last year replaced with a more thought-out, market-based version.

“We’ve got to address the critical issue of health care and do it constructively, but you don’t do it by essentially nationalizing our health care, kicking seniors to the back of the bus and killing jobs,” Johnson said. “So we’re going to go back, repeal that monster, and start all over again.”

Of course, context is very, very important.

Why Is Bipartisanship Seen as Success?

From the Rapid City Journal comes the following:

Only a hint of bipartisanship in small business jobs bill

How difficult is it to get bipartisan support on major legislation in the U.S. Senate?

It’s so difficult that passing a bipartisan bill sometimes means winning the votes of two senators from the other party.

That’s what happened this week with the Small Business Jobs Act pushed by Sen. Tim Johnson (D-S.D.) and Democratic leaders in the Senate. The act passed an important hurdle Tuesday in a procedural vote of 61-37, which sent the legislation on to likely Senate passage in the coming days.

But Republican support for the bill has dwindled from an earlier 17-1 vote in a Senate committee where all but one Republican senator voted in favor. Republicans closed ranks after the committee vote, and it took Republicans Sens. George Voinovich of Ohio and George LeMieux of Florida to provide the two votes needed to pass the 60-vote filibuster test in the Senate this week.

Go and read it all.

Why is bipartisanship celebrated, even when it is not really there? It would seem that we have moved so far from absolute standards that we are more interested in having a filibuster-proof majority agree on something than we are on whether the thing agreed upon is legal, constitutional, or even–poor test, but we’ll use it–likely to help.

This is nuts. No matter how many people agree on a bad thing, it does not move it into the good column.

Senator Johnson Invisible?

Mr. Reitzel sends in a letter to the Argus Leader. It is reproduced here in its entirety:

I’m writing this letter to encourage Steve Hildebrand to run against Rep. Stephanie Herseth Sandlin.

We need someone in Washington who will work with President Obama and not against him. We already have Sen. John Thune for that job.

We need a true progressive and not a so-called Blue Dog Democrat who is nothing more than a fence sitter.

We need a Democrat with ideals who isn’t afraid to stand up for what is right and be progressive. Not someone who is timid.

We need someone who will fight for those who can’t. Like the 40 million Americans who don’t have health insurance. We don’t need a Blue Dog Democrat who gets her orders from the insurance industry.

I hope other South Dakota Democrats stand up and encourage Hildebrand to run as well.

You will notice that Senator Thune and Representative Herseth Sandlin are both called out as lacking in “progressive” areas. However, you will also note that Senator Johnson is not mentioned by name. Is the writer leaving him out on purpose–as having nothing to do with the representative’s seat? If so, then why mention Thune? Or, is Johnson the “timid” one referenced in the section about being “right and … progressive?” Or, as the title of this post intimates, has Senator Johnson simply become invisible?

It would also appear that the writer does not believe that Dr. Weiland (who recently declared himself as the Herseth Sandlin challenger) is a “Democrat with ideals.”

All of that aside, I would encourage Mr. Hildebrand to run–if for entirely different reasons than those stated above.

Senator Tim Johnson Addresses Constituent on Health Care Reform Bill

Nicely done. Someone not known to me was kind enough to relate the story of a recent meeting and brief discussion with the senator. Here’s a bit:

I called Senator Tim Johnson’s office on Friday Nov. 20th to voice my opposition to the health care legislation. The Senate was planning on getting the legislation out of committee on Saturday Nov. 21st to be debated on the Senate floor starting the first week of December. The gentleman I spoke to on Nov. 20th informed me that Senator Johnson did not support the current bill, however he would be voting ‘yea’ to bring the bill out of committee so that it could be debated. I did the same drill as usual when I call, left my name and number and asked for Senator Johnson to vote NO.

I was in Rapid City on Tuesday November 24th and decided to go to Senator Johnson’s office, rather than call about my opposition to the current health care legislation. I was talking with the gentleman behind the counter and was explaining to him why I am against the bill. Before I was finished voicing my concerns, Senator Johnson walked in. I said, “Well there he is !”

Go and read it all.

Wealth and Universal Health Coverage

In a recent trip to South Dakota, Senator Tim Johnson made the following statement:

That is a shame and a shock that this country, as rich as it is, does not have universal health coverage.

Let’s take it apart and put it back together as a standard syllogism.

  1. Rich countries should provide universal health coverage.
  2. The United States of America is a rich country.
  3. The United States of America should provide universal health care coverage.

That first line presupposes that material wealth brings with it a responsibility. I would agree that those who have money have a responsibility to use it wisely and yes, lovingly to the betterment of their fellow human beings. People who have money–not governments.

The second line in this syllogism displays a lack of understanding of riches/wealth and who holds it. We are not a classic monarchy of the European sort which held that the king really owned everything and just let the people use it for specified reasons. Were we a country where the government owned everything (such as under communism in the old Soviet Union), it could perhaps be said that we are a rich country. Here’s the thing, we as a country do have incredible wealth in comparison to many other countries the world round. But that wealth is held by individuals, not the country/government itself.

In fact, when we look at the liquid wealth which is held by the government, it is negative. At the national level, it is negative to the tune of 12 to 13 trillion dollars. Add in the state governments and that number grows by hundreds of billions of dollars. Yes, the various governments “own” land, buildings, etc which might offset those values. The problem is that those things are held in trust for the citizens and do not exactly work out as disposable assets–as they would in the case of a corporation. Many different levels of government don’t like this fact, but under a Republic it is the way things are.

It just may be that we are quickly falling out of the second line in that syllogism, as well.

Now, we are down to the final line of the syllogism. Even if the first and second lines were to be true, there is something which would preclude the last line from following the others in a logical progression: the rule of law.

Our federal and state governments are to follow their several constitutions. Though I am not familiar with all of the state constitutions in detail, I do know that the national one must be seriously contorted to wrest from it any mandate for universal health coverage. Of course, our elected officials are so far from worrying about such matters that:

When asked House Speaker Nancy Pelosi (D-Calif.) on Thursday where the Constitution authorized Congress to order Americans to buy health insurance–a mandate included in both the House and Senate versions of the health care bill–Pelosi dismissed the question by saying: “Are you serious? Are you serious?”

Yes ma’am, we are serious. Further, we see no requirement in the Constitution that anyone be provided health coverage by dipping into the national coffers (or forcing any one of us to break our own piggy banks).

Senator Johnson, it is a shame and a shock, sir, that you do not understand that the basis for the bills you vote to pass should not be your feelings, emotions, pressure brought to bear by your fellows in the Senate, or even what other countries do. No, sir, the basis for the bills you vote into law should be no less than our Constitution and the principles of governance set forth therein.

Senator Johnson Franks on Deficit

We’ve already addressed Johnson’s thinking on the stimulus in a recent mailing to his constituents, let’s now move on with the federal deficit. He provides us with a lovely graphic to get started.

Pie Chart, Federal Deficits

Here’s the article from which the graphic was derived. The article includes, among other things, the following surprising statements:

If the analysis is extended further into the future, well beyond 2012, the Obama agenda accounts for only a slightly higher share of the projected deficits.

How can that be? Some of his proposals, like a plan to put a price on carbon emissions, don’t cost the government any money. Others would be partly offset by proposed tax increases on the affluent and spending cuts. Congressional and White House aides agree that no large new programs, like an expansion of health insurance, are likely to pass unless they are paid for.

So, the numbers which support the graphic are based on the idea that “no large new programs . . . are likely to pass unless they are paid for.” Right. Not to mention that increasingly strict regulation of businesses will indeed “cost the government money” when people don’t have any revenue to pay taxes on. The erroneous presuppositions inherent in these numbers are enormous.

Barack Obama has been president for 9 months (give or take). He now owns the deficit, no matter who created it. For him (and for his supporters such as Senator Johnson) to continue to claim that “ahh, we had this problem and can’t do anything about it right now” is remarkably childish. There are any number of things which could be done to reduce the affects of all the poor choices which were made by the President’s predecessors. However, the uproar isn’t about making positive changes to governmental spending habits. Nor does the current president want to stop spending at insane rates–he just wants to spend the money on different things (peace, love and lattes come to mind).

Poor fiscal policies have increased the deficit for years, including massive increases during President Bush’s years in office. Whatever the cause (including 9/11, Afghanistan and Iraq) Bush’s spending did add to the deficit. Yet the picture provided above is misleading, at best. Let’s look at another image, this one showing the past deficits as well as future projections by the White House and the CBO. Oh, and the numbers haven’t improved as of late.

Projected US Deficit

Right. Seems as though the slice of pie for Obama might be a bit bigger than Senator Johnson would have us believe. Of course, don’t forget that as a senator, Obama could have voted against increasing the deficit with regard to those “Bush-era” laws and policies. He largely did not.

The Gateway Pundit (Jim Hoft) looked at some of the issues surrounding deficits earlier this year. Here is his take on the matter:

The truth is that Obama inherited a 2008 budget deficit of 459 billion dollars. He voted for the 700 billion dollar bank rescue in the fall. He was left 350 billion from this spending bill when he took office. He then spent 787 billion dollars on a Stimulus Bill, 33 billion dollars on the SCHIP bill, and 410 billion dollars on his record-setting Omnibus Bill. Karl Rove explained that if Obama didn’t like the banking bailout bill he could have refused to spend that 350 billion dollars that Bush left him but he didn’t. Obama went ahead and spent it anyway.

The CBO estimated that the Obama budget deficit will total an astounding 13.1 percent of GDP this year. As a comparison, under George Bush, the federal deficit for 2008 was 3.2 percent of GDP. The deficit for fiscal year 2007, in the last budget adopted when Congress was controlled by Republican majorities, was 1.2 percent of GDP. Obama’s deficit will force the United States to borrow nearly $10 trillion in the next decade.

One understands Senator Johnson’s desire to put himself and the President in a good light when it comes to monetary policy. That desire should not trump the truth. He does us all a disservice by providing such thinly sourced information as fact. While there are times when a picture is worth a thousand words, this one seems to have a deficit of at least that much.

Senator Johnson Franks on Stimulus

I’ve sent a number of missives (both hardcopy and softcopy) to Senator Tim Johnson. Therefore, I’m on his mailing list. Of course, so is most of the rest of South Dakota. However, I was interested to receive the most recent mailing from his office (not his campaign). In a brief series of posts, we’ll be looking at each of the areas he addressed in this mailing.

First up is the stimulus. Original article below (first as image and then as text).

South Dakota Wins Big in Stimulus Package

South Dakota Wins Big in Stimulus Package

Money and tax cuts from the economic stimulus package enacted in February are already at work in South Dakota. Communities in every corner of our state have received funding for important projects that create jobs and further improve the our quality of life.

U.S. Senator Tim Johnson was pleased that the stimulus package yielded $12 million to increase the capacity of Mid-Dakota Rural Water System, which serves thousands of South Dakota families through a wide swath of Eastern South Dakota. A $6.7 million investment in the Mitchell Airport will support the region’s transportation system.

The economic stimulus package also provided funding for a wide variety of other South Dakota priorities, ranging from cardiac research at the University of South Dakota (USD) to repairing National Guard Armories in Brookings and Huron. Improvements will be made to the Gavins Point Fish Hatchery, as well as the National Wildlife Refuges located at Sand Lake, Madison and Waubay.

“These are just a few examples of the many substantial investments in our communities and in our future that were made possible by the economic stimulus package,” Johnson said. “The focus on good jobs combined with important infrastructure investments will generate economic activity that turns our economy around and returns our home towns and local communities to prosperity.”

While Tim shares concerns about the impact of the stimulus package on our budget deficit, mainstream economists assert that it is cheaper in the long run to get our economy moving again than to allow it to fall deeper and deeper into recession. Recent economic data support this view.

First off, nothing about how much money South Dakota got overall in the stimulus, nothing about how much of the stimulus money went to bailing out the state government’s 2009 budget. Nothing about how much more of the stimulus money will be needed to help out in that same regard for 2010 and 2011.

Then there is  “a focus on good jobs.” Where is this focus and what is the difference between a good job and a not-so-good job?

Finally, there is the last paragraph, which is where I’d like to spend most of the time. At first blush, it seems to acknowledge that there are those who disagree with the Senator and he shares their concerns. But then the piece does something which is a definite no-no: It provides two separate unreferenced facts as the complete basis for throwing out any disagreement that the stimulus is good for South Dakota.

Within this paragraph, we have a reference to “mainstream economists.”  Are Thomas Sowell and other economists of similar stripe not in the mainstream because they disagree with the current Bidenesque approach of borrowing our way out of a recession? Does the Senator know that by definition (at least by Wikipedia definition, so take it with a grain of salt) “mainstream economists” are divided over the benefits of the government meddling in the markets?

The second reference is to “[r]ecent economic data” which “supports this view” that borrowing more is better. Which data would that be? The data which shows the unemployment rate increasing beyond any measure of what we were told it would once the stimulus was enacted? The data which shows that we are now spending 40% of our personal income taxes to just service the national debt?

Must be some other data. I’d really like to know what it is. Surely it wouldn’t have been that hard to write a few more sentences giving us the sources for those statements. After all–franking is free, if you are a Senator.