Free Markets, Free People

Monthly Archives: February 2009


D.C. Voting Rights Bill — Still Unconstitutional (Updated)

I‘ve written about this issue before, and said all I think there is to say about it. The fact is that any bill coming out of Congress granting voting rights to D.C. sua sponte is plainly unconstitutional. What’s more, Congress is already well aware of this fact. The Congressional Research Service, the legislative analysis advisors to Congress, deduced the following about H.R. 328 (the most recent precursor to current D.C. voting rights bill):

… it is difficult to identify either constitutional text or existing case law that would directly support the allocation by statute of the power to vote in the full House to the District of Columbia Delegate. Further, that case law that does exist would seem to indicate that not only is the District of Columbia not a “state” for purposes of representation, but that congressional power over the District of Columbia does not represent a sufficient power to grant congressional representation.

In particular, at least six of the Justices who participated in what appears to be the most relevant Supreme Court case on this issue, National Mutual Insurance Co. of the District of Columbia v. Tidewater Transfer Co., authored opinions rejecting the proposition that Congress’s power under the District Clause was sufficient to effectuate structural changes to the federal government. Further, the remaining three judges, who found that the Congress could grant diversity jurisdiction to District of Columbia citizens despite the lack of such jurisdiction in Article III, specifically limited their opinion to instances where the legislation in question did not involve the extension of fundamental rights. To the extent that the representation in Congress would be seen as such a right, all nine Justices in Tidewater Transfer Co. would arguably have found the instant proposal to be unconstitutional.

Can Congress vote itself more members?

Can Congress vote itself more members?


During hearings before Congress on the constitutionality of the D.C voting rights bill, Deputy Assistant Attorney General John P. Elwood provided an excellent breakdown of how legal authorities had consistently found that the only way to grant D.C. citizens the right to congressional representation was through a constitutional amendment or by admitting D.C. as a state. Simply passing a law would not suffice.

Despite all the analysis presented, however, Congress continues to press forward with an unconstitutional bill:

Debate opened Monday on a bill to give the 600,000 people of Washington D.C. a full vote in the House. A new Democratic president, Barack Obama, and heftier Democratic majorities in Congress have improved the prospects for the decades-long effort that would certainly ensure another Democrat lawmaker in Congress.

Democrats outnumber Republicans by some 4-to-1 in the capital.

In a bit of horsetrading to offset the Democratic pickup, the bill would award a fourth House seat to Republican-leaning Utah, which narrowly missed getting that extra seat after the 2000 national census. With the two new seats, the House would have 437 representatives.

The time is ripe, said Ilir Zherka, executive director of the advocacy group DC Vote, to end a situation where “we are the only capital of a democracy on the planet that denies voting representation in the national legislature.”

The time is ripe because Democrats have a huge majority in both houses of Congress, and control of the White House. The fact that D.C. votes reliably, and overwhelmingly, for Democrats is the real reason for the bill’s support amongst that party, and one of the main reasons for many Republicans being against it. To overcome the opposition, therefore, Democrats have thrown a sop to Utah in the way of an extra representative, which would also appear to be unconstitutional without a census. Either way, the fact that the bill is plainly contrary to Article I, Section 2 of the Constitution seems to be merely a convenient excuse for some Republicans and a minor inconvenience to some Democrats.

Jonathan Turley has consistently echoed the above, and eloquently explains why Congress should not pass this law, and why the President should not sign it:

Like many, I believe that it is a terrible injustice for the District residents not to have a vote in Congress. As Justice Black stated in Wesberry v. Sanders: “No right is more precious in a free country than that of having a voice in the election of those who make the laws under which, as good citizens, we must live. Other rights, even the most basic, are illusory if the right to vote is undermined.” However, the great wrong done to the District residents cannot be righted through the violation of the Constitution itself.

This is not a debate about the ends of legislative action but the means. In a nation committed to the rule of law it is often as important how we do something as what we do. This is the wrong means to a worthy end.

[...]

[Our Constitution] is the world’s most successful constitutional framework because it is carefully balanced with limited powers between the three branches. It is a design that can be frustrating at times when injustices demand quick action. Yet, the very stability and integrity of our system demands that we remain faithful to its provisions, even when our principles stand in the way of our passions.

Just as there is no debate over the need for a vote for the District, there is no debate that such a vote can be obtained by other means. Indeed, there is no longer any claim to be made that the District (or the Democratic Party) lacks the votes needed to take a constitutional course. The political realities and expediencies that gave raise to this idea no longer exist. With control of both houses and the White House, the sponsors can secure a lasting and unassailable vote in the House of Representatives through either retrocession or a constitutional amendment. Indeed, some republicans have expressed their support for a constitutional amendment that would allow a voting House member for the District.

Like Turley, I am in favor of D.C. residents having a vote in both the House and the Senate. And also like him, I am fervently opposed to any extra-constitutional means of accomplishing that goal. Instead, let’s draft an amendment, or begin the process of retroceding D.C. back to Maryland. Let the Maryland officials be accused of wanting to oppress D.C.’s denizens for a while, instead of those of us who simply want to uphold the Constitution.

We know how to make it happen, and yet Congress insists on doing it the wrong way. Much of it, of course, is sheer laziness and want of expediency. But that is no excuse for elected officials to blatantly disregard their roles as stewards of the contract between the people and their government, and the very source of those officials’ power. Minor as some of these indiscretions may be, when Congress takes it upon itself to decide which parts of the Constitution are worth following and which are not, then we become a rudderless ship of fools.

However it’s done, I heartily agree that we start the process of welcoming our D.C. brothers and sisters to the circus known as Congress. In order to make that welcome worth something, however, I recommend that we go about it in the way that passes constitutional muster.

UPDATE: As it turns out, a bill has been introduced by Rep. Louis Gohmert (R-TX, 1st Dist.) to retrocede D.C. back to Maryland. Funny how this bill hasn’t received any news attention.


“Climate Change” And The Obama Administration – Huge Power Grab In The Offing

No doubt this will somehow end up being blamed on “global warming”:

A rocket carrying a NASA global warming satellite has landed in the ocean near Antarctica after an early morning launch failure.

The mishap occurred Tuesday after the Taurus XL rocket carrying the Orbiting Carbon Observatory blasted off into the pre-dawn sky from California’s Vandenberg Air Force Base.

“Orbiting Carbon Observatory”? It is apparently now the “Submerged Carbon Observatory”.

In other climate change news, it seems the new “Climate Czar” is ready to rock and roll on the question of carbon regulation:

President Barack Obama’s climate czar said Sunday the Environmental Protection Agency will soon issue a rule on the regulation of carbon dioxide, finding that it represents a danger to the public.

The White House is pressing Congress to draft and pass legislation that would cut greenhouse gases by 80% of 1990 levels by 2050, threatening to use authority under the Clean Air Act if legislators don’t move fast enough or create strong enough provisions.

Note that last line – certainly what one would expect an unelected “czar” to do, wouldn’t you say? Note also that the EPA intends to declare CO2 a “danger to the public”. Yes friends, the gas you exhale as a part of your respiration, the one that plants use in photosynthesis, is suddenly going to be a “danger to the public”.

Officially recognizing that carbon dioxide is a danger to the public would trigger regulation of the greenhouse gas emissions from coal-fired power plants, refineries, chemical plants, cement firms, vehicles and any other emitting sectors across the economy.

All those economic sectors and industries which are supposedly going to be engaged in our recovery via infrastructure improvement, providing critical power and fuel or on the list to be rescued by bailout funds. Does that make any sense at all?

Critics of putting an expensive premium on carbon say that such a schedule may be overly optimistic given the global financial crisis and the ramifications that putting a cap on greenhouse gases would have across nearly every sector of the economy. Tough action too fast, they say, not only could curb manufacturing and create an energy crisis by halting new power plant construction, but also could force a rapid migration of businesses overseas to cheaper energy climes.

But zealots don’t really care about such things – I mean, this is about “saving the planet” you know? And this isn’t just about Browner. She has some powerful backing:

Specifically, Obama wants an economy-wide law – instead of just some major emitting sectors – and to auction off 100% of the emission credits, which analysts say could exponentially increase the cost of emitting, as well as the pay-off for low-carbon projects.

So, given this, does anyone still doubt that we’re going to be in this recession for quite some time once the Czar throws the lever on this little power play (no pun intended)?

Wait, there’s more.  If you’re at all concerned with the expanded power this gives the federal government, you ain’t seen nothin’ yet:

Separately, Browner said the administration was also going to create an inter- agency task force to site a new national electricity transmission grid to meet both growing demand and the President’s planned renewable energy expansion. Siting has been a major bottleneck to renewable growth, and lawmakers and administration officials have said they’re likely to seek greater federal powers that would give expanded eminent domain authorities.

Hope and change.

~McQ


The 10th Amendment Movement Continues To Grow

And it’s about time:

State governors — looking down the gun barrel of long-term spending forced on them by the Obama “stimulus” plan — are saying they will refuse to take the money. This is a Constitutional confrontation between the federal government and the states unlike any in our time.

In the first five weeks of his presidency, Barack Obama has acted so rashly that at least 11 states have decided that his brand of “hope” equates to an intolerable expansion of the federal government’s authority over the states. These states — “Washington, New Hampshire, Arizona, Montana, Michigan, Missouri, Oklahoma, California…Georgia,” South Carolina, and Texas — “have all introduced bills and resolutions” reminding Obama that the 10th Amendment protects the rights of the states, which are the rights of the people, by limting the power of the federal government.

Although critics have panned these refusals as sour grapes by Republicans or attempts to thwart President Obama’s stimulus of the economy, in fact it is a fight the states should have undertaken years ago.

One reason is many of the laws passed at a federal level mandate funds be provided for the program at a state level as well. I’d be interested in anyone who can find Constitutional backing for such a requirement by the federal government, but it is what has happened in the past.

Secondly, there’s the matter of law. Much of what is driving this 10th Amendment movement is the realization that the Fed is attempting to extend its control deeper and deeper into the states. Many are driven by what some would call “wedge issues”, but as Bryan points out in his “MYOB” post, states more accurately reflect their citizenry than does the federal government and the imposition of “one-size-fits-all” legislation, especially when it exceeds the constitutional reach of the Federal government, is something to be resisted:

For example, Family Security Matters reports that Missouri’s “House Concurrent Resolution 0004 (2009) reasserts its sovereignty based on Barack Obama’s stated intention to sign into law a federal ‘Freedom of Choice Act’, [because] the federal Freedom of Choice Act would nullify any federal or state law ‘enacted, adopted, or implemented before, on, or after the date of [its] enactment’ and would effectively prevent the State of Missouri from enacting similar protective measures in the future.”

The resolution in Montana grew out of concerns over coming attacks on the 2nd Amendment, thus its preface describes it as, “An Act Exempting From Federal Regulation Under The Commerce Clause Of The Constitution Of The United States A Firearm, A Firearm Accessory, Or Ammunition Manufactured And Retained In Montana.”

New Hampshire’s resolution actually references certain federal actions that would be nullified within that state were they pushed by Obama’s administration, according to americandaily.com. Among these are “Any act regarding religion; further limitations on freedom of political speech; or further limitations on freedom of the press, [and any] further infringements on the right to keep and bear arms including prohibitions of type or quantity of arms or ammunition.

I sincerely hope this trend continues and that we see some states challenge the Federal government in court over 10th amendment issues in an effort to stop the mandates and the attempts to modify or change state law.

For those who have forgotten what the 10th Amendment says or aren’t familiar with it, it reserves to the states and people those powers not explicity delegated the federal government:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

I’d also remind everyone that the 10th amendment is a part of the Constitution known as the “Bill of Rights”. As we’ve all observed over the years, the rights of states have been all but rendered null and void. To regain a semblance of the federalism under which the nation was founded, movements like this are not only critical but necessary. It is one very important way we can curb the growth of the Federal government – assuming the Supreme Court agrees (which is not at all a given) since I’m sure this argument will eventually end up being settled there.

~McQ


Afghanistan – No Longer The “Good War”?

Apparently not to the usual suspects.

Bill Ayers was interviewed:

Ayers had this to say about President Barack Obama committing an additional 17,000 troops to Afghanistan: “It’s a mistake. It’s a colossal mistake. And, you know, we’ve seen this happen before, Alan. We’ve seen a hopeful presidency, Lyndon Johnson’s presidency, burn up in the furnace of war.”

Ayers thereby joins the rest of the moonbat contingent:

“I’m very upset; he promised change, and this is not change. It’s just going to create more deaths on both sides and create more terrorists,” said Jodie Evans, co-founder of Code Pink. The group, known for protests and targeting Bush administration officials, posted a statement Thursday condemning Mr. Obama’s decision and urging him to replace the combat troops with “humanitarian troops.”

“Afghanistan needs troops of doctors, farmers, teachers, not more troops,” the statement says.

It is apparently beyond Ms. Evan’s abilities to wonder how those “troops” of doctors, farmers and teachers are supposed to do their thing when, in the absence of our troops, the countryside is controlled by the Taliban. I assume she isn’t aware of the fact that the Taiban has a tendency to behead many of those she’d commit to A’stan.

Interesting though, isn’t it? Now we’re beginning to see that many of the supposedly “anti-Iraq” crowd, were just the usual anti-war bunch.

~McQ


For Once I’d Actually Like To See Reid Be Right About Something

Sen. Harry “the SURGE has failed” Reid is again in the analysis business:

Senate Majority Leader Harry Reid (D-Nev.) said on Monday that the banking industry is “very close” to being stabilized and the nation’s economy is starting to rebound.

“We tend to talk about the negative. … Things are beginning to turn and I think the American people are going to feel that very soon,” Reid said during an appearance on MSNBC’s “Morning Joe” show. 

Great.

Cancel the “stimulus” and cut the deficit by 789 billion.

Fiscal responsibility somewhat restored (well, except for Social Security, Medicare and Medicaid).

~McQ


Searching the Omnibus

Good luck searching through the omnibus spending bill:

The $500 billion omnibus spending bill to fund the most of federal government for the rest of the year will be debated in the House this week. And it has now finally been posted online.

It’s a PDF of scanned pages, meaning it can’t be searched or parsed in any other way. All 1,133 pages of it. Same with the 1,845-page explanatory statement.

That’s placing form over substance, putting a bill online in a useless format.

The bill combines spending for several agencies. On parts of the bill posted on the House Appropriations Committee website, you can literally handwritten notes and crossed out lines on various pages of the legislation. You can see an example on page 9 on the section of the bill dealing with appropriations for “Agriculture, Rural Development, Food and Drug Administration, and Related Agencies.”

You can still go through and find the pork, but the lack of a tool to search the document makes it more difficult.


9,000 earmarks in omnibus spending bill

“I can find no warrant for such an appropriation in the Constitution; and I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit. A prevalent tendency to disregard the limited mission of this power and duty should, I think, be steadily resisted, to the end that the lesson should be constantly enforced that, though the people support the Government, the Government should not support the people.” – Grover Cleveland

An omnibus spending bill introduced today in Congress is stuffed with 9,000 earmarks:

“We need earmark reform,” Obama said in September during a presidential debate in Oxford, Miss. “And when I’m president, I will go line by line to make sure that we are not spending money unwisely.”

President Obama should prepare to carve out a lot of free time and keep the coffee hot next week as Congress prepares to unveil a $410 billion omnibus spending bill that’s riddled with thousands of earmarks, despite his calls for restraint and efforts on Capitol Hill to curtail the practice.

The bill will contain about 9,000 earmarks totaling $5 billion, congressional officials say. Many of the earmarks – loosely defined as local projects inserted by members of Congress – were inserted last year as the spending bills worked their way through various committees.

In case you’re wondering, the highest number of earmarks in a single year is 13,997 (2005) at a cost of $27.3 billion. Though the number of earmarks dropped to 9,963 in 2006, the cost surpassed the previous year at $29 billion.

Obama has pledged to “slash earmarks to no greater than 1994 levels and ensure all spending decisions are open to the public.” This spending bill isn’t a great start on that promise.

You can read the FY 2009 Omnibus Appropriations Act here.

H/T: Club for Growth


NYT Asks: “Why Can’t Cerberus Foot the Bill?”

Welcome to the club. I’ve been asking that question for some time now. Better late than never, I suppose:

Chrysler said the only reason it was back asking for more money so soon was that the car market was worse than it had expected two months ago.

This cavalier approach to the public purse raises a very big question. If Chrysler is really on track for a turnaround and all it needs is some financing to get over a bad patch in sales and debt markets, why doesn’t Cerberus Capital Management, which owns 80 percent of the company, put up the money itself? Why should taxpayers have to take the risk? That’s what private equity funds like Cerberus are supposed to do.

Cerberus and Daimler, which retained a stake in Chrysler, have promised to convert $2 billion in loans to Chrysler into equity, which should help reduce its debt. But Cerberus said giving fresh money would violate its fiduciary duty to investors, breaking company rules limiting how much it can commit to any given investment.

We suspect these rules would be more pliant if Cerberus deemed Chrysler to be a good deal.

It seems the secretive private-equity fund is willing to gamble on Chrysler’s survival with the taxpayer’s dime, but not its own.

The real question is, if it is violative of Cerberus management’s fiduciary duty to bail out its own company, why is it fiscally responsible for the federal government to do so?

And what does it say when the leader of liberal opinion has more qualms about a bailout than the federal government? Nothing good I would think.


What’s Just Like Death?

Taxes, as the saying goes, in that both are certain to come to us all. The corollary is that once government spending outpaces tax receipts by a significant enough amount, then taxes will inevitably rise. Or, at least, that should be the corollary.

We’ve already heard about calls for raising the top income rate to 90%. Now Marc Pascal, writing at The Moderate Voice, lays out a more comprehensive plan:

The first of several stimulus packages has just passed but it is just the beginning of our efforts to address our immediate and long-term economic problems.

After 2010, the federal operating budget will face trillion-dollar deficits as far as the eye can see. They have to be addressed for the long-term prosperity of our country and our future credit-worthiness in the world.

Eventually every American has to dig in and pay more taxes to help our country and our fellow citizens. We must put in place the laws and mechanisms to steadily increase taxes after 2010. We have to owe up to our massive public and private financial messes. Cutting federal earmarks and waste will not eliminate even half the annual deficits. The federal budget gap will require increasing taxes by over $500 billion by 2011. Fiscally irresponsible and spoiled children hate to hear this news but it’s our only choice for our collective long-term prosperity.

It is true that people don’t want to hear this, and I don’t think that is limited to “fiscally irresponsible and spoiled children.” Indeed, the inevitable raising of taxes was one of the arguments against the stimulus package, so I’m not sure to whom Pascal is referring.

A number of prominent publicly-minded millionaires and billionaires including Warren Buffet have recommended higher income taxes on themselves and their friends for several years. Certainly Mr. Buffet has been right more than most politicians and it’s time to effectuate his recommendations. Their altruistic economic view may simply be a rational response for their long-term preservation and that of the nation as a whole.

Actually, their view is not altruistic at all. The very rich, with the financial means to hire the very best in tax advice, are quite skilled at arranging their affairs so as to minimize their tax burden. When Warren Buffet clamors for raising taxes on the rich, you can be sure that he does not intend to pay as much as he possibly can to the federal government. However, those in the middle income brackets surely will. Buffet and brethren simply hope that those taxpayers will somehow be mollified by the fantasy that “the rich are paying their share too.”

On to the plan:

The Bush tax cuts should expire by their own terms by 2010 and marginal income taxes will return to the rate of 39% for incomes over $250,000. Additionally, and instead of capping executive pay, we should create a new marginal tax rate of 49% for earning over $1 million.

That is actually a somewhat more reasonable plan than some that have be floated, but still a pipe dream in terms of raising tax revenues to cover the trillions in spending contemplated (and as yet revealed) over the next four years. Even if the rich were to pay every possible penny of their income above $1 Million in taxes at that rate, how long to do you suppose they would do it for? If you had a choice of living quite comfortably and making around a million dollars, knowing that you’d keep something close to 70% – 75% of the money, would you really continue working hard enough to earn more than that if you knew you would only receive 50 cents on the dollar?

If there are any short-term tax cuts, they should be combined with long-term tax increases. The 2009 FICA payroll tax for social security is a 6.2% tax rate on every dollar earned up to a gross annual income of $106,800. For more than a decade, everyone has agreed that to save social security (without increasing the retirement age, the tax rate, or lowering the average monthly benefits of just under $1,000 per person) the best solution is to raise the taxable income limit so the wealthy contribute more to the entire system. We could provide both a short-term economic stimulus to the majority of Americans and save social security for the long term.

Let’s lower the FICA social security tax rate for rest of 2009 and all of 2010 to 5.5% but raise the income limit to $250,000. In 2011, let’s raise it to 5.75% and set the income limit to $500,000. By 2012, the rate would be 6% and the taxable income unlimited. This would simply parallel the 1.45% FICA tax for Medicare and Medicaid imposed on all earned income. Its rate will probably have to be raised to 2% after 2010 to pay for existing programs and any expansions of benefits.

Again, not an entirely unreasonable plan considering the alternatives. But what’s never mentioned when someone suggests raising the income level for FICA is that, while more tax revenue would be raised, federal liabilities would also be increased. That’s because the government is simply taking more money now and promising to pay more benefits upon retirement. That does nothing to reduce the burden of current spending, which was supposed to be the point of the tax increases.

As near as I can tell, this part of the plan would have the effect of hastening the looming entitlements crisis in exchange for perhaps pushing the current one off down the road a bit. The end result looks more like a perfect budgetary storm as the bills we’re racking up today and the entitlements we’ve promised in the future, begin to overlap.

Across the political spectrum, most people agree that our various transportation, water/sewer, and electrical grid infrastructures have been long neglected. Infrastructure spending is the best use of government stimulus money because more jobs are created both quickly and over the long term. Just to modernize our existing infrastructures systems will cost at least 2 trillion dollars over the next 10 years. Furthermore, we must also invest in new energy technologies, mass transit and high speed rail lines – all of which will cost billions more. We can’t put off such spending and we have to be honest about paying for them over the foreseeable future without resorting to further borrowing.

This is a part of the supposedly Keynesian argument that government spending provides a greater multiplier than private spending. Of course, as Bruce has pointed out before, if that were the case then why have private spending at all?

Furthermore, I really don’t understand how government spending on infrastructure and energy technologies creates jobs.

In the infrastructure realm, once a government project is done, then the job disappears. If the job is done quickly, efficiently and completed on time then it’s not government work the job just disappears that much more quickly. And after that? How does a brand new bridge create a job after it’s built? Even worse, what happens if the project turns out like the Big Dig in Boston (which seems to be much more likely)? Sure people will have jobs for longer, but the supposed benefit of the structure will shoved further into the future and the taxpayers will be on the hook for a lot more than they signed on for. How does that sort of project stimulate the economy?

With respect to new energy technologies, I’m all for it. But with the government choosing which technologies to fund, how do we know we’re getting the best there is to offer? That’s not typically the case where government picks winners and losers. And just because something is “green” does not mean that it is efficient, beneficial to the economy, and/or capable of saving anyone money in the short (or long) term. In fact, it probably means the opposite of one or all of those things. Instead, why doesn’t government get out of the way and allow nuclear power plants to be built, thus saving taxpayers billions of research dollars. That’s technology that we already have, and it’s green. Otherwise, these sorts of proposals are little more than a massive wealth transfer from one group of people to the politically favored few. There is nothing stimulative about that.

Across Europe, the average tax per gallon of gasoline ranges from $4 to $6. The U.S. federal gasoline tax is a paltry 18.3 cents per gallon with each penny raising $850 million to $1 billion per year depending upon how much Americans drive. Only when gasoline hit $4 a gallon during last summer did we start taking mass transit, buying hybrids, shunning gas guzzlers, demanding more energy-efficient cars and buildings, and seriously considering alternative solar, wind and nuclear power, and our own oil and gas reserves. The best and only way to ensure long-term energy independence is to have a serious financial incentive that hits everyone.

OK, if we accept the premise that less fuel consumption is better for Americans, then Pascal has a good point here. Of course, I’m not sure why gas station owners or truck salesman are any less deserving of being stimulated than other Americans, but that seems to be a staple of these plans. Moreover, Pascal’s plan doesn’t look all that much different than how transportation projects are already funded at the federal level.

While we should not enact excessive gasoline taxes, we can at least impose an additional and modest oil import fee on foreign barrels of oil.

More importantly, we should increase the federal gasoline tax from 18.3 to 75 cents per gallon, by monthly increments of about 5 cents per gallon over 12 months. The overall U.S. gasoline price per gallon by the end of 2010 should still be around $3.00 but the U.S. would have $70 billion a year to pay for our many needed transportation and energy infrastructure projects. This would be the responsible, mature, and intelligent solution for raising the necessary funds for these projects.

Presumably, Pascal means that we would charge this import fee to the American refiners who distribute gasoline in the country. And Pascal does suggest that he thinks this would be a tax on everyone, which in addition to the increased gas tax it would be. Strangely, this is the sort of protectionist measure one sees where domestic industries are beset by low-cost foreign competitors, yet domestic production is practically forbidden. Instead, Pascal wants to drive demand for gasoline down, so he advocates raising the costs of gasoline indirectly. Would that have the effect of increasing demand for more domestic oil? Perhaps. But it would certainly raise costs for all Americans, whether we all buy hybrids (which are much more expensive) or not, and again I don’t see how raising prices is stimulative.

Overall Mr. Pascal’s tax proposal is not altogether outlandish, and certain elements of it are almost certain to come to pass. What’s so horrible is that these sorts of plans are only necessary (and inevitable) because the government has been spending far more than it takes in for quite some time now. Even if you think that the Bush tax cuts “cost” the federal government money, you have to admit that the one thing that every administration has had in common, whether Republican or Democrat, is that federal spending never decreases. Regardless of whether tax-and-spend is better/worse than cut-taxes-and-spend, the situation we find ourselves in today is precisely because spending never seems to drop, not because tax rates go up and down.

To be sure, there is nothing evil per se about deficit spending. Whether it’s bad or not depends on where the money is going, and how the costs are intended to be recouped. But at some point the piper must be paid, and when that time comes one would hope that all the spending had created some wealth with which to pay him.

Stumulative bridge for sale

Stimulative bridge for sale

Obviously taking money from Peter and giving it to Paul (minus a transfer fee, of course) won’t accomplish that goal. And neither does building a new bridge from Paul’s house to Peter’s. Indeed, unlike people, the government can’t work harder in an effort to “do something” and create wealth, because that’s not what governments do. The only things that government is any good at is making rules and enforcing (some of) them. Although those two actions can protect wealth and the opportunities to create wealth, neither action actually creates wealth.

Thus, we’re left with the unshakable propositions that (1) government spending necessitates taxes, (2) deficit spending necessitates tax increases, (3) tax increases necessitate higher prices, (4) higher prices produce less consumer spending, (5) less consumer spending results in less business revenues, (6) less business revenues means fewer jobs and less wages, (7) fewer jobs, less wages and less business revenues means less tax dollars, and (8) fewer jobs, less wages, less business revenues and less tax dollars means … more government spending is necessary?

If you believe that last one, then I have a bridge I’d like to build you. It will be ready for use immediately upon the check clearing.

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