Remembering Ike

The United States last balanced its budget in 2001. Since then, revenues have gone down and government spending has gone through the roof. And yet, we sure don’t seem to have much to show for it, do we? That is, unless you work on Wall Street or Capitol Hill.

Congress and the President waste more of our money every year and approval polls make it clear that the American public has had enough. Obama’s job approval is around 44% and Congress’s is an absolutely dismal 13%. Surely they’ve gotten the message, don’t you think? Surely they’re trying to establish a lower profile and to cut back on unnecessary spending.

Think again.

Congress has approved a $112.5 million budget to build a memorial in the Washington D.C. mall to our 34th president, Dwight D. Eisenhower. At least 80% of that budget will come from taxpayers. No, you weren’t asked to vote on this expense. The wonderful folks on Capitol Hill decided for you. To put that cost in perspective, the recently opened Martin Luther King Memorial only cost taxpayers $10 million.

One might debate that honoring Eisenhower with a new memorial is a worthy cause despite how unpopular our current leaders are. After all, he is one of the major American heroes of World War II and is considered by many to be one of the top ten Presidents of our nation’s history. He is credited for the Interstate Highway System which changed our road system into the modern cross-country mode of transportation that it is today, he approved the act that founded NASA, and he signed two Civil Rights acts that helped desegregate our schools. Of course, he also got us involved in the Korean War in an effort to stave off Chinese aggression and is the man responsible for putting us in the middle of Middle Eastern conflict. Oddly enough, his area of expertise during his time in office was considered foreign policy rather than domestic.

Consider for a minute if we had been asked to vote on the decision. Perhaps we would have approved it just as Congress did. If you believe he was one of our country’s greatest leaders and that our need to glorify our past is more important than using that $100+ million dollars to create jobs or lower taxes, then we just need to make sure that the project’s budget is legitimate despite its size and get the blessing of the Eisenhower family on the design before we break ground. Those sound like appropriate next steps, don’t they?

That’s where things get really interesting.

The Eisenhower family hates the design and doesn’t approve of the architect, Frank Gehry or the sculptor, Charles Ray. Gehry was chosen without having to submit an actual design and Ray is known for his sculptures of naked children. Originally part of the commission overseeing the project, Ike’s grandson David resigned in protest of the design. Gehry’s vision calls for Eisenhower to be depicted as a barefoot seven-year-old boy sitting in the midst of four acres surrounded by eight-story tall pillars that hold up steel mesh tapestries that show images of the Kansas plains he grew up on. David’s sister Anne has argued that the mesh is likely to collect debris and require a great deal of maintenance to avoid looking uncared for. David and Anne’s sister Susan has also voiced her objections, stating that the design should be simple and should represent the fiscal responsibility her grandfather was known for.

All told, it seems difficult to believe that the project is moving forward, yet it is scheduled to break ground this summer. It seems Congress just doesn’t care what the public or even the great man’s family thinks. One more reason to vote your incumbent Congressmen out of office at the next opportunity.

Energy Independence

Gasoline prices in the US have risen 43% since 2006. In the same time period, the average US income has risen by 4.2%. It doesn’t take a mathematician to determine that fuel prices are taking an ever increasing bite out of an American citizen’s wallet. Recently, headlines have been made regarding TransCanada Corporation’s Keystone Pipeline expansion project and President Obama’s rejection of the proposal until further studies can be conducted on its economic and environmental impacts. Proponents of the pipeline state that it will create jobs and help America obtain energy independence. But will it?

Personally, I believe it will create jobs, although they’re likely to be temporary since most of them would disappear once construction is complete. But the purpose of this post isn’t to debate the project’s merits on that front. My focus in on this country’s need to reduce our dependence on Middle Eastern oil. Would Keystone allow us to import less crude oil from the Middle East, replacing it with Canadian oil instead? Yes, it would.

However, it’s at that point that the issue gets murky. Despite our need to import crude oil, we actually export more of the petroleum products made from it (like gasoline) than we import. In fact, the rate of these exports is growing rapidly. How can that be? How can Americans be forced to pay 43% more for a necessity like gasoline while our country exports more and more of that same product overseas to places like China, Brazil, and India?

The answer is – deregulation.

Over the past decade, Congress has made it increasingly easy to profit from commodity stockpiling and selling. The Commodity Futures Trading Commission (CTFC) has provided exemptions to most of the large banks, allowing them to falsely manipulate the price of commodities like oil in order to reap massive profits for their investors.  US oil companies sell their products offshore because demand in those countries allows them to sell at a higher price, lowering US supply and falsely inflating US prices in the process. Furthermore, we spend hundreds of billions of dollars attempting to influence Middle Eastern countries through a combination of war and bribery in the hopes it will positively impact the supply of crude oil when we could be spending a portion of that money on supporting the development of alternative energy instead.

Imagine how independent we could be of Middle Eastern conflict if we replaced 20% to 30% of our cars with electric vehicles? Imagine how much lower US gas prices would be if they were controlled by supply and domestic demand instead of speculation and offshore profiteering. That future isn’t so far fetched. With proper regulation, oil and gasoline prices could be stabilized while still allowing a fair profit to investors. With proper investment, electric cars and recharging facilities could be built to turn our gasoline driven economy into an electricity driven economy. In comparison, the amount of domestic jobs such a transformation would create dwarf anything possible via projects like Keystone.

Tesla Motors is a great example of the sort of company the United States should be investing in via tax credits and rebates to buyers. These aren’t dinky cars that you’d be embarrassed to drive and they don’t have wimpy batteries that need to be recharged every hundred miles. These are beautiful vehicles with batteries that last over 200 miles. If our country were to invest in the development of cars like this and the recharging stations that would supply replacement batteries (instead of pumping gasoline), we’d be well on our way to solving one of the biggest factors in the demise of this country’s middle-class.

In conclusion, the Keystone Pipeline is a short term improvement, and in my opinion, should be approved. But the long term solution is not increasing the supply of crude oil and the sooner our leaders recognize what really needs to be done, the better.

Tax Reform and Jobs

Plenty of government and financial scumbaggery went on over the holiday break. Some of the highlights include Obama signing Congress’s National Defense Authorization Act (NDAA) which stomps all over our Constitutional Bill of Rights. Financial derivatives broker MF Global and its CEO Jon Corzine filed a $41B bankruptcy claim which brought to light that they’d “lost” $1.2B in client money by illegally combining client and company funds.  And D.C. councilman Harry Thomas Jr. was charged with stealing $350K in government funds earmarked for youth sports programs in order to purchase, among other things, a luxury SUV and rounds of golf.

But that’s not what I want to write about today. There will always be liars, crooks, and politicians (or is that redundant?) to complain about, but how about another solution proposal instead? In fact, how about two solutions wrapped into one?

President Obama is crowing about the unemployment rate dropping to 8.5%, the lowest it’s been since February 2009. That rate is still above his promised 8% and of course, under-reported given that it doesn’t include the folks that have stopped actively looking for work. Businesses are complaining about our corporate tax rate that tops out at 35%, the second highest rate in the world. They state that this forces them to transfer and invest their profits overseas rather than keep them here where they can help our economy.  That 35% rate is also misleading since our tax laws include so many corporate loop holes that few companies actually pay that rate. Instead, they use creative accountants to help them retain more of their profits, doubling the problem for citizens. Companies have less money to hire and pay US workers and our government receives less tax from those companies to pay for its programs.

This brings us to my idea. Why don’t we dramatically simplify the tax rules, offering companies a large tax break based on their percentage of US employees? We remove most of the tax code loop holes, leveling the playing field. Then we offer companies the opportunity to lower their tax rate to 20% based on the percentage of their workforce, including contractors, who are US citizens. The baseline for this tax break starts at 60% of the workforce. If 100% of their employees are US citizens, that company pays 20%. If 75% are US citizens, they pay 27.5%. If 60% or less of their workers are citizens, they’re subject to the current 35%. Obviously migrating offshore jobs back onshore takes time so we offer a one-year grace period from the day the bill is passed. After that, the new rules are in effect. Companies that employ Americans enjoy a greatly reduced tax rate. Companies that export their jobs pay the higher rate to make up for the harm they’re doing to our economy. Sounds reasonable, don’t you think?