Archive for ‘Regulatory Reform’

December 13, 2011

This President has Never been about Jobs, but what?

by Steve Dana

President Obama often talks about how everyone needs to pay their fair share and then points to successful citizens as taking advantage of the system; but in a negative way, rather than using their example of success as encouragement for others to be successful as well.  At a time when many Americans are struggling, Obama and many of his ilk are angry because some Americans are not struggling so much.

Think about all the immigrants who became the foundation of our country over the years.  When asked why they sacrificed everything to come to America, they answered with two things; liberty and economic opportunity.  They wanted to be free and have the chance to work hard and be successful in America.

Liberty and Economic Opportunity!

When the Democrats try to rationalize how folks who don’t pay a dime of federal income tax are paying more than their fair share, they compile all the increases in their cost of living as evidence supporting their case. 

So who or what is driving up the cost of living for Americans?

The short answer, your government!

Who wrote the tax code that gives General Electric the loopholes so they pay no tax?  Who wrote the regulations that told banks to make loans to folks who couldn’t afford to pay for them?  Who passed the laws that enable a single person to file a frivolous lawsuit that prevents a factory from being built without either proof or economic penalty for failing to provide proof?

Don’t get me started about why food cost has risen so much!

Once again, your government!

I remember when he was Candidate Obama he said that by necessity energy costs would have to increase.  He didn’t explain too well why it was necessary but knowing that higher energy costs would unfairly target lower income Americans he spent the past two and a half years working to raise energy costs.  I think the strategy was to raise the price on current cheap energy so the really expensive “ALTERNATIVE ENERGY” companies the President and his cronies wanted to promote appeared more competitive.  We all know how that worked out with Solyndra and others.

It appears that strategy worked as far a supporting Obama’s core supporters, but hardly Main Street Americans.  Could it be that average Americans are not his first priority?  Think about those union construction workers not going to work because of the Keystone Pipeline deal being delayed.  Could it be that the rank and file union workers are not his first priority either?

At a time when the President talks about energy independence from foreign sources, he turns his back on American energy companies and offers billions of American dollars to Brazil to develop their petroleum resources which just happen to be found in deep water off their coast. 

So the President is subsidizing oil exploration and development for Brazil so we can pay them for the foreign oil rather than Saudi Arabia or Kuwait while depriving American workers of family wage jobs on the oil rigs and in the refineries here at home.

I would think that if deep water drilling is as risky to the environment as the President suggests, then it shouldn’t matter if it’s in Louisiana or Brazil, should it?  And, maybe if we shouldn’t be subsidizing American oil companies, certainly we shouldn’t be subsidizing foreign oil companies either.  And if it’s good for the Brazilian economy to create jobs in the petroleum industry it’s got to be really good for Americans too, right?

When the administrator of the Environmental Protection Agency was asked in a Congressional hearing whether his folks ever considered the economic impacts of the regulations they adopted, he indicated that they did not.  So what’s so important about that?  Well, think about the Endangered Species Act and the Clean Water Act for starters.  Your utility bills in your homes are impacted by changing standards for you local water and sewer providers.  Your PUD rates are severely impacted by regulatory changes for our hydro-electric and nuclear energy producers.

Folks in my small city experience these impacts every day.  In 1992 we built a state of the art sewage treatment plant designed to meet current and future discharge standards as outlined by the Washington State Department of Ecology but in 1993 when the plant was completed, Federal regulations had changed to the point where the plant was out of compliance before it ever processed a gallon of sewage. 

Since I was Mayor at the time, I took a lot of heat for that but we did what we were told by both the state and federal regulators at the time.  Those changes affected thousands of other small cities and millions of people; and not in a positive way.  When asked whether he was concerned about those folks who had been damaged, a DOE staffer replied that it wasn’t his job to be concerned about economic hardships.

There is no doubt that the cost of living has increased substantially, but I suspect that if you want to point fingers, the Democrats are more responsible for those increases than Republicans.

Our challenge today is to get Americans back to work at jobs that will support families.  That means the government has to roll back regulations that strangle job producers while still considering the mission of their agency.  The EPA still needs to do a job, but not at the expense of our economy.

Those Occupy Wall Street protesters may have a legitimate beef, but the culprit is not the guy that followed the rules, it’s the government for making the rules.  How many times have you yourself said “just tell me what the rules are so I can get on with my project?”

Given the choice of creating family wage jobs in the energy industries and even the financial industry or inhibiting job creation with more excessive regulation, the President and the Democrats consistently choose more regulation.  What does that tell you about their priorities?

Then take a look at their fall back position on every issue today; raising income tax rates on everyone earning more than a million dollars per year.  Even though studies show that the revenue needed to solve even one of the problems would not be collected by the increase they propose.  Remember the discussions about raising the debt ceiling, RAISE TAXES ON THE RICH!  Remember the Super Committee, cut spending by RAISING TAXES ON THE RICH!  Remember talks about Entitlement Reform, RAISE TAXES ON THE RICH!

Our problems have gotten so big even Bill Gates and Warren Buffet can’t come to our rescue.

Why isn’t anyone talking about that?

Raising taxes on rich folks will not solve a problem with spending that increases 8% per year, every year while the economy only grows at 2%.

November 14, 2011

Super Committee Agonizes about 3.2% Cut

by Steve Dana

Did you ever wonder why when the government decides to increase spending it happens next week but when they talk about reducing spending it’s always in budget cycles five to ten years out?  Does that really make any sense?

I really only care about what they will cut in their next budget and the one after that because there is some likelihood those same elected officials will still be around to be held accountable.

The Super Committee is agonizing about reducing spending somewhere in the neighborhood of $1.2 trillion over ten years.  Considering the fact that federal spending increases 8% per year and that is considered a “no growth” budget.  So what are they cutting the $1.2 trillion from?

Where else in the world could that happen? 

If the budget is $2.4 trillion per year in 2011, then a no growth (8%more compounded) budget for 2012 would be about $2.6 trillion; $2.81trillion for 2013, $3.02 trillion for 2014 and on up to a total of about $37 trillion over the next ten years. 

Remember, that is how much cash the federal government will spend over the next ten years when they consider an 8% increase in spending a no growth budget.  They say they are trying to reduce spending by $1.2 trillion during that ten year period which amounts to about 3.2% of the $37 trillion.  And they are agonizing?

I’d settle for a no growth budget being a zero percent increase year over year and no cuts.  If they just capped spending at $2.4 trillion per year then over ten years we would only spend $24 trillion instead of $37 trillion.

Then if you consider that the government only takes in $1.8 trillion per year at the current level and that is not subject to the 8% growth rate.  Generally a revenue growth rate of 3-4% is considered good and 5% is great.  Let’s assume for this simple analysis a growth in revenue of 3.5% per year over the next ten years.  Revenue received totals only $21.8 trillion when compounded.

Our current national debt is about $14 trillion and without reducing spending but actually increasing spending 8% year over year and experiencing 3.5% growth in revenue each year our national debt increases by another $15 trillion to about $29 trillion.

And the Super Committee is agonizing about cutting $1.2 trillion.  There is also word that they are trying to make a “really big deal” and cut $4 trillion over ten years or slightly more than 10% of the $37 trillion total.

Could this discussion be any more absurd?

We need real spending cuts not a slowing of the growth rate.

If that weren’t bad enough, consider how you react when you are elected to Congress in 2016 and someone trots out this agreement to cut spending in some future budget cycle.  Do you feel obligated to cut spending or kick the can to the next guy?

What happens if no future Congresses agree to make the cuts promised in 2011?  What obligation does a future Congress have to honor agreements made by the Super Committee?

In a word; NONE.

It would be a good start to adopt a budget because that would indicate that the Senate finally came to the table.  It would be better if we capped spending.  It would be great if we could actually reduce spending.

I’m thinking I hear a kicking sound!

November 14, 2011

Write the Rules, Take the Credit?

by Steve Dana

There’s been no shortage of media coverage for the expanding “Occupy Wall Street” protest movement across the country.  When it started in New York, you could tell that folks were angry, but interviews showed that many were gathered, but not to protest a common grudge.  Everyone seemed to have a beef, but more often than not, it was different from the next person.  That should have been a tip.

In an effort to justify protesting, the media tried to compare the O W Streeters to  TEA Party protesters but if you ever attended a TEA Party event, you never saw a spectacle like what has devolved in cities like New York, Denver and Oakland.  Certainly both sides have bad apples, but I can’t recall a significant TEA Party event where anyone got hurt, let alone be murdered.  TEA Partiers police their own events so the focus is only on the protest.  In spite of the fact that the TEA Party is not centrally organized; every chapter champions generally common goals; smaller government faithful to the Constitution, providing for the common defense, protecting personal liberties.

Not surprisingly, most of the media still insists the two movements are the same; in spite of the violence on the left.  I can’t help but wonder how they can spin that fiction even when confronted with the facts.

Some of the protesters given a chance to voice their reason for protesting, point to “fat cats” on Wall Street for their lack of jobs on the one hand but maybe the lack of opportunity to be “fat cats” themselves on the other.  Most of the interviewees complain about how they graduated from college with huge college loan debt expecting to be hired by some big company only to find they are unable to secure a job.  Few gave much thought to who might be their prospective employers as they were signing those loan papers but all have concluded it was a Wall Street conspiracy.  Unless they were planning on a public service career in which case they are angry for a different reason.

Occupy Wall Street protesters allege that robber barons with Wall Street addresses engineered the system that allowed them to get filthy rich(er).  Few of them really understand how the system works.  If they only knew. 

When I was a Snohomish city council member in the 1990’s I encountered a land developer who made the point so clear to me when he told me he had preferences but he really didn’t care what regulations we passed, he would analyze what the regulations allowed him to do, what they wouldn’t allow him to do and decide whether it made financial sense for him to invest in a project.  If it made financial sense to him, he would invest.

If that simple lesson doesn’t explain how business decisions are made and who/what is responsible for the debacle our country has endured over the past few years, then I guess I won’t get through to you.

Another thing, chiseling isn’t reserved just for capitalists.  If it were just capitalists gaming the system, they would have been driven away long ago, but then, who would have provided the jobs and the products and the tax revenue that pays for everything else?   Think about how you learn the rules in your world and interpret them to your own advantage.  Taking advantage of loopholes or stretching the truth or as a former accountant used to say, “venturing into the gray zone” is a behavior practiced by a good many of us.  Using poorly written laws and regulations to your advantage is not a crime, it isn’t even unethical.  In many circumstances, it’s thought of as being clever and ingenious.  That is of course unless it doesn’t benefit you. 

Being able to capitalize on a scale that might make you wealthy may be an advantage for folks who already have money, but it doesn’t deprive you or me from enjoying the same opportunity if we have a good idea and are willing to work really hard.

It’s clear to me that the burden for our dilemma lays clearly on the shoulders of those who pass the laws and write the regulations; City Councils, Legislatures and our Congress but don’t forget the regulation writing bureaucrats that work for them all.  Where would we be without our friends the bureaucrats?

If you are unhappy because General Electric exploited the tax code and ultimately paid no federal corporate income tax, look to the government that created the loopholes.  I have no great affection for General Electric but they didn’t write the rules, did they?

While I am singling out GE, can we really blame them for moving their jobs to foreign countries when our government eliminates incentives to keep jobs in America while at the same time telling them how important it is to develop a world economy by raising the standard of living in foreign countries.  Even if succeeding at that goal comes at the expense of jobs at home?  Ask yourself who promotes the “world economy” thing the most and if they are supporting a world economy are they doing so at the expense of our American economy.  Every manufacturing job that goes overseas in the name of world economy chips away at the middle class in America.

If you really want to blame someone because there are no new jobs in many industries still doing business in America, just look at the regulatory burden heaped upon those businesses and go back to the lesson I described above.  If it doesn’t pencil out to hire because of uncertainty or tax burden, blame the government not the business owners.  As much as you may not like it, share holders do look at profitability and the bottom line and sometimes make the choice to not invest in America.

Go ask your elected officials how they failed to propose, negotiate and pass legislation that either prevented middle class family wage jobs from heading overseas or created jobs in America by reducing risk and uncertainty  to a business thinking about locating in your town.

The answers the protesters are looking for will not be found in New York, Denver or Oakland but in Washington DC and every state capital in the land.

October 30, 2011

Occupy Pennsylvania Avenue!

by Steve Dana

After watching the Occupy Wall Street protests for a couple weeks I really hoped the protester would do their thing for a while and then go home.  Not so surprisingly the protesters are still at it.

Since I’ve confessed before to listening to Glenn Beck, I look for George Soros under every rock.  And since Beck warned us many months ago this type of protest was coming, driven by left wing organizations funded by Soros it’s only disappointing that Beck was right. Craig’s List ads recruiting folks to be paid protesters is a good indicator they’re not there on principle; paid bail and legal aid for protesters who are arrested, who are encouraged to do illegal acts so they will be arrested and food brought in to feed the protesters paid for by someone else are a few examples.

As I watch it happening, listening to the television interviews of some of the protesters it’s clear many of them are there just for the experience; not because of anything specific but because they want to be a part of it.  Who can blame young folks for following a pied piper who promises a good time if they will just join the crowd?

At the same time I’m also hearing folks complaining to Wall Street about the lack of jobs; or that Capitalism is the root of all evil.  On the one hand they blame business for not creating a job for them then they demonize the system that can create jobs.  It’s clear that Economics 101 was not one of the classes they took in college.

And since a goodly number of the protesters are unemployed recent college graduates angry and afraid because life is not fair they are looking for someone to blame.  It’s unfortunate that American History and Government weren’t classes they took either since then they might understand the role of government in our economic system.

I’m disappointed that college educated young people, out of ignorance, are focusing their anger on the system that could be their salvation.  I’m disappointed that these kids are paying for an education but getting a meaningless diploma; and pay they will even if there are no jobs.

Which brings me to…

Many of the protesters didn’t pay for their educations yet, they borrowed the money to go to college and now that they are out, their lenders are expecting to be repaid.

The economy has been in the tank for three or four years now so these recent graduates should’ve had an inkling that the competition for jobs would be fierce yet they still went heavily into debt to get an education with little likelihood of getting a job when they graduated.  And now, they are angry?  Help me understand, what job you are hoping to land when you get your degree in Women’s Studies or Art History?  Shouldn’t a job or career be a consideration for students if their “education” requires they take on so much debt?

Nobody forced them to borrow the money and maybe prudence might have suggested that in a recession they might choose a more conservative strategy but like some of their career choices poor judgment was wide spread and now they want to blame someone else.

It’s time for these kids to understand that the crappy economy has been crappy for all of us. You don’t have to be unemployed to understand the plight of Americans today, young and old. Many of us have learned the brutal lesson that when we make bad choices there is a reckoning; but we step up, we take our medicine and we move on.

If the protesters are serious about changing things so they will have jobs in the future they need to ask the companies they hoped would hire them why they don’t have jobs for them and listen carefully to their answers.  More likely than not, the culprit will be too much government.  Then the protesters can decide whether they are protesting in the right places.  If you can’t figure out which companies to ask, you probably got your degree in the wrong field!

American businesses would like nothing better than to have jobs for every young person graduating from college today because that would signal that our government has gotten off their backs and the economy is moving productively again.  If only we could convince the government to get with the program.