Balance budget

Back in late 2012 the government could not agree to cut into the deficit so they agreed to a sequester to force cuts. They said that if no agreement is reached there will be automatic across the board cuts of 1.2 trillion over the next nine years. The President felt that congress would not agree to this since half the cuts were to come from defense but they did agree and now the President wants out of the deal. The argument against across the board cuts is that it does not prioritize and thus some projects deemed very important are just like less desirable projects. Of course if you try to cut projects based on importance every item has it constituents and the fights begin and when the dust settles nothing is cut. A better plan is to limit annual increases in spending to the inflation rate but that is seen as an impossible task. When President Obama took office the total spending for 2009 was 2.14 trillion and in 2015 it is expected to be 3.90 trillion. During this time the average annual inflation rate has been 1.8%. If government spending has increased at this rate the spending this year would be 2.38 trillion instead of 3.90 trillion and we would have a trillion dollar surplus and a balanced budget. Instead we have a 600 billion dollar deficit. It is not an impossible task to balance the budget and in the process save social security and Medicare from going broke.

Monarch

This past election the call from the votes was for congress and the President to co-operate but the call was not heard. First off, at the State of the Union speech Obama offered things like a $3,000 child tax credit and free junior college knowing full well the congress would not approve and he could point out how the Republicans don’t care about poor people. Next the congress approved the Keystone Pipeline knowing that Obama would veto it and they could claim he doesn’t care about jobs. So far it’s the same old blame game and nothing gets done. Next up is tax reform but the experts are saying it is too close to the next presidential election to do that. Since we have major elections every two years it seems it will always be too close. Not doing anything would be OK but government agencies like the EPA are working overtime making up new regulations. While the legislative branch is doing nothing the executive branch is working hard. As I have said before, as long as the two parties are neutralizing one another the president, who every that may be, can act and nothing can stop him. If he does something the congress does not like they can sue him but that goes through the courts and takes years. They can’t cut the funding and that would shut down the government and no one wants to be blamed for that and impeachment is out of the question since it takes 67 votes in the senate. It seems we have an elected monarch.

Keystone

While the Keystone Pipeline oil is only a small part of the overall energy picture there are good reasons from the standpoint of the environment to build it. Currently this oil is being shipped by rail to the Gulf refineries. Using a pipeline is safer than rail and does not produce any CO2 like the train engines. Today Senator Schumer of New York said that this pipeline would only provide 35 permanent jobs and he was correct. Note the word permanent. It will take thousands to build it but only 35 to operate it. This is lying by leaving out part of the story. This same Senator is pushing for infrastructure project like roads and bridges. It would take thousands to build a large bridge but only a hand full to operate the bridge when it is finished. These people constantly tell half a story to skewer the truth to make their point. I sure hope people can see through this but I wouldn’t bet on it.

Muslim Brotherhood

When the Muslim Brotherhood gained control of Egypt by way of popular election, President Obama sided with them saying the people have voted in a free election. The Brotherhood promotes Sharia Law. They were quickly ousted by the military and more moderate leaders have succeeded them. Yesterday President Obama announced he will cut short his visit to India to go to Saudi Arabia and talk with the new king who today announced that he wants to rid the world of the Muslim Brotherhood. Should be interesting.

Women's rights

One of the US allies in the Middle East is Saudi Arabia, a country that treats women like children or at best as second-class citizens. Two of the Kings 15 daughters have been under house arrest for years for speaking out about women’s rights. The only reason the US maintains this close relationship with the Saudis is oil. If the government would open up federal lands for drilling the US would, in short order, no longer need any oil from Saudi Arabia and could put pressure on them to start treating women as human beings. Women in the country, in particular those concerned with women’s right, should be pushing the government to open these lands but they are handcuffed by the environmentalist and thus Saudi oil continues to determine US policy toward women’s rights. The truth is that liberal policies dictated by environmentalist, tops liberal policies concerning women’s rights, so no one wants to talk about the issue.

Greek elections

In yesterday’s elections in Greece the country took a sharp turn left as the liberals won big. The country had gotten into financial trouble caused by many years of expanding government benefits and increasing debt. When Greece became part of the European Union they were forced to cut back (this is called austerity) and they made an attempt but the people revolted and now they may withdraw from the Union. The most costly benefit in Greece is social security, much like other western countries including the United States. While other countries raised the retirement age to 67 Greece refused and kept theirs at 61 and much lower for certain groups. The new government promised to move away from austerity and continue with benefits. Once the government gives out benefits it becomes very difficult to take them away. These past five years Greece has been supported by the World Bank, International Monetary Fund and the European Central Bank. These entities may not continue this as other countries in the Union are beginning to object.

Rights

When the founders set up the constitution they were concerned about the federal government having too much power since they just went to war to escape the power of the king. With that in mind they wrote the Bill of Rights which limited the power of the government. They listed the powers of the government in the constitution and then proceeded to limit them with the Bill of Rights. When FDR was President he did not like these limitations and proposed a second Bill of Rights listing the things he believed that people have a right to and intimating that the federal government should provide those rights. “Necessitous men are not free men,” FDR proclaims. Since “true individual freedom cannot exist without economic security and independence,” the original Bill of Rights must be supplemented by eight rights that “spell security.” The proposed rights include the “right to a useful and remunerative job”—not the right to work, but the right to demand a job, and a well-paying one at that. “Farmers have the right to obtain “a decent living” from their toil, and businessmen have the right to be free of “unfair competition and domination by monopolies.” There are as well rights to “adequate medical care,” education, and the “right to earn enough to provide adequate food and clothing and recreation.” He was unable to get that through the congress but since that time liberals have dreamed of such rights. President in his State of the Union address attempted to revive that dream when he said: First -- middle-class economics means helping working families feel more secure in a world of constant change. That means helping folks afford childcare, college, health care, a home, retirement -- and my budget will address each of these issues, lowering the taxes of working families and putting thousands of dollars back into their pockets each year. The President did not describe these as rights but intimated that the government should help to pay for such things.

NIH research

Hillary Clinton recently got into some trouble when she stated that businesses do not create jobs. Not sure what she meant by that but some say that it is the government that creates jobs and that is correct in one respect. When the government spends money on R&D it indirectly creates jobs since new discoveries lead to new products and industries. Elizabeth Warren, liberal from Massachusetts, has proposed that the money from fines levied against pharmaceutical companies be used for research for new medicines and this sounds reasonable. These large drug companies profit from government research and further research will bring more profits. The National Institute of Health (NIH) has done the ground work for many of today’s drugs and the drug companies benefit from this. This is one way that government and private business co-operates to help everyone.

Energy sources

To get a better idea on how many jobs are created by the fracking process in North Dakota, consider the new refinery being built in Dickenson, ND. It will process 20,000 barrels per day and employ 90 full time employees most of which have already been hired. Another refinery of similar size is breaking ground and others are scheduled. Considering North Dakota produces over one million barrels per day it will take a lot of refineries. In addition many other jobs are created to manufacture replacement parts along with loading and transportation facilities. There are 142 refineries in the US but most are set up to refine the heavy oil that has been imported over the past 50 years and the new oil coming out of North Dakota is light and it would require a large expense and considerable time to change over. That is the reason why the US still imports oil. Current law prohibits the US from exporting oil but that will change with the new congress and imports will be offset by exports. In time the refineries will change and most of the domestic oil will be refined here in the US and if the government co-operates the country will be energy self-sufficient and no longer have to cater to countries in the Middle East like Saudi Arabia.

Low income

Recent polls show some glimpse of positive thinking when it comes to the economy but there remains little for the low and middle income people to celebrate. The labor participation rate is the lowest it has been in 36 years. This represents the number of people who could be working compared to those who are working. These people are in the low and middle income groups. The housing market has made a slow and painful comeback but this group cannot get loans with the new income and down payment requirements. The stock market is up but that is no help for this group. Wages for this group have been stagnant for years and prices continue to rise and that is why they are pessimistic about the future. These are the people whom President Obama keeps saying he wants to help but the only bright spot for them has been the price of gasoline which The President, with his opposition to fossil fuels, has done nothing to help. Now he wants to help by giving them government handouts in the form of tax credits and free college. What these people want and need are good jobs and that is where the emphasis should be, but that has to be done through the private sector. Start by expanding the energy industry and move from coal to oil to natural gas especially in transportation and power plants. This will by its very nature open the door to infrastructure projects and all of this provides good paying jobs for low and middle income people.

Oil price and ISIS

There are so many strange relationships in the Middle East these days it is hard to keep track but one area the press has not focused on is the sale of stolen oil by ISIS. The question is who is buying this oil and the answer is Syria and the Kurds both sworn enemies of ISIS. While ISIS gets some money from ransom payments, it gets most of its money from illegal oil sales. Kurdish fighters known as Peshmerga represent the only group the US has rallied to fight against ISIS and they are supplying their enemies with the money needed to fight against them. The one thing that is hurting ISIS more than any other is the drop in the price of oil which is just one more advantage caused by the US use of fracking to increase the world’s supply of oil. The countries around the world giving the United States the most grief are suffering the most from low priced oil, countries like Iran, Syria, Russian and Venezuela. Other countries more friendly to the US are finding life a little easier because of the oil price, countries like Japan and China and most of Europe.

Late term abortion

The Republicans once again showed their ineptness at politicking today. Polls show that Americans oppose abortion after 20 weeks by a two to one margin so the congress wanted to pass a law forbidding these late term abortions but they got into a squabble over the word reported. They as a group wanted to make rape an exception to the new law but some wanted the rape to be reported and so they withdrew the bill. This makes the Republicans appear to doubt the woman who reports rape and this plays into the idea that they do not see rape as serious. Dumb, dumb, dumb!

True cost

I have always been interested in politics. In 1956 I campaigned for Stevenson against Ike even though I was only 19 and at that time you had to be 21 to vote. In 1960 I switched parties and voted for Nixon against Kennedy as I figured a millionaire could not relate to the general public. Over the years I was always amazed that any Republican could be elected since they were called the part of the rich and there were many more poor people. The answer to this was twofold. First polls showed that many poor people did not vote and second many poor people planned on getting rich. President Obama won because poor people voted and his party lost in 2014 because the poor people were disillusioned and stayed home. He had it right when he said the Democrats lost because only 36% of the eligible voters voted. His state of the union message is designed to overcome this voter apathy by promising freebees to the low income groups. He is offering a tax cut to the middle income and an increase in the child tax credit and free community college which will help both the middle income and low income groups. He plans to pay for these new benefits by taxing the rich to the tune of 32 billion dollars per year and this of course solicits cheers from those who are not rich which is most of us. Now the stage is set for the greedy Republicans to shoot down the entire plan and thus create the incentive for the poor people to come out and vote in 2016. The plan is a brilliant because it will win the election for Clinton. The Republicans line up to prove the plan will work by making dumb statements like, taxing the job creators will hurt the economy. The press will improve the plans success chances by not investigating the cost to cover these new benefits. I will do this job for them. First off the child tax credit which is a program that is very helpful to lower income people is now $1,000 per child and last year cost the government 57 billion dollars The child tax credit is the sixth largest tax break today, according to the Joint Committee on Taxation (JCT). It costs $57 billion in revenue this year, $290 billion over 5 years, and an estimated $550 over ten years. Of that total, slightly more than half is spent on refunds to taxpayers who have no tax liability. The President wants to raise this credit to $3,000 per child. Do the math. Next the cost of the community college plan. If every state participated, the White House suggests that Mr. Obama’s proposal could help nine million students and would save full-time enrollees an average of $3,800 a year. However, using the average cost, state and federal governments would have to pick up the tab of $34.2 billion each year. And, of course, these governments will get this money from ... guess who: We, the taxpayers. Nothing is free. Finally he proposes a $500 tax credit and increase deductions for child care which will cost about $1,000 per middle class family of which there are over 50 million. Even the Internet has not calculated this cost but the best guess is 50 billion per year. I don’t mind taking money from the rich and giving it to the poor but let’s use the correct figures. Instead of the 32 billion Obama is proposing a more accurate figure would be about 180 billion but who is counting. When you get into the billions no one cares.

Share the wealth farce

Here is a report in the news today. In 2014, the 80 richest people had a collective wealth of $1.9 trillion; a rise of $600 billion — or 50%, in four years — according to the report, Wealth: Having It All and Wanting More. Is this upsetting because they have so much or we have so little? Let’s move into a fantasy world where these people recognize the unfairness of this and agree to share with the rest of us. Since there are 7 billion people on the planet, if they agree to give all of their money to us, we will each get $270. I point this out to confirm my argument that the world today is like is has been, that being, there are too few rich and too many poor. The free market system that has blossomed in Asia in the past 30 years along with trade with the developed western world has done more to help the poor than any sharing could ever accomplish. The best way to help the poor around the world is the same formula for helping the poor in America and that is providing a decent job where individuals can help themselves and not have to rely on the largess of others. There are many reports showing the progress made around the world by the forces of globalization and here is one. Contrary to what you might have heard, virtually all of the most important forces that determine what make people’s lives good — the things that determine how long they live, and whether they live happily and freely — are trending in an extremely happy direction

Gay marriage

The Supreme Court is going to rule on the same-sex marriage case and while I am not opposed to Gay marriage, I can foresee some possible problems. At one time in my career I was involved in estate planning. When the first spouse dies proper planning will allow most of the estate to pass to the surviving spouse without much tax and this same planning can reduce the tax when the second spouse dies but there will be tax as the estate passes to the heirs. I can see a time in the future where a man dies and his wife marries his son and then when she dies the estate passes to the son without any tax. Thus the estate passed to the next generation without tax. This is not legal now but if the rule is that marriage between consenting adults is OK, will marriage between relatives be next. This also leaves open the door for polygamy. These things are not likely but I mention them only as possibilities because so often the government fails to see the unintended consequences of good intentions.

State of Union address

The President will announce a tax increase on the wealthy of 320 billion over ten years and that money will be used for middle class tax cuts. The president's address -- his first to a Republican-led Congress -- will call for $320 billion in tax increases over 10 years. Aside from funding new tax credits including a tax credit for working families and expanding the child care tax credit, the White House says that money would go to funding measures to make college more afforable and accessible, including the president’s recently announced plan to make community college free for many students. Since the lowest income people pay no tax this will not help them and that represents 50% of the population. Best estimates show that 56 million families earn between $50,000 and $150,000 and this is often considered the middle class. If we take the 32 billion per year and give that to the 56 million middle class families they will each get $600. There are 70 million families who earn less than $50,000 per year and they will not get anything. This Democratic Party that was called the party of the poor is no longer that but has become the party of the middle class. Some say this happened when they found out that the poor didn’t vote. Notice that included in The President’s plan is expanding the child tax credit. This is currently at $1,000 and he plans to increase this to $3,000 and that would be a big help to the poor since this credit is paid even if no taxes are owed. The problem is that this year’s cost to the government for the child tax credit was 57 billion and if the credit is raised from $1,000 to $3,000, as The President is proposing, that will more than use up the tax increase. Now since the new tax on the wealthy will only bring in 32 billion there will be a shortfall and this does not include the plan for free community college and wipes out the middle class tax cut. My guess is that many of the people who listen to this state of the union address will believe all this is possible and I will be very surprised in any news people bother to explain how it will work. This is reminiscent of The Presidents claim for Obamacare when he said that it would insure 31 million new people and it would not cost anything and the people and the most of the press believed it.

Pogo

Every politician’s salvation, rest in the hands of peoples short retention span. A recent example is all the protest marchers who were determined to make the actions of certain police departments come under scrutiny and have now been replaced by a terrorist shooting in Paris. The message is that if you mess up just wait patiently until the next big news item comes along and then go quietly into the background. This has been the case for a number of years but was perfected by the Obama administration along with the aid of an adoring press. Like I have often said we got the government we deserve or to say it more succinctly, I quote that famous philosopher Pogo who said, “we have met the enemy and they is us”. For you younger people Pogo was a comic strip.

Sleeping giant

When the Japanese were planning their attack on Pearl Harbor, their most famous military person warned, “do not wake the sleeping giant”, but he was ignored. In today’s war against terrorist the United States is once more asleep. What will it take to wake up the giant? The first step will be to recognize that we are in a war. Many of our leaders are hesitant to act so we name our battle plan, “Operation Inherent Resolve”. To act with more force, invites criticism from others for collateral damage. ISIS is now gathered in parts of Iraq and Syria and could be severely degraded with an intensive air attack but fear of hurting civilians is stopping the US from acting. The first Gulf War, started to drive Iraq out of Kiewit, was over quickly with a minimum of US casualties. The Gulf War began with an extensive aerial bombing campaign on 17 January 1991. The Coalition flew over 100,000 sorties, dropping 88,500 tons of bombs,[92] and widely destroying military and civilian infrastructure. After 5 weeks of continuous bombing the ground forces went in and in 100 hours the war was over. This same strategy could bring an end to ISIS in these areas and do so with a minimum of US loses. This would also send a strong warning to other terrorist groups and they would be hesitant to ever congregate large forces in a single area.

Court case on Obamacare

The Supreme Court has agreed to hear the case regarding Obamacare centered around one line in the plan. "Exchange established by the State." When this law was being written there was concern that many states would not go along with the new regulations and in order to encourage them to do so the law stated that unless a state agrees to establish an exchange they would not receive federal subsidies. Even with this incentive 36 states decided not to establish an exchange but the Obama administration chose to offer subsidies anyway and this decision is being challenged in court. If the court rules that there shall be no subsidies for those 36 states that did not establish an exchange, about 8 million people who are now receiving subsidies will lose them. Many of these people will then be eligible for insurance under Medicaid. There are no pre-existing conditions requirements under Medicaid and the cost is little to nothing. The court ruling will likely be announced in June of this year.

Diesel

The second part of the economic recovery attributed to the energy industry is underway and it is the lower cost of diesel. Diesel prices have declined over one dollar in the past year and expected to drop another dollar this year. There are 3.5 million semi’s on the road and about 10% are independent drivers who own their rig. These trucks average 50,000 miles per year and get on average 5 miles per gallon so they each use about 10,000 gallons of fuel each year. The means that big companies like Costco and Walmart will save millions in fuel cost but small independent drives which represent the middle class will save $10,000 this year and up to $20,000 next year. This is how you help the middle class. There are about 300,000 independent drivers who own their truck as small businessmen. Walmart has 6,000 trucks on the road so they will save $60 million dollars this year and double that next year. When the world finally changes over to natural gas the savings will be even more and air quality will improve. In addition there are no acid rain chemicals or heavy metals like mercury and lead in natural gas. Here are some recent headlines. Fleets can save well over $150,000 in fuel costs over the six-year life of a truck. Natural gas prices are typically $1.50/gallon-equivalent cheaper than gasoline and $2 cheaper than diesel. They emit 20 to 30 percent fewer greenhouse gasses than their gasoline or diesel counterparts.

rare earths

There are two reasons why China leads the US in the solar business. The first is they control the mining of rare earth metals needed for production of solar panels and second they control this because the US has stopped mining because of environmental concerns. China has scrapped its quota system restricting exports of rare earth minerals after losing a World Trade Organization (WTO) case. Beijing imposed the restriction in 2009 while it tried to develop its own industry for the 17 minerals, which are crucial to making many hi-tech products, including mobile phones. Last year, a WTO panel ruled that China had failed to show the export quotas were justified. China dominates rare earth production. It is estimated to be responsible for 90% of its production, despite only having a third of the world's deposits. This is a day late and a dollar short since the US has now come to realize that the solar panel craze was just a ploy to give government money as favors to big campaign donors and the whole push regarding climate change is fast fading away.

Energy industry

While the White House has done little or nothing to promote the fossil fuel energy boom of which The President is now taking credit for, it is not too late. There is still much the government can do to promote this industry. The administration can increased access to domestic energy reserves onshore and offshore by leasing more areas under federal control, reversing the slide in oil and natural gas production on federal lands from 2009 to 2013. It can streamline the federal permitting process for drilling and weed out red-tape regulatory obstacles to safe and responsible development. The administration can let privately-financed energy export projects go forward so that American liquefied natural gas (LNG) can claim a share of the developing global market that befits the world’s number one producer. It can lift America’s anachronistic, self-hindering ban on crude oil exports- which, along with LNG exports, would stimulate more domestic production and economic growth while bringing overseas wealth into this country. It can back repeal of the counter-productive Renewable Fuel Standard and its potentially harmful mandates requiring ever-increasing use of ethanol. All of this can be done with a stroke of The Presidents pen! Jobs in the energy industry pay on average five times the minimum wage and include many blue collar jobs. For a president who is concerned about the gap between rich and poor this is an opportunity to do something about it but we wait as The President contemplates what to do about some minor project like the Keystone Pipeline.

Ethanol

When the government announced it would promote the production of ethanol from corn a new industry was born. The government would not only subsidize the product but would demand by law that a given amount be added to gasoline. This meant that the government would guarantee a profit to those in the business and also guarantee a customer. As corn ethanol plants came on line it soon became evident that operating costs were higher than the original projections and many plants lost money and closed. There were two main problems which could have easily been predicted but were glossed over in the excitement of new jobs. Some say the excitement was from taking business away from the oil companies and giving it to farm co-ops. The first problem was competing with food corn which raised the price of many food items and the second was the final distillation process where the ethanol was separated from the water. The next push was to produce ethanol from corn cobs instead of corn and this removed the problem of competing with food but the distillation cost remained. Here is a quote from the first operational non-corn ethanol plant. By utilizing residual biomass solids from the ethanol conversion process, the plant generates 21 megawatts (MW) of electricity – enough to power itself and provide 4-5 megawatts of renewable power to the local Stevens County community. Most of the power used by the plant is to distill the final product. This is needed because ethanol is soluble in water but if microbes were developed to produce a hydrocarbon the final distillation would not be needed since hydrocarbons are not soluble and would just float to the top and be skimmed off. In any event ethanol or hydrocarbons are not as efficient as just using natural gas which is abundant without processing. In addition natural gas emits less carbon dioxide than ethanol or hydrocarbons and allows the engine to run cleaner and more efficiently. Of course it is the big oil companies which control the natural gas business.

Cuomo

Former New York Governor Cuomo died today. He became famous when he gave the key note speech at the 1984 Democratic Convention. In this speech he pointed out the gap between the haves and the have nots as he ridiculed President Reagans shining city on the hill’s view of the country. Here is part of his speech. But the hard truth is that not everyone is sharing in this city's splendor and glory. A shining city is perhaps all the President sees from the portico of the White House and the veranda of his ranch, where everyone seems to be doing well. But there's another city; there's another part to the shining the city; the part where some people can't pay their mortgages, and most young people can't afford one; where students can't afford the education they need, and middle-class parents watch the dreams they hold for their children evaporate. Today the gap is much larger but would The Governor give this speech with President Obama in the White House. He would not because party trumps country. The Governors concern for the poor and down trodden would not have even been mentioned if there were a Democrat in the White House. During these past six years the middle and lower income groups have suffered with declining wages while the rich have gotten richer. Would he have said that in his speech?

Chickens

Having spent considerable time in the chicken business a recent law passed in California caught my eye. The new law says laying hens must have larger cages. A laying hen is fed for about 25 weeks before it lays an egg and then it lays for about 18 months lying about 250 eggs per year and then it is slaughtered and the meat sold for various purposes such as soup. Expanding the size of buildings to hold these birds will increase the cost of operation in things like utilities and insurance. These costs will be passed on to the consumer and I hope the chickens appreciate this. There are some people who believe that humans should not consume meat and they have been trying to close down the meat industry and figure that if they can increase the cost of meat this will further their cause.

New regs

Picture a room in a typical town where the local officials are gathered to write regulations concerning construction. Should we use 2 by 6’s or 2 by 8’s and the answer, let’s go with the 8’s. Should we use 8 inch blocks or 10 inch blocks, let’s go with the 10. Get the picture! Since there is no one in the room representing industry the tendency is to play it safe and go with the more secure. Whenever regulations are prescribed it is best to have both sides represented but all too often that does not happen in government. The pace of agencies issuing new rules and regulations has hit a record high under President Obama, whose administration’s rules have filled 468,500 pages in theFederal Register. And, according to the Competitive Enterprise Institute, the president is poised to unleash another 2,375 new rules on American businesses without first giving Congress an up or down vote. I have no idea what all these new rules entail but my guess is that some are either unnecessary or excessive. The government needs to protect the citizen’s safety but should not shut down business in the process. It is well known that when you lower the speed limit you save lives but we do not propose a 10 mile per hour limit because that would be counter-productive. For those whose lives were saved it would be a good law but the price to the rest of society would be prohibitive.