politicalcivility.com Blog

In response to my post on Obama’s PAC pledge, Misty asked a question about what did I mean about “incentives.”  It’s a fair question and one that is best answered by using a recent constituent letter I received from Senator Hatch’s office after I emailed his office asking him to oppose the farm bill. 

In my view, Hatch’s letter perfectly illustrated both the pork spending problem and the incentives issue that drives decision making and $$ flow in DC.  Hatch gave no principled justification as to why this farm bill was the right thing for government to do.  Every rationale he used in his letter pointed to one overriding theme–bring home the bacon or in the case of this farm bill all the benefits, special programs, business perks. 

So how does this answer the incentives question?  Toward the end of his letter, he also mentioned that this bill was supported by “many agricultural groups in our state.”  PACs (or in this case agricultural special interests groups) know that Sen. Hatch needs votes and that he needs money to run a campaign.  PACs offer both to the elected official.  PACs and special interested groups on the other hand need the people with the power of the purse (or the ability to take from one person and redistribute to another which would be illegal if PACs did it on their own) to do their bidding–they need their Sen. Hatch’s who have compromised to the point that all they have left to offer their constituents is BACON versus principled leadership.

So there you have the recipe for the continuation of the DC incentive love fest: [INCENTIVE for the Politician) votes which equal reelection and continued power and [INCENTIVE for the Special Interest] the growth of government programs or contracts or a general redistribution of wealth directly designed to benefit them. Of course all this is paid for by yours truly: you and me the taxpayer.

This lovefest is what Frederic Bastiat eloquently describes as “legal plunder.”  And as it relates to our government today, we see a Bastiat’s Universal Legal Plunder played out over and over again and unfortunately not just by our own Sen. Hatch.

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Bastiat on Legal Plunder:

“See if the law (senators or congressmen/women) takes from some persons what belongs to them, and gives it to other persons to whom it does not belong.  See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime…

“The person (agricultural interest in the above example) who profits from this law will complain bitterly, defending his acquired rights. He will claim that the state is obligated to protect and encourage his particular industry; that this procedure enriches the state [or its citizens]…

“Do not listen to this sophistry by vested interests.”

It’s almost like listening to the news every day.

I have to give props to Obama for his commitment [see Misty Fowler’s blog] to refusing PAC money.  I hope more elected officials will take his lead, but I have my doubts and here’s why (from a Letter to Editor in WSJ–it just says it better than I could):

“The only reason lobbyists [PACs, special interest groups, etc.] appear as influential as they do is because of the power of the bodies they beseech.  In other words, the power of lobbyists is directly proportional to the ability of the Senate and House of Representatives to give favors to the clients of lobbying firms.  Rein in government [bridges to nowhere, boondoggle research projects in WV, a whole list of welfare programs, etc.] and you rein in lobbyists.  Any attempt to weaken lobbyists without reforming government will do nothing more than violate the Constitution and ensure our politicians become less informed than they already are.”

Until we rein in government, I am afraid Obama’s commitment will be short lived because the incentives just don’t line up.

A side note warning to Obama on his commitment is to not pull a Bush Sr. “Read my lips no new taxes.”  If Obama sticks to his commitment, the political shift that could occur could turn him into an FDR, Reagan type president and would be a tremendous legacy even if that was all he accomplished.

I have to admit that my thinking regarding the immigration issue has changed significantly over the past couple of years as I have spent more time reading and listening the to arguments on both sides.  One of the major shifts occured when I began to look at and study the difference between types of law: malum in se and malum prohibitum.

Here’s a quick overview from Cafe Hayek:

A critical distinction in Anglo-American law is that between actions that are malum in se and actions that are malum prohibitum.  Some actions are malum in se — wrong in themselves.  Examples are murder, rape, theft, and fraud.  These actions are now formally prohibited by legislation, but their wrongness — indeed, their very illegality — exists independently [emphasis added] of legislative prohibition.  If, say, the Virginia legislature were to repeal its statutory prohibition on murder, murder would still be wrong and criminal in Virginia.  Murderers would still be wrongdoers and criminals.  If the State government refused to punish such criminals, people would do so privately.

Other actions are malum prohibitum — “wrong” merely because the government proclaims these actions to be wrong.  One example is avoiding taxes.  If Uncle Sam tomorrow abolishes the federal income tax, failure of Americans to send money to Washington would be neither wrong nor criminal, and persons who send no money to Washington would not be regarded by their neighbors and co-workers as despicable louts whose company should be avoided.

Immigration law is clearly a malum prohibitum type law, as such it is a-moral, meaning that if we removed all immigration law people coming here would not be considered immoral.  Thus it follows that the “criminality” aspect of an immigrant not following the law is no different that a legal citizen breaking the speed limit.

Mention the word ExxonMobile and global warming and the response is pretty predictable.  “Oh those guys that are making billions and funding all the global warming deniers.”  The fact is that statement is pretty true.  Exxon has made billions and they have spent several million over the past 15 years making research grants to a few (but hardly all) university professors and think tanks.  Problem is they may have been wasting their money.  Maybe they should change their strategy and just copy “green” GE. 

The WSJ recently released a list of top spenders in Washington DC, and right behind the US Chamber of Commerce and the American Medical Association (makes you wonder about why we are having problems refoming the medical system) was not ExxonMobile but eco-friendly GE rounding out the top 3.  From 1998-2007 GE spent in excess of $160 million in lobbying efforts.  Exxon didn’t even make the top 10.

Why would GE spend so much money?  Answer: they are heavily invested in green technology (wind, solar, and those nice expensive light bulbs that are now mandated by the federal government in 2012).  GE isn’t the only one benefitting from green policy, but they sure haven’t taken any chances on not cashing in on their green investment.

So maybe Exxon should stop trying to fund science and just go straight for the golden goose: the beltway goose that is.  GE is green alright (just check out their website: www.ge.com) but the green might not have anything to do with the environment.

I’ve been busy this week with EarthWeek at Sutherland which has kept me from posting more, but I wanted to throw out this question posed by Roy Innis during the first day. 

What’s the balance?  What’s the right balance between development and conservation?  What’s the balance between the principles of stewardship and economic progress?  What’s the balance between the development of ‘alternative’ fuel sources and asking consumers to pay significantly more for life’s basic necessities (food, shelter, warmth/cooling)?

This balance question forces us to start making clear what is the principle and priority framework we are coming from rather than relying on the rhetoric or emotional hysteria that can accompany both sides of the issue.

As I look at the issue of climate change/global warming here are a few of principles/priority frameworks that guide how I look at this debate.

1. Stewardship: As I have stated on this blog before I am a firm believer in being a wise steward of the earth’s resources, but inherent in that belief system is the idea that the resources should be used. 
2. Cost: For me the balance question has to look at cost with a heavy bias toward human cost (this goes back to my post about conservationalist philosophy versus a preservationist worldview).  Human life takes highest priority.  So when millions begin to starve or die because of “green” policy then those policies must change.
3. Government Expansion: This goes back to my belief that any “war” so called on an issue (environmentalism, poverty, terrorism, you fill in the blank) leads to significant government intervention (which leads to greater inefficiency and subsuquent increase use of resources) and loss of freedom.  Also if you want to see how well the a government controlled economy handles the environment look no further than the former USSR and China.  Both stellar examples of clean air and water.
4. Cause & Effect: One of the most glaring issues of the IPCC report is the misuse or lack of use of appropriate cause and effect analysis.  Much of what the IPCC calls “cause” is actually just correlation.  There is a huge difference. So getting this right is critical if we want to really make a difference or know if we really can make a difference.
5. Everything on the Table: If we are to have a serious discussion about environmental problem solving, we must stop arbitrarily removing proven solutions and dismissing legitimate scientific research and inquiry.  Let’s put everything on the table: wind, solar, nuclear, manmade versus natural warming effects and see what is real according to the science and economics and then balance that with the cost to the environment and cost to society to see what makes the most sense.  Then we need to step back and let the market work. 

Just a few of my thoughts.  The floor is now yours.

For those keeping track, today is TAX day.  Hopefully you’ve already filed and will avoid a) the bad weather and b) long lines at your local post office.  I think this brief history is very informative and demonstrates the shift away from the founders intent of how government should be funded.  The table at the end shows just how far we’ve gone.

A Brief History of the Income Tax in the U.S.

1634 – The Massachusetts Bay Colony enacted an income tax (no other mention of taxing personal income is mentioned for over 200 years). 

1861 – With the advent of the Civil War, both the Union and the Confederacy instituted income taxes to finance their war efforts.  This constituted the first time the U.S. federal government levied an income tax; the federal government’s then limited operations were previously financed almost entirely from tariffs on imported goods.  Technically, the personal income tax was unconstitutional (at the time), but no challenge was made in the judicial system.  After the war, the income tax was eliminated and the federal government reverted back to its previous sources of revenue.

1894 – The federal government introduced a new tax on individual income with the passage of the Wilson-Gorman Act.  This act required that any gains, profits, and income in excess of $4,000 be taxed at a rate of 2%.  In compliance to this act, the Farmers’ Loan and Trust Company of New York determined to remit payment to the U.S. Treasury on behalf of its shareholders subject to the tax.  Charles Pollock, an owner of ten shares in the company, sued Farmers’ Loan to not remit the payment.  Pollock lost at the lower court but won at the Supreme Court level.  The majority opinion of the court cited the constitutional guarantee that “No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.”  A “direct” tax was a tax on property, while an “indirect” tax (not barred by the constitution) was a tax on an event like receiving a gift or rendering labor for a wage.  Tax on a security’s appreciation was considered an effective tax on a property, and thus a “direct” tax.  To make the tax constitutional, congress would have to apportion the tax burden among the states according to their proportional populations.  Since the Wilson-Gorman Act did not accomplish the requisite apportionment among the states, it was ruled unconstitutional.

1909 – The federal government levied an income tax on corporations, which was challenged but upheld by the Supreme Court.  The rationale was that a corporation is created by law; therefore, the authors of the law (governments) have the right to tax a corporation’s creation and operation (events that lead to “indirect” tax status).

1913 – The decision in Pollock vs. Farmer’s Loan and Trust Co. was unpopular and stirred debate for several years.  In fact, the presidential candidates competing in the election of 1912 largely debated on the grounds of whether or not an amendment overturning Pollock was needed.  The sixteenth amendment to the constitution was proposed.  It would sanction a federal income tax on both individuals and corporations with no requirement for apportionment.  Sponsors of the amendment presented it as a measure that would affect the “super rich” who were portrayed as having gained too much control over the nation’s wealth.  Public opinion fell on socioeconomic lines with support coming mainly from western and southern states and opposition coming from the northeastern states.  In the end, 42 of the then 48 states ratified the amendment.  Connecticut, Florida, Rhode Island, and Utah formally rejected the amendment, and Pennsylvania and Virginia never even bothered to consider it.

Shortly after the amendment was ratified, congress passed the Revenue Act of 1913, under which taxpayers became responsible to submit their first Form 1040 on March 1, 1914.  This act allowed filers to claim personal exemptions of $3,000 for individuals and $4,000 for those “married filing jointly” persons.  Given the size of the average income at that time, only 6 percent of Americans made enough money to exceed the exemptions and, therefore, assume a tax liability.  Tax rates varied from 2 to 6 percent (the highest rate was applied to taxable income in excess of $500,000).

1943 – Congress instituted the pay-as-you-go system, which remains in force today.  This system requires employers to withhold and remit payroll taxes and also requires persons earning non-wage income to make quarterly payments to the IRS for estimated tax liability.

1945 – WWII and FDR’s New Deal introduced large financial obligations and tax law was altered accordingly.  The portion of Americans subject to a tax liability grew from 6 percent in 1939 to 74 percent in 1945 (the sixteenth amendment’s reach beyond just the “super rich” would continue to the present day).  Also the progressive rate structure applied to taxable income increased during this period.  The lowest rate structure ever enjoyed by U.S. taxpayers occurred just after the passage of the sixteenth amendment (1913); 1 to 6 percent.  The rate structure from 1944 to 1945 is still the highest ever experienced in U.S. history; 23 to 94 percent!  The highest rate was applied to income exceeding $200,000.  (How much work incentive would you have if you knew that for every additional dollar you earned, 94 cents would go to Uncle Sam?)

Today – the table below shows the sources of federal government revenue for 2007:

The National Taxpayers Association just released their 2007 scorecard (Full Report and Criteria):

Quick Glance:

1. Rep. Bishop: B+
2. Rep. Cannon: A
3. Rep. Matheson: D
4. Sen. Bennett: B
5. Sen. Hatch: C+

Hatch’s ranking, sadly, doesn’t surprise me.  The last 8 years or so I have watched Sen. Hatch abondon the principles and conservative platform that got him the job in the first place. He seems more concerned with power and writing songs, than showing real conservative leadership in the Senate.

Matheson’s grade may come back to hurt him if the economy continues to decline.  Frankly, I thought his record on tax policy would have been more in the ”B” range. 

A good reminder from a former president.

There are no adequate substitute for father, mother, and children bound together in a loving commitment to nurture and protect.  No government, no matter how well-intentioned, can take the place of the family in the scheme of things.  (President Gerald Ford, 38th President of the United States)

The state has issued its Budget overview and two items jumped off the page.  1) The state depends on the federal government for 50%+ 22% (See the update) of the state budget and 2) the 2008 budget has been revised up $1 BILLION for FY2008.

[UPDATE]

I wanted to get this clarification from Mike on this post:

The LFA report does not explicitly state what “state funds” are or are not. The GOPB report is much clearer in this regard which is why I usually base my calculations on GOPB data. Unfortunately, the GOPB report doesn’t come out until April or sometimes later.

“State funds” include
- individual income tax
- corporate income tax
- unearmarked general sales tax
- other general fund (severance, insurance premiums, tobacco/beer taxes, liquor PROFITS)

“State funds” exclude
- dedicated credits such as university/college tuition, liquor TAXES, gas taxes, motor vehicle registration fees
- earmarked general sales tax
- education property taxes such basic, voted, board, K-3 (other K-12 property taxes such as debt service, recreation, transportation, etc are excluded from both “state funds” and total funds.

Also, GOPB is more accurate in calculating growth rates. For example, when comparing FY09 and FY08, GOPB excludes FY08 supplementals because FY09 supplementals won’t be known until next year. By including FY08 supplementals when calculating growth rate, which LFA does, the growth rate will most likely be understated once supplementals are known and included for both years.

Supplementals should be included when they are known for both years. For example, FY07 and FY08 supplementals are known so it makes sense to include those.

This post is primarily an answer to a comment from Misty Fowler on this blog.  Her comment:

“I give up, I don’t think people that are set against the idea of global warming are just being blind and don’t want to hear the truth. I’m really truly not sure what people like you have against the idea of taking care of our planet.”

My first response to this question is a question.  How does my opposition to those pushing the global warming movement immediately make me someone who opposes the idea of taking care of the earth?  This is a plain and simple logical falacy in that it assumes that I can only take care of or that I only care for the planet if I buy into a particular worldview on global warming. 

I have already highlighted some of the bungled attempts to legislate “earth” sensitive products (GE fluorescent bulbs and ethanol), which especially in the case of ethanol are actually more destructive to the earth than the ‘dirty’ products they were supposed to replace.  Given the track record of these ecologically friendly products, I believe I have the right and responsibility to be skeptical of the fixes many of the advocate propose regardless of my feelings about the science.

I think what Misty mistakes as lack of care for the earth really is based perhaps (I can’t speak directly for Misty, so I am generalizing here) in a fundamental philosophy difference in how we see the world.  I am a conservationist, meaning that I believe in personal (not government mandated) stewardship and wise use, and that I have what Peter Borrelli calls a anthropocentric world view.  This view starts with viewing man as the measure of creation. 

This view [conservationalism] is opposed to the preservationist philosophy, which fundamentally has a biocentric view of man and nature, meaning that man is just another creation and so is of no more value than a dog, cat or house fly.  The preservationist advocates a position of nature lock out because humans have no right to disturb the flight patterns or mating habitat of an animal, reptile, bug or whatever.  It also centers on a scarcity versus abundance mentality or zero sum world view–i.e., if man’s population grows xyz animal loses. It is this view that allows preservationalists to make man the problem because he is the great annoyer of nature. It is this view that allows environmentalist to ignore the human costs of their actions/policy initiatives (i.e., DDT and 40 million children [who have died since DDT’s ban– thanks Ed for the correction here. WHO puts the number at 1 Million+/year, 90% of which are in Africa] around the world from malaria or the increased burden the poor and low-income families in America are carrying) because their suffering is equal to or in some cases not as significant as the bird that has the minor risk of dying from DDT exposure.

As a conservationalist, I am and will forever be opposed to prohibitionist and mandate policies regarding the earth, because they a) increase the size and scope of government and b) lead to a huge loss in freedom and liberty.  With respect to the first point, I lived in Russia and saw first hand the effects of a state run everything.  This form of centralized government ultimately leads to unwise use of resources and the destroying of the environment.  It also destroys the average citizen’s desire to be a good steward. 

My idea of good principle grounded environmental policy is based on incenting behavior not mandating or punishing behavior.  This incentive based policy is one of the primary reasons that the polar bear population is growing as noted in a recent USA TODAY article. This policy approach limits the role of government, frees humans to make good choices and fosters freedom and liberty.  So do I favor tax breaks for enviro-friendly cars; yes.  Would I favor mandating that by 2012 every American should run a enviro-friendly car; absolutely not.  Should I be rewarded for paying extra for energy efficient windows and appliances; yes. Should the government mandate my choice in appliance or windows; no.