Category Archives: Political Opinion

Ron Paul – Cap and Trade Will Lead to Capital Flight

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In my last column, I joked that with public spending out of control and the piling on of the international bailout bill, economic collapse seems to be the goal of Congress.  It is getting harder to joke about such a thing however, as the non-partisan General Accounting Office (GAO) has estimated that the administration’s health care plan would actually cost over a trillion dollars.  This reality check may have given us a temporary reprieve on this particular disastrous policy, however an equally disastrous energy policy reared its ugly head on Capitol Hill last week.

The Cap and Trade Bill HR 2454 was voted on last Friday.  Proponents claim this bill will help the environment, but what it really does is put another nail in the economy’s coffin.  The idea is to establish a national level of carbon dioxide emissions, and sell pollution permits to industry.  HR 2454 also gives federal bureaucrats new power to regulate a wide variety of household appliances, such as light bulbs and refrigerators, and further distorts the market by providing more of your tax money to auto companies.

The administration has pointed to Spain as a shining example of this type of progressive energy policy.  Spain has been massively diverting capital from the private sector into politically favored environmental projects for the better part of a decade, and many in Washington apparently like what they see.  However, under no circumstances should anyone serious about economic recovery emulate an economy that is now approaching 20 percent unemployment, where every green job created, eliminated 2.2 real jobs and cost around $800,000 each!

The real inconvenient truth is that the cost of government regulations, taxes, fees, red tape and bureaucracy is a considerable expense that has to be considered when companies decide where to do business and how many people they can afford to hire.  Increasing governmental burden directly causes capital flight and job losses, as Spain has learned.  In this global economy its easy enough for businesses to relocate to countries that are more politically friendly to economic growth.  If our government continues to kick the economy while its down, it will be a long time before it gets back up.  In fact, jobs are much more likely to go overseas, compounding our problems.

And for what?  Contrary to claims repeated over and over, there is no consensus in the scientific community that global warming is getting worse or that it is manmade.  In fact over 30,000 scientists signed a petition recently directly disputing the claims on which this policy is based.  Legitimate environmental claims should instead be directed towards the public sector.  The government, especially the military, is the most serious polluter in the country, and is exempt from most EPA regulations.  Meanwhile Washington bureaucrats have classified the very air we exhale as a pollutant and have gone unchallenged in this incredible assertion.  The logical consequence is that there will come a time when we will have to buy a government permit just to emit carbon dioxide into the atmosphere from our own lungs!

The events on Capitol Hill last week just demonstrate Washington’s audacity in manufacturing problems just so they can expand government power to solve them

Brought to you by Alan’s Money Blog:
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Ron Paul – International Bailout Brings Us Closer to Economic Collapse

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Last week Congress passed the war supplemental appropriations bill. In an affront to all those who thought they voted for a peace candidate, the current president will be sending another $106 billion we don’t have to continue the bloodshed in Afghanistan and Iraq, without a hint of a plan to bring our troops home.

Many of my colleagues who voted with me as I opposed every war supplemental request under the previous administration seem to have changed their tune. I maintain that a vote to fund the war is a vote in favor of the war. Congress exercises its constitutional prerogatives through the power of the purse, and as long as Congress continues to enable these dangerous interventions abroad, there is no end in sight, that is until we face total economic collapse.

From their spending habits, an economic collapse seems to be the goal of Congress and this administration. Washington spends with impunity domestically, bailing out and nationalizing everything they can get their hands on, and the foreign aid and IMF funding in this bill can rightly be called an international bailout!

As Americans struggle through the worst economic downturn since the Great Depression, this emergency supplemental appropriations bill sends $660 million to Gaza, $555 million to Israel, $310 million to Egypt, $300 million to Jordan, and $420 million to Mexico. Some $889 million will be sent to the United Nations for so-called “peacekeeping” missions. Almost one billion dollars will be sent overseas to address the global financial crisis outside our borders. Nearly $8 billion will be spent to address a “potential pandemic flu” which could result in mandatory vaccinations for no discernible reason other than to enrich the Pharmaceutical companies that make the vaccine.

Perhaps most outrageous is the $108 billion loan guarantee to the International Monetary Fund. These new loan guarantees will allow that destructive organization to continue spending taxpayer money to prop up corrupt leaders and promote harmful economic policies overseas.

Not only does sending American taxpayer money to the IMF hurt citizens here, evidence shows that it even hurts those it pretends to help. Along with IMF loans comes IMF required policy changes, called Structural Adjustment Programs, which amount to forced Keynesianism. This is the very fantasy-infused economic model that has brought our own country to its knees, and IMF loans act as the Trojan Horse to inflict it on others. Perhaps most troubling is the fact that leaders in recipient nations tend to become more concerned with the wishes of international elites than the wishes and needs of their own people. Argentina and Kenya are just two examples of countries that followed IMF mandates right off a cliff. The IMF frequently recommends currency devaluation to poorer nations, which has wiped out the already impoverished over and over. There is also a long list of brutal dictators the IMF happily supported and propped up with loans that left their oppressed populace in staggering amounts of debt with no economic progress to show for it.

We are buying nothing but evil and global oppression by sending your taxdollars to the IMF. Not to mention there is no Constitutional authority to do so. Our continued presence in Iraq and Afghanistan does not make us safer at home, but in fact undermines our national security. I vehemently opposed this Supplemental Appropriations Bill and was dismayed to see it pass so easily.

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Ron Paul – Audit the Fed, then End It!

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I have been very pleased with the progress of my legislation, HR 1207, which calls for a complete audit of the Federal Reserve and removes many significant barriers towards transparency of our monetary system.   This bill now has nearly 170 cosponsors, with support from both Republicans and Democrats.  Senator Bernie Sanders has introduced a companion bill in the Senate S 604, which will hopefully begin to gain momentum as well.  I am very encouraged to see so many of my colleagues in Congress stand with me for greater transparency in government.

Some have begun to push back against this bill, and I am very happy to address their concerns.

The main argument seems to be that Congressional oversight over the Fed is government interference in the free market.  This argument shows a misunderstanding of what a free market really is.  Fundamentally, you cannot defend the Federal Reserve and the free market at the same time.  The Fed negates the very foundation of a free market by artificially manipulating the price and supply of money – the lifeblood of the economy.  In a free market, interest rates, like the price of any other consumer good, are decentralized and set by the market.  The only legitimate, Constitutional role of government in monetary policy is to protect the integrity of the monetary unit and defend against counterfeiters. 

Instead, Congress has abdicated this responsibility to a cabal of elite, quasi-governmental banks who, instead of stabilizing the economy, have destabilized it.  It took less than two decades for the Federal Reserve to bring on the Great Depression of the 1930’s.   It has also inflated away the value of our currency by over 96 percent since its inception.  It has invisibly stolen from the poor and given to the rich through this controlled inflation, and now openly stolen through recent bank bailouts.  It has predictably exacerbated the very problems it was meant to solve. 

Detractors have also argued that the Fed must remain immune from the political process, and that that more congressional oversight would distort their very important decisions.  On the contrary, the Federal Reserve is already heavily entrenched in the political process, as the Fed chairman is a political appointee.  High level officials routinely make the rounds between positions at the Fed, member banks, Treasury and back again, taking care of friends and each other along the way.  

As far as the foolishness of placing complex monetary policy decisions in the hands of politicians – I couldn’t agree more.  No politician or central banker, no matter how brilliant, is smart enough to know more than the market itself.  The failure of central economic planning has been witnessed over and over.  It is frankly beyond me why we ever agreed to try it again.

To understand how unwise it is to have the Federal Reserve, one must first understand the magnitude of the privileges they have.  They have been given the power to create money, by the trillions, and to give it to their friends, under any terms they wish, with little or no meaningful oversight or accountability.  Thus the loudest arguments against greater transparency are likely to come from those friends, and understandably so. 

However, it is the responsibility of every member of Congress to represent the interests of the people that sent them to Washington and find out what has been happening with our money.  As the branch of government with the power of the purse, we really have no other reasonable choice when the economy is in the shape it is in.

Ron Paul

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Fewer Taxes for Real Economic Stimulus

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Taxes are the issue this week as Americans struggle to make the April 15th deadline to file their returns. It is a good time to contemplate the effects of big government and what it does to our country.  The income tax is one of the most egregious encroachments on our liberties today.  It is a form of involuntary servitude, which was supposed to have been outlawed by the 13th Amendment. 

Tax Freedom Day is defined as the day when the nation as a whole has theoretically earned enough income to fund its annual federal tax burden.  For all of the days of the year before this day, you are a slave to government.  For 2009, Tax Freedom Day will come on April 13th.  Almost a century ago in 1910, before the mistakes of 1913-namely the inception of the Federal Reserve and our current income tax, Tax Freedom Day was January 19th, signifying a mere 5% tax burden.  Somehow, our country functioned just fine.

If calculated to include government spending and the deficit, rather than just collections, Tax Freedom Day would actually fall on May 29.  The annual deficit adds to the growing debt of future generations and adds insult to injury to those that struggle to make this economy work.  It is a slap in the face that this is not enough to prevent this crushing governmental burden from falling on the next generation. 

For months now, Washington has been desperately throwing taxpayers’ money at various programs to stimulate us out of the recession, to no avail.  Seeing hard-earned money confiscated from the people and spent in such wasteful ways, such as the recent bailouts, is almost too much to bear.  Getting rid of the income tax altogether, while very beneficial, may be a while in coming.  In the meantime, I am fighting for every tax cut or tax credit possible. 

I can think of no better economic stimulus than letting people keep their money and spend it how they see fit.  For this reason, I am an original cosponsor on a bill that would give Americans a two month employment and income tax holiday, while taking unused TARP money back from the Secretary of the Treasury and putting it in the Social Security trust fund instead.  

In addition, I have recently introduced the Child Health Care Affordability Act.  If passed this legislation would provide parents with a tax credit of up to $500 for health care expenses of dependent children.  I have also re-introduced the Tax Free Tips Act, which would make tips exempt from federal income and payroll taxes.  I am also an original cosponsor of a bill that would make permanent the deduction of state and local sales taxes.  My bill HR 162 exempts Social Security benefits from income tax.

These are just a few of the many tax related bills I am fighting for in Congress, but without a corresponding cut in the size of government, which I am also fighting for, we are simply adding to the future tax burden of our children.

Ron Paul

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Ron Paul – Bankruptcy is Economic Stimulus

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The distraction on Capitol Hill this week has to do with the jackpot bonuses that executives at AIG recently received.  The argument is over a relative drop in the bucket.  The total amount of bonuses given out was $165 million.  The government has put $170 billion into AIG so far.  Many now are demanding we get this money back.   We ought to be spending our time and effort doing something more worthwhile, like figuring out how the Federal Reserve is handling the trillions of dollars they are creating and pumping into the economy, and how that is affecting the purchasing power of dollars in your pocket.

The big mistake was appropriating the TARP funds in the first place.  A Johnny-come-lately bill of attainder won’t stop the spending epidemic.  This whole situation is a perfect demonstration of why “doing nothing” and letting failing companies fail would have been much better than sinking valuable money and resources into them. 

When a company makes a profit, it is a signal that it is taking resources and increasing their value while controlling costs.  When a company operates at a loss, it is a signal that it is decreasing the value of its resources or letting out-of-control costs outstrip any value it has created.  A company operating at a loss is therefore an engine of wealth destruction.   Bankruptcies are a net positive for the economy because more productive competitors are rewarded by opportunities to buy up remaining assets at bargain prices to strengthen their operations.  In an economy that allows this kind of growth and change, any jobs lost by bankruptcy are soon replaced by new ones as the most efficiently managed businesses gain access to more assets and expand. 

Bankruptcy was the stimulus that we needed in the case of AIG. More bankruptcies would clean out malinvested resources and enable economic growth again.

AIG, by losing money and maneuvering their operations to the brink of bankruptcy, was telling us that they were inefficient.  So what did we do?  We forced the taxpayer to assume the losses, and now we are supposed to be shocked that it is not working out.  Had AIG gone bankrupt, it would have been impossible to hand out these bonuses.  The taxpayer would have been fleeced for $170 billion less last year.  Had they gone bankrupt, the world would not have come to an end, it would just continue on with one less engine of wealth destruction.

We should have learned from Japan.   The 1990’s is referred to as Japan’s “lost decade” because of the zombie banks kept on life support by the Japanese government.  Any productivity was redirected through these engines of wealth destruction, resulting in long term stagnation.  We should and can avoid this outcome if we come to our senses.  

A recession should be a time of strengthening and regrouping for an economy. But as long as the government insists on maintaining the status quo by propping up failed institutions, we will continue to dig a bigger hole for ourselves.

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Ron Paul – Earmarks Don’t Add Up

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Earmarks seem to be the hot topic this week, and as a fiscal conservative I am dismayed so many people deliberately distort the earmarking process and grandstand to make political points.  It is an easy thing to do with earmarks.  It takes a little more time and patience to grasp the reality of what earmarks really are.

To be sure, if earmarks were the driving force behind explosive government spending as some have been led to believe, that would be a good reason for all the fuss.  The misconception seems to be that members of Congress put together a bunch of requests for project funding, add them all together and come up with a budget.  The truth is, it is not done that way.  The total level of spending is determined by the Congressional leadership and the appropriators before any Member has a chance to offer any amendments.  Members’ requests are simply recommendations to allocate parts of that spending for certain items in that members’ district or state.  If funds are not designated, they revert to non-designated spending controlled by bureaucrats in the executive branch.   In other words, when a designation request makes it into the budget, it subtracts funds out of what is available to the executive branch and bureaucrats in various departments, and targets it for projects that the people and their representatives request in their districts.  If a congressman does not submit funding requests for his district the money is simply spent elsewhere.  To eliminate all earmarks would be to further consolidate power in the already dominant executive branch and not save a penny.

Furthermore, designating how money is spent provides a level of transparency and accountability over taxpayer dollars that we don’t have with general funds.  I argue that all spending should be decided by Congress so that we at least know where the money goes.  This has been a major problem with TARP funding.  The public and Congress are now trying to find out where all that money went. 

The real issue is that the overall budget is too big, by far, which is why I always vote against it.  But attacking the 1 percent that was earmarked solves nothing.  The whole issue is a distraction from the real problems we face, which are that the Federal Government will absorb over 1/3 of our country’s GDP this year and taxpayers are forced to fork over more than half their income to fund government at all levels.  On top of that, the national debt is $11 trillion, which is $36,000 per citizen.  The recent increases in bailouts, government spending and money creation is going to hobble our economy for decades.  We must curb the government’s appetite severely if this country is ever to thrive again.  The noise over “earmarks” is a red herring and a distraction from the real issue of uncommitted spending.

It is time to attack the entirety of government spending.  We especially need a full account of the activities of the Federal Reserve that spends and creates trillions of dollars with no meaningful oversight. This is a huge problem that needs immediate attention.

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