You Should be Furious!

December 16, 2009

There are certainly a lot of things that Washington does that should make the average American citizen furious.  I would like to point out just four: the hypocrisy of the illegality of purchasing foreign prescription drugs, federal employee salaries, the job busting cap and trade legislation, and the wanton destruction of the dollar.

The price of prescription drugs in the United States has increased by 9 percent in the last year.  Certainly the ever increasing cost of drugs is a major reason for the pressure on Congress to reform our healthcare system.  However, currently it is illegal for Americans to import cheaper prescription drugs from outside the United States.  Drugs produced by American companies, but sold in foreign markets are usually between 35 to 55 percent lower in price due to price controls of other countries.  It is an outrage to me that we are not able to take advantage of the stupidity of other governments and import and buy their cheaper American made drugs.  The same bleeding hearts in D.C. that whine about how people are dying because they can’t afford prescription drugs are standing in the way of those folks getting cheaper drugs.

Now, an argument given for keeping importation illegal is that the safety of the drugs cannot be guaranteed.  Nonsense!  We are talking about countries like Japan, the United Kingdom, and Canada which have product protection mechanisms in place.  Personally, I’ve lived in the developing world for 8 years and my family has never had an issue with unsafe drugs in those countries.  The bottom line is that there is an easy way to cut drug costs and provide much needed medication to the financially strapped sick, but Congress refuses to do the right thing.

Then there is the story reported by USA Today that the number of federal employees who make $100,000 or more jumped from 14 percent to 19 percent of all bureaucrats during the first 18 months of the recession.  The average federal worker’s salary is now $71,206 compared to $40,331 for private sector employees.  To put it in even greater perspective, in December 2007 the Transportation Department had one employee earning $170,000.  By June of 2009 the department had 1,690 workers with salaries above $170,000.  Substantial pay raises and new salary rules were the reason for the jump in salaries.  So while 7.2 million Americans were losing their jobs, not only were financial institutions and car manufacturers bailed out, your tax dollars also went toward ensuring the comfort and security of our ruling bureaucrats.  Not only did Uncle Sam not cut back on labor costs like the rest of America, he handsomely rewarded those that produce very little if anything that benefits society.  All Americans should be furious.

Turning to the environment, if Congress was intent on destroying jobs in these tough times it would have immediately passed the 1500 page cap and trade legislation.  The painful new taxes the legislation would have imposed on all of us would have increased business costs and reduced aggregate demand thereby making an awful job market that much worse.  Additionally, Environmental Protection Agency administrator Lisa Jackson admitted during a Senate committee hearing that the bill would not significantly reduce global carbon concentrations in the atmosphere.

Fortunately, Democrats have sat on the legislation given the political risks to their careers of passing it.  But, just one minute, because to the rescue comes the EPA.  This past week the agency issued an “endangerment finding” that global warming is hazardous to human health.  In addition, the enviro-nazis at the EPA threatened Congress that if it didn’t pass cap and trade then it, the EPA, “would act on its own—and in a far more blunt fashion than Congress preferred.”   According to one anonymous administration official, ,” the EPA is going to have to “regulate in a command-and-control way, which will probably generate even more uncertainty.”

Why is the EPA going to impose regulations that it admits will not significantly reduce global carbon concentrations in the atmosphere?  Why does Congress put up with this extortion?  Wasn’t the EPA created by Congress and thus answerable to it and not the other way around?  Why would Congress allow a bunch of unelected bureaucrats to decide policy?  The answer is easy: to deflect blame for stupid policy.  The EPA is doing Congress a favor – it is going to further drain our economy with expensive regulations and when your congressperson runs for reelection he/she can blame the EPA.  Of course, the question that should be asked at town hall meetings is, can’t Congress take away the EPA’s power?  Yes it can, and as Americans get wiser about what charlatans their elected leaders are they will press them more and more for upright answers.

Lastly, and most importantly, the American people should be outraged at the wanton destruction of their currency by the Fed, Congress, and two presidents.  In the last 3 years alone the dollar has lost 30 percent of its value!  What do you expect the way money has been thrown at financial firms, car manufacturers, and so forth.  For their part, the banks seem to have done well investing their bailout funds since they seem to be turning profits without loaning money.

The federal philanthropy continues – on Saturday, the Senate cleared the way for the passage of a $1.1 trillion spending bill.  The vote was held up for an hour to allow Senator Lieberman an Orthodox Jew to walk more than 3 miles to the Hill on the Sabbath to cast the 60th vote to end debate.  Now, I am not an authority on Orthodox law, but didn’t the Senator consider voting in the Senate chamber work?  I suppose, like the Constitution that body continues to violate, when it serves their purpose members of Congress fell free to violate whatever parameters will get the job done.

All the bailouts and all this additional spending with money we do not have on aid for car dealers, loan guarantees for steel companies, and 5000 pork barrel projects for individual members continues to devalue our money making it that much harder for those already struggling to make ends meet in this horrendous economy Washington has given us.  Members of Congress are either charlatans or economic imbeciles because their inflationary policies hurt the same people they purport to help.  The whole thing is a stupendous outrage.

So, what is there to do?  I already think it is too late?  We owe 12 trillion dollars with none of our problems resolved.  Congress and the President seem hell-bent on making sure America is further bankrupted by every giveaway scheme imaginable – everyone knows the litany by now, too big to fail, too important to fail, so called environmental protection, cash for clunkers, homebuyer credits, etc, etc, etc….  I suppose we have the mid-term elections to look forward to next year, but given past experience if Republicans take Congress it will be akin to going on a diet and drinking Bud Light instead of Regular Bud.  Bottom line:  both are bad brands. 

If this article has irritated you even just a little bit, understand that there is a lot more that Washington spews that is awful.  From prescription drugs to federal salaries it seems like Washington only cares about it special constituencies and not the rest of us who are hurting.  And these examples are just the tip of the iceberg.

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Cap and Trade is Obama’s Smoot-Hawley

June 30, 2009

History repeats itself.  It is amazing how similar the 1920s and 2000s have become.  First, were the unsustainable economic booms; then came the busts.  Of course the easy money policies of the Federal Reserve caused both busts.  Then there is the government’s response to both crises – public works programs, lots of stimulus spending, more easy money by the Fed, and tax hikes on the rich.  For sure, these policies did not cure what was ailing the economy in the late 1920s and they are not curing our economic ills today in the late 2000s.  Really, the only dreadful piece of the government’s response to the crisis in the 1920s that is missing from today’s response is trade protectionism. 

Hold on one minute.  The House this past week passed the president’s cap and trade legislation.  Now, I know that cap and trade has nothing to do with trade between countries and protectionism.  It is not legislation intended to protect domestic products against foreign competition like the Smoot-Hawley Tariff was intended to do in 1929.  Instead, cap and trade is intended to protect the environment against foreign substances.  On the surface, to compare the two measures is a stretch.  However, the consequences of cap and trade if passed by the Senate will be very similar to those of Smoot Hawley during the Great Depression.

In 1929, the Smoot-Hawley Tariff placed duties on thousands of imported products in order to make them less competitive against domestic U.S. products.  Naturally, our trading partners placed equally heavy tariffs on U.S. goods entering their countries.  This had the effect of raising the costs of all good at a time when many were losing their jobs and couldn’t afford to pay more for things.  It is acknowledged by many economists that Smoot-Hawley and the wave of international trade protectionism that it brought forth was a major contributor to worsening an already sharp economic downturn.

Similarly, cap and trade will raise costs for consumers on virtually every product they buy.  Because the goal behind the legislation is to artificially hike the price of electricity and gasoline in order to lessen their use by Americans, higher prices will appear for everything made in plants that use these resources.  This naturally includes everything from food to computers to trucks.

To their credit, Americans are already hoarding their money.  A report last week indicated that the household savings rate in this country has jumped to 7 percent – the highest rate in years and up from 1 percent in 2007.  Higher prices on goods caused by cap and trade are not going to reverse this trend.  As a matter of fact, according to the Heritage Foundation, cap and trade will significantly increase necessary household energy costs by at least $1500 a year.  Cap and trade amounts to nothing more than a tax increase on everyone – including middle class Americans thus another Obama campaign promise broken.

The Smoot-Hawley tariff contributed to the crippling of the American economy during the Great Depression.  Cap and trade, although not a trade protectionist measure, will have similar consequences during this depression.  It will raise the cost of living which will make consumers cut back on spending further.  Production will then decrease further and unemployment will increase more.  Perhaps it’s already too late, but if our so called leaders would just read the history books they could save us a lot of economic hardship.