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Monthly Archives: November 2011

While many politicians look at balancing the federal budget as a tale of two cities, tax increases and spending cuts, and the failure of the super committee resulting in mandatory cuts to Social Security, Medicare, and Defense in 2013, there is a third avenue that can and should be used.  The federal government can create engine of revenue external from mainstream taxation.

Though the Constitution limits the federal government’s ability to establish itself as a for-profit entity in its own right, there is some leeway.  One thing the federal government already owns outright is the Interstate Highway System.  Initiated by Harry Truman and completed by Dwight Eisenhower, Interstate highways were built for the primary purpose of commuting, holiday travel, and delivery of goods to retail venues including supermarkets via truck easier, and the secondary purpose of being turned over to the government for military vehicular transport in the event of a national emergency.

Though many states claim stretches of Interstate highway as turnpikes and toll-ways for the purpose of generating revenue of their own, a true interstate highway prohibits toll collection and sales of products are limited to vending machines at rest areas operated by non-profit organizations.  When a state is in full compliance of this standard, it receives federal funds to cover the cost of 80% of the roadway maintenance.  Toll highways running concurrent into Interstate highways are only entitled to 50%.  Many states are now asking for waivers to place all-electronic toll collection devices (EZ Pass and other brand transformer readers) at state lines.  Instead of issuing waivers, why doesn’t the federal government just go into the business?

I am not a big fan of toll collection, but it is a fair way to collect revenue as someone unemployed for example will not be crossing the state line as frequently as a commuter employed in a neighboring state.  And with high speed transponders instead of people in collection booths, the environmental and highway safety issues associated with traditional toll collection no longer exist.  If the federal government collected $3.00 per vehicle and kept one dollar for itself and one dollar each for the two states on the border, this is a lot of revenue from the high volume of vehicles passing.  I am not suggesting a higher fee for more axles as this can adversely affect the price of food and other goods transported by truck—I am suggesting a flat rate of $3.00 for anything on wheels passing the gateway.  Part of the revenue can be applied toward paying down the debt and part to repair the nation’s dilapidated infrastructure.

 

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As I continue to bring up ways on how the federal government can balance its budget once and for all, I came across a very interesting article written by Adam Biterly from the Americans for Limited Government’s web site, getliberty.org, citing Don Boudreaux, professor of Economics at George Mason University.

By definition, a liberal is an agent for change, while a conservative is an agent for the status quo.  Let me state that the United States of American is the greatest country in the world in spite of the economic downturn we are experiencing.  In 1776, the tyranny and oppression of George III in Great Britain was the status quo for The Colonies that would become the first thirteen states.   Our founding fathers who desired to declare independence and form a nation of our own with a representative democracy were the liberals of their time.  To ensure Americans would have all the inalienable rights and freedoms bequeathed unto us by God, they wanted a government at the national level, but a very limited one.  British philosopher John Locke went down in history as The Father of Liberalism, but the last thing he wanted was big government.

If Obama and company think they are fulfilling the dream of Mr. Locke, they are seriously mistaken.  Let us look at the Wall Street Occupiers of today.  They are protesting Taxation without Representation, our founding fathers fought against taxation without representation and formed a representative democracy.  They are protesting corruption at both the corporate level and in Washington.  John Locke said Power Corrupts, and Absolute Power Corrupts Absolutely, and preached the most limited government possible so that corruption could be minimized.  Our founding fathers established the most intricate system of checks and balances in the history of the world so that no one person or one branch of government would ever claim absolute authority.  What Mr. Locke desired is now the status quo.  If Mr. Locke were alive today, he would be proud to call himself a conservative.

My advice to the Wall Street protestors today is that they take care in what they wish for.  You are protesting the very free country our founding fathers created for you giving you the right to protest.  Do what you feel is right, but check and balance yourself against the status quo, which in spite of all its problems, still beats every alternative in the world.  Thank you, John Locke, oh father of liberalism, for your insight into our conservative agenda and wherever you are, best of luck as a born again conservative!

In 2013, MLB will realign the Houston Astros from 16-club National League to the 14-club American League, resulting in 15 teams in each league, in accordiance with the terms and agreement of the sale of the team to Jim Crane.  Some fans like the symmetry, I think it is a big mistake.

If not Mr. Selig, someone in the office of the Commissioner has a very short memory.  In 1998, when the Arizona Diamondbacks entered the National League and the Tampa Bay Rays (then called the Devil Rays) entered the American League, both sporting 14 clubs at the time, the decision to move the Milwaukee Brewers, owned by the Selig family, to the National League creating a 16-14 alignment was so that each league would have an even number of teams, thus maintaining Interleague play as a short 12-18 game interlude in the early middle of the schedule.  In order to have two leagues with an odd number of teams, a regular season schedule with 14 teams in each league playing intra-league opponents and one team per league playing each other.  If each team will play 162 games in about 27 weeks, each team will have to play 30 interleague games (a rollback to a 154 game season may reduce the schedule to 26 weeks and 25 interleague contests).  This is about 18% of the MLB schedule.  And the fact that the AL uses a DH and the NL bats the pitcher in the batting order further complicates things.

The rationale, according to Selig to balance the 6 divisions (5 teams each) to level the playing field for each of thirty teams to win their division, instead of the understaffed AL West with only 4 teams and the overloaded NL Central with 6 ball clubs.  With the adaptation of a second wild card in each league and the two wild cards facing off in a single game showdown prior to the start of the mainstream postseason, Selig feels each team needs the same chance to finish first and avoid the showdown.  What Selig fails to realize is by increasing the Interleague schedule to 30 games, you are taking away from the part of the schedule where teams play in their own division, which are the key games to winning their division.  While I support the second wild card and the one game playoff to avoid complacency when a team clinches no worse than a wild card, still has a shot at first place, but chooses to rest its players instead, I think a co-requisite is a schedule that ensures more than 50% of the season be played in one’s own division.  Currently, each team plays an average of 19 games against their own division opponents (maybe one division opponent only 18) resulting in average 76 out of 162 divisional contests.  In a 5-team division, this number should be 21 games against 4 opponents for 84 games in one’s own division, 3 more games than 81 or half of 162.  To play 30 interleague games, both intra and inter division games will have to be sacrificed.

I hope the powers to be at MLB have a chance to rethink this before 2013, although if it in the CBA, we are probably stuck with it.  You want to achieve equity among the leagues, contract two teams out of the majors (this had been discussed) and have two 14 club leagues.  So as not to offend any fans in any part of the country, I will not mention any candidates.  Just understand this will create equity and as players will be cut through attrition and a reorganization draft, a more concentrated talent pool will result in better quality ball played on the field in all [14-survinving] venues.

As I reported to you last time, it is highly problematic for the federal government to balance its budget by shedding its baggage and dumping it onto the states, which have debt of their own to deal with.  We must assess each service of the federal government extracurricular to the inception of the Constitution in 1789 and test them against three questions: (1) do we really need this service?  Less than half will actually be eliminated this way because what we did not need in 1789, we need now.  There is a good argument for not having something like Social Security prior to FDRs New Deal; I think with more onuses to save in a savings account or investment portfolio for retirement, young Americans entering the workforce in their twenties would do it out of necessity.  Unfortunately, we cannot leave the elderly and disabled who are not financially well off with no means of support.  (2) What combinations of two or more departments of the federal government can be colsolidated?  My Social Security and Medicare consolidation example in the previous post explains that.  (3) What services of the federal government can be turned over to the private sector?

All presidential candidates including President Obama desire to create a better environment to enable the private sector to create more jobs.  Looks like we can balance the budget and create jobs with this one action.  I am not prepared to say the United States is ready for an investment firm to take over Social Security, a health insurance company to take over Medicare, of for a technology type company to take over education.  Rome wasn’t built in a day.  But I can think of one example right off the bat, something the federal government can do right now, it can get out of the railroad business.

This is no slur on Amtrak, I have no axe grind with anyone who works for them and most of their trains are quite comfortable.  But they are heavily dependent of federal subsidies to stay afloat.  Before Amtrak was a gleam in anyone’s eye, there were a lot of privately owned railroads.  In my neck of the woods, the New Haven Railroad Company provided the commuter rail service I use today now owned and operated by the New York City MTA, and the Pennsylvania Railroad Company, who handled service between Boston and Washington, DC.  As private for profit businesses, they updated their cars and equipment in a timely fashion (MTA Metro North Railroad still using 1971 vintage rail cars on New Haven line), and were able to create lots of private sector jobs.  In addition, we would never have to bail out General Motors again. The new M-8 rail cars arriving in stages to the New Haven line are Japanese imports, built by Kawasaki, the motorcycle company.  Privately owned railroads can give the contracts for updates to General Motors instead and we can ride the rails in Made In America cars.  This will add more private sector jobs at General Motors and the railroad contracts will keep them in black ink for decades.  And it will have a domino effect on other industries such as steel making, vinyl and such materials for the seating, and the like.  More private sector jobs and more financially stable private sector companies that never need bailouts.  In the 2008 presidential debates, Republican candidate John McCain made reference to Joe the Plumber, in an attempt to make a case that overtaxing the rich makes it too hard to get rich and live the American Dream.  How about Joe the Railroad Tycoon?  Any Vanderbilts out there?

One of our fellow Republicans, Texas Governor Rick Perry has actually suggested turning the services of Social Security and Medicare over to the states.  Reduction in the size of government does not mean reduce the size of the federal government by shedding its baggage on the states making them larger.  States are in debt too.  We shed the baggage, [possibly] create a surplus, and then go back into debt bailing out the states, back to square one.  And I don’t want to see the states shedding their baggage on the cities and towns either.  No big government means no big government!  I think one big step we can take by reducing the size of government saving it a lot of money toward a balanced budget is Departmental Consolidation.

During World War II, the overseeing of our military was divided into two departments, the Department of War and the Department of the Navy.  Dwight Eisenhower consolidated the two departments into one, which we now know as the Department of Defense.  The same services and operations continue, but with a bureaucracy with half as many government employees.  This can be applied to saving Social Security and Medicare, and I’ll throw Medicaid into the mix for now albeit that one may not be around in the future.  We have three services overseen by three different bureaucracies.  Let’s consolidate the three services into one federal government department, call it the Department of Human Services.  All three (or two out of three) services will continue business as usual, but with a bureaucracy one third the size, again eliminating superfluous government jobs.  Part of the money saved on the two-thirds salaries and benefits can be reinvested into the Social Security Trust Fund enhancing its stability moving into the future, while part goes to pay down the debt.

I am a staunch supporter of a flat tax.  A real flat tax, that it.  Herman Cain’s first of three nines is a step in the right direction, but he still wants exemptions and reductions for those living and/or working in empowerment zones.  Rick Perry’s simple 1040 postcard is also a valiant effort, but he is offering this as a second option to the traditional way of filing with the IRS.  I want to go the whole nine yards and have one flat percentage rate for all Americans from the part-time minimum wage employee to the multi-billionaire.  Do this, you will both collect plenty of tax dollars and save the government money as there is no need for the IRS to continue to exist.  You simply set the withholdings of every American to the exact percentage rate and have the withholdings electronically transferred directly to the United States Treasury.  At the end of the year, everyone is paid in full.  No one could commit fraud if they tried, ensuring the federal government will always collect the exact proper amount of income tax to the penny.  And with no need for a dedicated bureaucracy to oversee the operation of income tax collection, the money saved on salaries and benefits for IRS employees, not to mention the paper we save by not having to print forms (also great for the saving trees and the environment), we are headed for a massive reduction in debt.  With all due respect for median and lower wage earners, let me remind you that according to The Bible, if you earn a dime a week, you are supposed to give a penny a week to The Lord and live on nine cents a week (tithe).  Kudos to Mr. Cain for asking the federal income tax to be one percent less than the Lord.