Now it’s “Too Small To Fail”

I don’t know if I should comment on this week’s MoveOn.org email or allow it to speak for itself.

Forgiving the student loan debt of all Americans will have an immediate stimulative effect on our economy. With the stroke of the President’s pen, millions of Americans would suddenly have hundreds, or in some cases, thousands of extra dollars in their pockets each and every month to spend on ailing sectors of the economy.

As consumer spending increases, businesses will begin to hire, jobs will be created, and a new era of innovation, entrepreneurship, and prosperity will be ushered in for all. A rising tide does, in fact, lift all boats—forgiving student loan debt, rather than tax cuts for corporations, millionaires and billionaires, has a MUCH greater chance of helping to raise that tide in a MUCH shorter time-frame.

The future economic success of this country is wholly dependent upon a well-educated, prosperous middle class. Instead of saddling entire generations with debt from which there is no escape, let’s empower the American people to grow this economy on their own!

All of the bailouts, such as TARP, were a mistake.  They were foisted onto the American people because the affected institutions were “too big to fail.”   MoveOn.org is essentially saying what was good for the goose should be good for the gander.  What a slippery slope!

There’s not much difference between bailing out financial institutions and college students who borrowed a lot of money to finance their education.  In the former case, the banks and mortgage companies knew they were taking huge risks with exotic products like “securitized mortgage backed securities.”  In the latter, students entered into a legal contract agreeing to repay a loan.  It’s a tough sell to claim ‘poor me’ regardless of one’s size when you know the risks and engage anyhow.

Our economic and political system is supposed to allow a person to own and control what they can create and earn.  When government decides for us that we have to pay for the mistakes or, in this case, the voluntary choices of another, there is justifiable resentment.   Why work hard if the fruits of one’s labor will go to someone else?  If we take the incentives out of our economic system, it will break.  Government is supposed to protect the rights and property of its citizens, not take them away.

It’s also hard not to be a bit cynical about this demand.  Remember the federal takeover of student loan program as a part of the health care bill in 2009?  How easy it would be for the federal government to erase almost one trillion dollars ($1,000,000,000,000; the words don’t do the number justice) from its balance sheet.  We already see too much fiscal irresponsibility for political gain.  Do you think students will back a candidate or a party willing to negate their financial liability?

The financial bailouts of 2008 created the outrage that evolved into the Tea Party.  The calls for government to continue the fiscal insanity of more spending when we’re broke keep it going.

As if this demand wasn’t outrageous enough,  don’t get me started about the unconstitutionality of doing this “with the stroke of the President’s pen.”

The Debt Ceiling

I believe that the Minnesota state shutdown was a testing ground for the national debate on government spending, so I think a few thoughts on the national debt ceiling debate are relevant.

I appreciate many of the forwards I receive from folks who wish to share information with me.  Tonight, I couldn’t pass by this gem from MoveOn.org:

The Republicans have created this crisis, and they’ll be responsible for the consequences. Raising the debt ceiling is a routine part of American politics. Republicans raised it seven times under President Bush. And President Reagan raised it 14 times.

But today’s tea-party Republicans decided to use this must-pass bill as a way to take the American economy hostage.

There’s a lot of nonsense here, but my favorite is “raising the debt ceiling is a routine part of American politics.”

Sadly, it is.  I read that the debt ceiling has been raised 74 times since 1961 (it was first implemented in 1917).

So, Moveon, as long as the wrong choice is habit, that makes it ok… right MoveOn?

Well, it’s also habit for the Federal Reserve Bank to dole out money to insiders and crony banking buddies.  This drives up interest rates and inflation, eating away at the spending power of everyone, but especially hard hitting on those in the lower income brackets.  So that’s ok?

Um.. sorry to bring up another little historical tidbit, but how about this floor speech from the U.S. Senate:

“Increasing America’s debt weakens us domestically and internationally.  Leadership means that ‘the buck stops here.’  Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren.  America has a debt problem and a failure of leadership.  Americans deserve better.”
— Senator Barack Obama, D-IL
Congressional Record, S.2237-8, 3/16/06

So is it also ok to be against something before you’re for it?  Still with me MoveOn?

If Senator Obama was able to see the consequences of raising the debt ceiling for what it was in 2006, a transfer of debt to future generations, then why isn’t it a similar “failure of leadership” now that the Tea Party has the same stance?

It is difficult to tell somebody ‘no’, whether it’s going to the beach when the weather forecasts severe storms or a paved bike trail when the state is broke.  We, the people, are in this mess because previous politicians have over promised knowing they wouldn’t be around when the bill came due.

It takes courage and leadership to admit we need to change our spending habits so we can afford the things we need – or in the case of the federal government – afford the things they are Constitutionally authorized to do.  I don’t care if it’s then-Senator Obama, the current Republican elected officials or the Tea Party.  Raising the debt ceiling is the wrong choice.  If you and I have to ‘cut up the credit card’ when we’re in deep debt, then so does Uncle Sam.

It’s a Spending Problem (and here’s proof)

Need proof that state government has a spending problem?  MPR provided yet another example in a recent story on Lutsen Mountain violating a permit on water sourcing:

[Rep.] Dill and [Sen.] Bakk say if Lutsen is forced to take water from the lake [Superior] instead of the Poplar River, they will ask taxpayers to underwrite the cost.

It is a fact (and an economic principle) that resources are limited.  State government collects tax money and then chooses how to spend it according to the requirements and powers granted by the Constitution.  The problem is that lawmakers discovered that they could spend your money on other things.  Throw in the power of taxation and there’s no need for prioritizing or making a hard decision.

Minnesota will have an additional $4 billion in revenue during the biennium to spend through the general fund.  That’s a 12% increase from the last budget!  There is plenty of money to spend.

Lawmakers don’t want to tell constituents (or donors or patrons) that they can’t have something.  It usually isn’t good for them personally (think: re-election) even though it’s good for every one else.

Why are we cutting allowances for traumatic brain injury patients but paving a bicycle trail from Saint Bonifacius to Mayer?

Why are the budgets shrinking for the courts, the third and equal branch of government, but we bailed out the Buffalo Regional Railroad for almost $3 million?

Why do we sit in a bottleneck traffic jam on I-494 in Plymouth but spend almost $6 million on prairie restoration?

What is the next Constitutionally mandated state service that will suffer because Rep. Dill and Sen. Bakk want to subsidize a private business in their area?

I wrote about this last October.  Our state’s budget problem will not be solved with class warfare, but with fiscal responsibility and the courage to prioritize.  The state Legislature did its job and passed a balanced budget that spends within the means of the state.  It’s time for Governor Dayton to sign those finance bills or he will bear the responsibility for shutting down state government.

Request or Require

A fair amount of press, including at the national level, has been given to our state senate chamber this week.  I think a lot has already been written about the issues of speech, religion and their interaction with government, but that’s not the part of this topic that I find most interesting.

I took note of the reaction.

Currently, clergy who offer invocations at the Minnesota Capitol are “requested” to keep their prayers non-denominational.  In reaction to Pastor Dennis Campbell’s prayer this week, Senator Bonoff asked leadership to change the language to “required.”

The simple act of changing the language from “request” to “require” illustrates a fundamental difference of political philosophies.  Advocates of limited government react to things they don’t like by altering their own approach: find a substitute, abstain or attempt to persuade others to change.  Liberals and statists react to things they don’t like by using the force of law to change a situation to fit what they think it should be.

Voluntary or mandatory? Choice or force?  Which is consistent with our founding principle of self-determination?

We live in a diverse society.  I think it’s ironic to celebrate our diversity in one breath and bemoan it in the next.  One person’s right of choices, beliefs or practices does not take away or negate another’s right to the same.   That’s why I think an imposition of will is an inappropriate course of action and why I became an advocate for individual liberty and self-governance.

Sugar Free

Tuesday morning Rep. Collin Peterson (MN-7) was interviewed on MPR.  Cathy Wurzer asked about being the ranking minority member of the House Agriculture Committee instead of its chair.   A few of his comments had me wide awake in no time.

MPR Peterson interview 012511
(the audio begins immediately at this topic)

“When I was chairman, sugar never came up.  I just put it together and it went into the bill.  I think that will be what happens this time… Everybody knows I’m the guy that’s got the most sugar in my area.  They’re not going to give me a hard time.”

I heard a lot of arrogance in these remarks, but it was the next sentence that had me yelling back:

“And it doesn’t cost any money.”

Really?

Unfortunately, this audio link lacks context – what was the question he was asked?  If Rep. Peterson means that there’s no cost to the process of simply writing up what he wants and inserting into a bill, then yes, I agree with that.  But this interview immediately followed a story on the influence of Moorhead-based American Crystal Sugar’s political contributions.  That story cited information from opensecrets.org that ACS-PAC gave to 32 senators and 218 congresspeople during the last election cycle. As the story’s author said,

“That money opens doors for Price [lobbyist for ACS] on Capitol Hill.”

Too bad Monty Hall isn’t here to tell us what’s behind those doors.  I guess I’ll have to look for myself…

Rep. Jim Jordan (R-OH) wants to end a cornucopia of federal programs and subsidies, including the USDA Sugar Program, which rings in at $14 million ANNUALLY.  Sounds like it’s not exactly  “doesn’t cost any money”…

It is true that sugar producers don’t receive direct government subsidies.  Does that mean there’s no payout behind those doors on Capitol Hill?  No – the payout is in tariffs and quotas that diminish supply.  Since the demand for sugar doesn’t decrease, US consumers end up with higher prices.

The USDA Sugar Program has quotas and charges tariffs on incoming sugars from certain areas; the mind-boggling rate chart can be found here.  Just imagine the bureaucratic and administrative efforts from public and private offices to enforce and conform to these tariff schedules!

Those tariffs and quotas restrict competition so there are higher prices in the United States.  Mark Perry, an economist with the University of Michigan and currently at the American Enterprise Institute, estimates that US consumers overpaid $4.5 BILLION in 2010 than if they had been able to pay the world market price for sugar.

In this case, the federal government is a catalyst for costs to taxpayers, but not a direct participant since they aren’t doling out tax dollars as a subsidy.  I guess I understand why in the eyes of Rep. Peterson he doesn’t see any “cost” to the taxpayer.   Let’s do some quick math: $4.5Bn divided by about 310 million Americans.. about $14.50 from each one of us last year.  Since sugar is in almost everything we eat, who could possibly notice paying about 4 cents a day more for their food?  But it sure adds up when we all do it!

Government regulations and mandates create small, indirect and sometimes invisible costs from all of us to benefit a select few.   Sugar is only one example of the hidden costs due to government interference in markets.  It all leaves a bad taste in my mouth and reminds us of the need to limit the power of the federal government.