Since President Jimmy Carter said in the 70s that we needed to become energy independent, we have been sold a bill of goods by the government and the US press that we are at the mercy of the middle east when it comes to petroleum. Would you be surprised to learn that for the first time since the big war ended, we are now a net exporter of petroleum?
Yes friends, this year we exported 753.4 million barrels of everything from gasoline to jet fuel, while we imported only 689.4 barrels, according to the US Energy Information Administration. How, you may ask, could this be, when gas has run over $3 per gallon most of this year? Well friends, it’s called the old law of supply and demand; and the gas producers have realized they can keep our prices high by selling to the ever growing third world markets and other countries across the globe, keeping our supply short.
In August of this year, US drivers burned 7.7% less gasoline than 4 years earlier; partly because of government mandates to the auto industry to improve mileage, and partly because we just plain could not afford to buy any more gasoline. Yet, did this reduction in demand bring down prices?
No-sirree, because the refiners knew they could sell it across the pond and keep prices up.
Furthermore, their insistence that we need to supplement our gasoline by adding up to10 per cent corn-based ethynol alcohol is specious, too. Look at what has happened to the price of corn-based food products as a result of the demand for corn. And yet we continue to give exorbitant tax credits for mixing gasoline and ethynol.
Now, don’t misunderstand me. I am a capitalist and I believe in free trade, but not at the expense of the citizens of this nation, for the benefit of China, et al. In September alone, we exported nearly 1 billion barrels of gasoline. Gasoline and low-sulfur diesel used by our truckers were the biggest lures for foreign customers, and look at the premium our truckers have to pay over gasoline for a product which requires much less refining. It’s insulting to us all.
According to the Wall Street Journal, Singapore’s petroleum imports from the US quadrupled in the last 5 years, while Mexico’s petroleum imports rose by two-thirds.
Growing domestic output means our refineries are producing more fuel than the US market demands, so they look overseas to keep demand up, and the prices high domestically. Corporate profits are rising for Royal Dutch Shell, Exxon, Valero and Marathon.
And the domestic petroleum industry continues to push for the Keystone XL pipeline carrying petroleum tar sands from Canada across our Midwest to refineries in Port Arthur, Texas. I am all for the pipeline, but I do not think we should see these sands refined, and then shipped across the world, so our $3 plus per gallon price can be retained. It is past time we all should join the occupy Wall Street movement and bombard Congress with the demand that restrictive tariffs be placed on US oil exports, and that all ethynol credits be ceased immediately.
Friday, December 23, 2011
Thursday, November 3, 2011
WHO OWNS YOUR GOVERNMENT?
This is a column to illustrate whether your government does its best to provide a stable economy for the average American citizen, or whether it represents the fat cats who spend the big bucks. You decide.
Following the crash of 1929, one of every five banks in America failed, and their depositors were completely wiped out. In 1933, the Glass-Steagall Act was passed in an attempt to prevent this ever happening again. The law prevented banks from underwriting either debt or equity securities, or owning insurance companies. Thus, they had to choose between being a deposit/lending institution, or a Wall Street financier. In 1956, under the President called “do nothing” Eisenhower, Congress passed the Bank Holding Company Act, stating that a holding company owning two or more banks could not engage in the securities or insurance business either.
Shortly thereafter, in the 60s, banks began to lobby Congress to let them slip into the municipal bond market, underwriting debt securities for cities. In 1986, the Federal Reserve Board, which regulates banks, re-interpreted Section 20 of the Act, which prevents banks from being engaged in securities, to allow up to 5% of their revenue to come from securities transactions. They also allowed Bankers Trust, a bank, to engage in commercial paper (unsecured short term business loans.) We should note here the “independent” Reserve Board was formulated by financiers and established by Congress in 1913, to control our money supply. It is a totally private corporation owned by the banks.
In 1987, over the objections of Chairman Paul Volcker, the board voted 3-2 in favor of proposals from Citicorp, J. P. Morgan and the aforementioned Bankers Trust to allow these banks to handle commercial paper as described above; and to underwrite revenue bonds and mortgage backed securities (the instrument which so recently wrecked the housing market and the whole economy). Chairman Volcker warned that banks would likely lower loan standards in pursuit of lucrative security offerings, and market bad loans to the public.
In March 1987, the Fed allowed Chase Manhattan Bank to enter the commercial paper market. It also stated it planned to raise the 5% securities revenue limit to a 10% limit. In August 1987, Alan Greenspan, a former Director at J. P. Morgan, was named to replace Volcker as Fed Chairman. Most of the world considered him a financial genius, but only until the crash of 2008-9.
In January 1989, the Fed voted to allow banks into both corporate debt and equity securities, and raised the revenue limit to 10%. All during the 80s and 90s, Congress debated legislation to repeal Glass-Steagall, but always failed to act. In 1996, with the support of Greenspan, the Fed raised the bank securities revenue limit to 25%. About the only teeth left in Glass-Steagall was preventing banks from entering the insurance business. In 1997, the Fed gave banks the right to buy and own securities firms outright. Bankers Trust started it by buying Alex Brown, a brokerage firm.
In fall of 1997, Sandy Weill, chairman of Travelers Insurance, tried to merge with J. P. Morgan, but failed. He then bought Salomon Smith Barney, a brokerage firm, and then proposed a merger with Citigroup, owner of Citibank. This was clearly a violation of what was left of Glass-Steagall, because it involved an insurance company.
Greenspan, with the support of President Bill Clinton and his Treasury Secretary Robert Rubin, leads the Fed to approve this merger which clearly violates the law. In order to protect us (what a ruse), Greenspan says that unless Congress repeals Glass-Steagall within 2 years, the merger will have to unwind. Deep within the Regs was the possibility of three additional 1 year extensions to Weill which could be provided by the Fed. Just days after announcing the administration would support the repeal, Treasury Secretary Robert Rubin, who had previously been Chairman of Goldman-Sachs investment firm, left the administration to take a top executive post at Citigroup, under Sandy Weill.
In the 1997-98 election cycle, the finance, insurance and real estate industry spends $200 million on lobbying, Citibank alone spent $100 million. The industry spent another $150 million on campaign contributions. And on November 4, 1999, Glass-Steagall is finally repealed, less than 2 years after the merger. Remember the mortgage debacle which started in 2007? Remember the crash of our economy? Remember Paul Volcker’s warning? You decide who Congress was representing.
Following the crash of 1929, one of every five banks in America failed, and their depositors were completely wiped out. In 1933, the Glass-Steagall Act was passed in an attempt to prevent this ever happening again. The law prevented banks from underwriting either debt or equity securities, or owning insurance companies. Thus, they had to choose between being a deposit/lending institution, or a Wall Street financier. In 1956, under the President called “do nothing” Eisenhower, Congress passed the Bank Holding Company Act, stating that a holding company owning two or more banks could not engage in the securities or insurance business either.
Shortly thereafter, in the 60s, banks began to lobby Congress to let them slip into the municipal bond market, underwriting debt securities for cities. In 1986, the Federal Reserve Board, which regulates banks, re-interpreted Section 20 of the Act, which prevents banks from being engaged in securities, to allow up to 5% of their revenue to come from securities transactions. They also allowed Bankers Trust, a bank, to engage in commercial paper (unsecured short term business loans.) We should note here the “independent” Reserve Board was formulated by financiers and established by Congress in 1913, to control our money supply. It is a totally private corporation owned by the banks.
In 1987, over the objections of Chairman Paul Volcker, the board voted 3-2 in favor of proposals from Citicorp, J. P. Morgan and the aforementioned Bankers Trust to allow these banks to handle commercial paper as described above; and to underwrite revenue bonds and mortgage backed securities (the instrument which so recently wrecked the housing market and the whole economy). Chairman Volcker warned that banks would likely lower loan standards in pursuit of lucrative security offerings, and market bad loans to the public.
In March 1987, the Fed allowed Chase Manhattan Bank to enter the commercial paper market. It also stated it planned to raise the 5% securities revenue limit to a 10% limit. In August 1987, Alan Greenspan, a former Director at J. P. Morgan, was named to replace Volcker as Fed Chairman. Most of the world considered him a financial genius, but only until the crash of 2008-9.
In January 1989, the Fed voted to allow banks into both corporate debt and equity securities, and raised the revenue limit to 10%. All during the 80s and 90s, Congress debated legislation to repeal Glass-Steagall, but always failed to act. In 1996, with the support of Greenspan, the Fed raised the bank securities revenue limit to 25%. About the only teeth left in Glass-Steagall was preventing banks from entering the insurance business. In 1997, the Fed gave banks the right to buy and own securities firms outright. Bankers Trust started it by buying Alex Brown, a brokerage firm.
In fall of 1997, Sandy Weill, chairman of Travelers Insurance, tried to merge with J. P. Morgan, but failed. He then bought Salomon Smith Barney, a brokerage firm, and then proposed a merger with Citigroup, owner of Citibank. This was clearly a violation of what was left of Glass-Steagall, because it involved an insurance company.
Greenspan, with the support of President Bill Clinton and his Treasury Secretary Robert Rubin, leads the Fed to approve this merger which clearly violates the law. In order to protect us (what a ruse), Greenspan says that unless Congress repeals Glass-Steagall within 2 years, the merger will have to unwind. Deep within the Regs was the possibility of three additional 1 year extensions to Weill which could be provided by the Fed. Just days after announcing the administration would support the repeal, Treasury Secretary Robert Rubin, who had previously been Chairman of Goldman-Sachs investment firm, left the administration to take a top executive post at Citigroup, under Sandy Weill.
In the 1997-98 election cycle, the finance, insurance and real estate industry spends $200 million on lobbying, Citibank alone spent $100 million. The industry spent another $150 million on campaign contributions. And on November 4, 1999, Glass-Steagall is finally repealed, less than 2 years after the merger. Remember the mortgage debacle which started in 2007? Remember the crash of our economy? Remember Paul Volcker’s warning? You decide who Congress was representing.
Thursday, January 27, 2011
THE FLAT INCOME TAX
The US income tax is broken. One answer to the revenue problems of the US government is so simple, that it defies the imagination. And so fair, it would make the Equal Employment Opportunity Commission blush. The problem is that the answer leaves the highly paid Washington lobbyists totally out of the equation, and as well reduces the size and scope of the IRS. It also makes everyone pay their fair share of operating our federal government. Therefore, until you, Mr. and Mrs. John Q. Public arise, and demand to be heard, our Congress will only hear from them. And people like me, who try to pose a reasonable solution, may find themselves ushered to a mental hospital to keep our voices silent.
According to the US census, the population of the United States in 2010 was some 308 million people. There were just under 140 million income tax returns made. According to the US Government Superintendant of Documents, the top half of those taxpayers paid 97.3 per cent of all the income taxes collected, and the bottom half paid only 2.7 per cent of the income taxes collected. The average rate of their income paid by the top 50 per cent of payers after deductions was 13.65 %. The average rate of their income paid by the bottom 50 per cent of payers after deductions was 2.59 per cent. So, you see the published progressive income tax rates of 10% through 35% are a farce, and just provide work for the lobbyists.
It does not take a genius to see that every able, adult working person in this country is not paying their fair share to operate the Federal government, and those who do pay are largely paying more of their income to make up what is collected. In fact, the top earning 1 per cent of the nation pays a 37% share of all the tax. The top earning 10 per cent of the nation pays a 68 % share of all the tax. The bottom earning 50 per cent of the nation pays only a 2.59% share of the tax. There are 43 per cent of working Americans who pay in little income tax, and some still receive Federal refunds, called Earned Income Tax Credits, for much more than they pay. A low income couple with three qualifying children may get an annual check as large as $5,666 from the IRS, without paying anything in first. This is wealth transfer at its finest.
The total federal income taxes collected last year was $1.031 trillion. If we were to charge every person who earned any income, no matter how small or how large, a flat 15% income tax while keeping all present deductions, the US Government personal income tax collections would have been about 25% higher, or $1.263 trillion, again leaving all deductions intact. If we disallowed all deductions, the total collected would be much higher. This would probably double the personal income taxes collected to $2 trillion plus, and be eminently more fair to every taxpayer. And it should please the socialistic thinkers among you, because the rich would suffer the loss of all their tax shelters.
Altogether, we spent about $3.721 billion last fiscal year. According to the Associated Press, therefore, forty cents of every dollar spent in the 2010 budget was borrowed. Federal debt last year totaled over $13 trillion. The debt is now crawling close to the $14.3 trillion debt limit, which Congress must soon raise, or we will be in default.
Alexander Tytler, 18th century Scottish lawyer and historian, is reported to have said words to this effect, abut the time our nation was born: “A democracy will last only until a majority of the electorate determines they can vote themselves money from the Federal treasury, by electing the people who will promise to give it to them.” History records the average lifetime of previous great nations as 200 years. This is today called by some the “Tytler cycle.” Tytler did not even mention borrowed money, which for us has made it all possible, thus far. But now comes the day of reckoning.
If we instituted the 15% flat income tax with no exemptions or deductions, we would probably double our income tax collections, and more important, everyone would be paying their fair share, even though the bottom half would still pay in much less of the taxes. And if everyone was paying taxes, there would be much less demand for free public services. Anyone interested?
According to the US census, the population of the United States in 2010 was some 308 million people. There were just under 140 million income tax returns made. According to the US Government Superintendant of Documents, the top half of those taxpayers paid 97.3 per cent of all the income taxes collected, and the bottom half paid only 2.7 per cent of the income taxes collected. The average rate of their income paid by the top 50 per cent of payers after deductions was 13.65 %. The average rate of their income paid by the bottom 50 per cent of payers after deductions was 2.59 per cent. So, you see the published progressive income tax rates of 10% through 35% are a farce, and just provide work for the lobbyists.
It does not take a genius to see that every able, adult working person in this country is not paying their fair share to operate the Federal government, and those who do pay are largely paying more of their income to make up what is collected. In fact, the top earning 1 per cent of the nation pays a 37% share of all the tax. The top earning 10 per cent of the nation pays a 68 % share of all the tax. The bottom earning 50 per cent of the nation pays only a 2.59% share of the tax. There are 43 per cent of working Americans who pay in little income tax, and some still receive Federal refunds, called Earned Income Tax Credits, for much more than they pay. A low income couple with three qualifying children may get an annual check as large as $5,666 from the IRS, without paying anything in first. This is wealth transfer at its finest.
The total federal income taxes collected last year was $1.031 trillion. If we were to charge every person who earned any income, no matter how small or how large, a flat 15% income tax while keeping all present deductions, the US Government personal income tax collections would have been about 25% higher, or $1.263 trillion, again leaving all deductions intact. If we disallowed all deductions, the total collected would be much higher. This would probably double the personal income taxes collected to $2 trillion plus, and be eminently more fair to every taxpayer. And it should please the socialistic thinkers among you, because the rich would suffer the loss of all their tax shelters.
Altogether, we spent about $3.721 billion last fiscal year. According to the Associated Press, therefore, forty cents of every dollar spent in the 2010 budget was borrowed. Federal debt last year totaled over $13 trillion. The debt is now crawling close to the $14.3 trillion debt limit, which Congress must soon raise, or we will be in default.
Alexander Tytler, 18th century Scottish lawyer and historian, is reported to have said words to this effect, abut the time our nation was born: “A democracy will last only until a majority of the electorate determines they can vote themselves money from the Federal treasury, by electing the people who will promise to give it to them.” History records the average lifetime of previous great nations as 200 years. This is today called by some the “Tytler cycle.” Tytler did not even mention borrowed money, which for us has made it all possible, thus far. But now comes the day of reckoning.
If we instituted the 15% flat income tax with no exemptions or deductions, we would probably double our income tax collections, and more important, everyone would be paying their fair share, even though the bottom half would still pay in much less of the taxes. And if everyone was paying taxes, there would be much less demand for free public services. Anyone interested?
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